“My business is based in a different European country, when I pay for a Coworking Service where should the service be taxed?”
According to the European Union’s common system of VAT legislation, the place of taxation of goods or services between EU Member States depends on the nature of the transaction, the kind of product supplied and whether transport is involved.
Where must Coworking Services be taxed?
In regard to services provided from a company based in one EU Member State to another, the general rule is that the service will be taxed at the place of the customer if it’s a business, or at the place of the supplier if the customer is a private individual.
However, there a some exceptions to this rule, such as:
- services connected with immovable property (real estate);
- passenger transport;
- activities relating to culture, sport, education and entertainment;
- restaurant services.
In the cases listed above, the service will be taxed at the place of the supplier (where the service is provided).
Hence, in the case of renting a workspace at GOCO Coworking, which is a service connected with an immovable property, the service must be taxed in Spain (the place where the immovable property is located).
So how do I deduct the VAT charged in Spain?
As a company based in a EU Member, you always have the right to deduct the tax charged in Spain.
In order to do so, you can submit an application for VAT refund in Spain called “Form 361: VAT Refunds for non-residents” (Modelo 361: Devoluciones de IVA a no establecidos). Remember that this form is for “non-residents” who are using temporary services in Spain, however if you are resident you may be asked to register for VAT in Spain to deduct taxes. In which case, you will have to submit a “Form 303” like any other Spanish corporation.
The good news is that Form 361 (for non-residents) is a short one-page form translated to English! You can find more information about it in the Spanish Tax Agency Official Page.
We hope this information was helpful!
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