On Tuesday, February 18th, the Spanish Council of Ministers passed a Bill on Digital Service Tax for the Parliament’s approval, in line with the EU Digital Tax Package proposal published on March 2018, and in an attempt to adapt the Spanish tax system to the new digital business models.

This Digital Service Tax, also known as “Google tax”, is aimed at levying digital services in which there is an essential user contribution in the creation of value for the company providing those services, and through which the company monetizes those contributions, as well as at preventing large tech companies from averting tax by routing their profits to the bloc’s low-tax states.

It is intended to be an indirect tax that will place a 3% rate on earnings from online ads, deals brokered on digital platforms and sales of user data, excluding from its scope the sales of goods or services between users in the framework of an online intermediary service; and sales of goods or services contracted online through the website of the supplier where the latter does not act as an intermediary.

Pursuant to guaranteeing that SMEs are not affected by this tax, it shall only apply to companies with, at least, €750m in global revenue and which income from digital services affected by this law exceeds three million Euros in Spain.

In parallel, international negotiations are being held at the Organisation for Economic Cooperation and Development (OECD) towards a consensus on a cross border tax system, which in the words of the organisation’s director Pascal Saint-Amans “is the best way to address the tax challenges arising from the digitalisation of the economy”.  An agreement between member states is expected by the end of 2020.

The Spanish Finance Minister, María Jesús Montero, stated that the tax would not be implemented until December, to allow the OECD to reach an agreement on a separate, global tech tax. 

To the present day, no conclusion may be driven on the future Google tax regulation and its possible effects, taking into consideration that the EU Digital Tax proposal is still pending approval and so does the Bill on Digital Service Tax.  However, the Spanish coalition government has made clear its intentions to move towards a “fairer” tax system; either it derives from national regulation or from an international agreement at the OECD level.

Additionally, the Spanish government gave its green light to a “Spanish Tobin Tax”, an indirect tax on financial transactions intended to levy 0.2% rate on certain types of transactions for the acquisition of shares of listed Spanish companies with market capitalization above €1,000 million; hence, unlisted companies and SMEs shall not be affected.

The foregoing shall be applicable to all transactions included in its scope, regardless of the place of residence of the agents involved, and will not affect the primary market; thus, it  shall not have an impact on IPOs.

In like manner, the government has stated that transactions necessary for the functioning of market infrastructure, company restructuring transactions, intra-group transactions and temporary transfers, shall be exempt from the payment of this levy.

The person liable for tax is the financial intermediary who transmits or executes the purchase order and must submit an annual tax return. For these effects, the Ministry of Finance will publish annually, before December 31, the list of companies subject to the tax every year.


Maria Eugenia García, abogada de Cremades & Calvo-Sotelo 

De acuerdo