- New VAT Interpretation: The Spanish Tax Authorities (STA) assert that internal transactions between head offices and foreign branches may incur VAT if branches are deemed independent, affecting financial and insurance sectors.
- Legal Controversy: This interpretation, upheld by the Spanish Central Administrative Court (TEAC), is questioned for potentially misinterpreting EU law and may lead to further challenges in the courts.
- Implications for Businesses: Companies must review documentation and prepare for increased scrutiny from tax authorities, as this interpretation raises VAT exposure for entities operating in Spain through branches.
Source Alvarez and Marsal
