We echo a consultation recently issued by the Directorate General of Taxes that refers to the tax treatment applicable to a natural person who carries out the activity of “influencer”. The services she provides are the publication of videos and photographs made by herself on an online platform.
The consultation refers to the determination of the applicable heading to the Tax on Economic Activities, hereinafter IAE, the treatment in the Value Added Tax of the services rendered, hereinafter VAT, and the obligation of the payer (entity resident in the United Kingdom) to make withholdings on the remuneration paid.
With respect to the IAE, the consultation states that, since there is no heading that includes the activity in itself, in application of the provisions of the regulations to that effect, it must be classified in the activity that is most similar to the service rendered. In this case, the Court considers that it should be classified as a business activity under headings 961.1 Production of cinematographic films and 973.1 Photographic services.
In relation to the VAT treatment, it understands that, in application of the rule of localization of services, to the extent that the advertising service is provided to an entity located in the United Kingdom, it must invoice its services without VAT as it is considered an activity not subject to Spanish tax.
Notwithstanding the above, we must not forget the special localization rule established in the Value Added Tax Law that refers to services rendered to entities located in third territories (in this specific case, the United Kingdom), which determines as a localization criterion the one based on the effective use or exploitation of the services.
Thus, the consultation itself limits the criterion established above to the analysis -case by case- of the services rendered by the influencer outside the community and its effective use and exploitation in the territory of application of the tax.
In this case, we understand that it would be necessary to determine whether part of these advertising services are applicable to the national territory (for example, determining the fees of the members residing in Spain of said platform who follow the influencer in said territory). In this case, we understand that part of the services to be invoiced should be subject to Spanish VAT.
Finally, with respect to the obligation of withholding by the entity located in the United Kingdom, the consultation concludes that insofar as the entity located in that territory does not operate in Spain through a permanent establishment nor performs economic activity without a permanent establishment, there is no obligation to withhold tax on the income paid.