Installation of Plants and machinery in Spain. VAT Territoriality
In Article 31-bis of EU Regulation 282/2011, services considered to be provided in Spain are listed, including “the installation or assembly of machinery or equipment that, once installed or assembled, can be considered immovable property.”
If an Italian company not established in Spain for VAT purposes receives an order to install machinery, equipment, or furniture in Spain, it must assess whether these items will remain fixed to the property and thus be classified as immovable property. In such a case, the VAT on these services will be localized in Spain.
In this operation, Spanish VAT will apply, although typically this obligation will fall on the Spanish client, as the Italian company will apply the reverse charge.
However, Spanish law does not always allow the application of reverse charge, and there are two possible exceptions to consider:
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If the services are provided to another client who is not established in Spain.
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If the contract is part of a global project for the restructuring of the facility or building (even in this case, the owner of the facility/building should formally communicate this circumstance).
In the two cases mentioned above, the Italian company should apply for a Spanish VAT number and invoice the work with Spanish VAT.
