In order to harmonize our local regulations with community regulations, this is how Article 72 of the General Budget Bill for 2023 that the Ministry of Finance and Public Administration sent last week to the Congress of Deputies for parliamentary processing reads, the Government echoes, finally, the enormous debate that has arisen in recent months around the rule of effective use and exploitation of services, contained in Article 70. Two of the LIVA, and that, in the heat of the latest jurisprudential pronouncements , both national and community, had become an unquestionably topical issue.
The closure rule, commonly known as the effective use rule , allows attracting to the territory of application of the tax, in order to subject to tax, services that, by application of the general rules on the place of provision of services, are located in the first instance outside the territory of the European Union and, in that sense, not subject to tax.
The excessively generalized application of a rule that, in its original conception, in the Community Directive, is provided for on a subsidiary basis, in order to avoid only cases of non-taxation, double taxation or distortion of competition, had been strongly criticized from the beginning. technical point of view, both by the doctrine and by taxpayers.
Source PwC
