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Taxand Spain provides an overview of the current tax landscape in their latest newsletter.
Free legal aid services are not subject to VAT
A ruling was requested on whether the provision of free legal aid services within the framework of Law 1/1996 of January 10, 1996 on free legal aid is subject to VAT.
These services have traditionally been considered not subject to VAT. In its ruling V0170-17 of January 25, 2017, however, the DGT changed its position in the light of recent case law emanating from the Supreme Court, concluding that such services were subject to VAT at the standard rate of 21%.
However, following the recent entry into force of Law 2/2017 of June 21, 2017 amending the aforementioned Law 1/1996 (referred to in the legislation section of this newsletter below), the DGT has once again changed its position, returning to the traditional view that these services are not subject to the tax. This conclusion is based on the argument that services provided within the framework of the free legal aid system are mandatory services rendered free of charge, and that the amounts received by the professionals involved (from the Bar Associations) are for indemnification purposes.
Discover more: The latest on state aid and other Spanish tax developments
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Businesses with operations across Spain should take note of the updates to ensure they remain compliant.