In short
The Spanish Tax Directorate (STA) has recently issued relevant guidelines on the VAT treatment applicable to the supply of NFTs and the role of marketplace intermediaries, decision V2274-22.
STA’s VAT approach
Following the criteria for ruling V0486-22, the STA held that a person who develops and then sells NFTs should be considered an entrepreneur for VAT purposes. Furthermore, NFT sales through platforms/marketplaces should qualify as an electronically delivered service (ESS).
STA distinguishes two different digital assets:
- The underlying digital file that can be digitized as an image, video, song or other digital content.
- NFT, which involves the intangible property to be transferred.
The rationale for the STA treating the sale of NFTs as an ESS bases itself when selling NFTs is that the STA understands that what is transferred to the acquirer with the sale of an NFT is the intellectual property of the underlying digital file rather than the digital archiver itself as an existing bodily good.
STA treats the sale of NFTs through an online platform/marketplace as a digital service (ESS), that the sale of NFTs is subject to 21% VAT. Recently, the STA applies the presumption stated in art 9 bis(a) of IR 282/2011 and understands that the NFT owner sells the NFT to the platform as long as it is not possible for the seller to know the identity of the customer and therefore cannot comply with tax obligations that follow of this.
Taking into account the above, STA states that when selling NFTs through a marketplace, there are two different offers of services:
- A provision of services by the NFT Seller to the Platform which will only be located in Spain when the NFT Marketplace is based in Spain
- A supply of services by the Platform to the NFT Buyer will be located in Spain if (i) the Platform can identify the NFT Buyer as a specific person based in Spain or (ii) the Platform can identify the NFT Buyer as a taxpayer based in Spain
The STA warns that electronic interfaces, such as the online marketplaces or (NFT marketplace), have certain record-keeping obligations that enable the STA to check whether the VAT has been correctly reported and paid.
Please note that the binding consultation also refers to the potential application of the U&E rule when the ESS carried out from Spain is located outside the territory of the EU, but the effective use and exploitation is carried out in Spain. In this connection, we would like to mention that with the current draft of the state budget, the VAT Act will exclude the application of U&E for ESS. If the current version enters into force, the Spanish U&E rule will no longer apply to ESS from 1 January 2023.
Conclusion
NFT marketplaces based in Spain will be considered to perform procurement and provision of services (ESS) in Spain when acting as intermediaries. To avoid falling under art. 9 bis(a) of IR 282/2011, the NFT marketplace should provide the NFT seller with the necessary data to the NFT buyer so that the former can determine the VAT location for the transaction and comply with the corresponding tax obligations.
