SPAIN

Indirect Tax News - December 2020

Digital Service Tax

On 16 October 2020 the law on the Tax on Certain Digital Services (the DST) was published in the Spanish Official Gazette. The DST will enter into force on 16 January 2021 (three months from the time it was is published).

This new tax is an indirect tax compatible with the VAT and will be levied on the provision of certain digital services involving users located in the Spanish territory.

In this article we briefly discuss the main features of the DST.

Taxable event

The following will be considered taxable events under the DST:

  • Online advertising services – this includes the placing of advertisements on a digital interface where the targets of the advertised services are the users of that interface.
  • Online intermediation services – this involves making available a digital interface that helps users locate or interact with other users, or that allows users to render services or supply goods directly between them.
  • The sale of data generated from information provided by users – this involves transmission of user data related to users’ activities on digital interfaces.

Location of the services

It is generally understood that digital services are performed in the Spanish territory when the user is located in the territory, regardless of whether the user has paid any amount that represents income derived from the service.

Taxable payers

DST taxpayers will be companies with a net world-wide turnover in the previous year that exceeds EUR 750 million and whose revenues from digital services affected by the tax exceed EUR 3 million in the previous year in Spain. When a company´s activities start at some point in the immediately preceding year (in other words, the company did not carry on the activities for a full 12 months in the previous year), determination of whether it satisfies the revenue thresholds will be based on an annualization of its revenues.

The above-mentioned threshold applies at the Group level.

Taxable amount and tax rate

The tax base will be the gross income, excluding the VAT or other equivalent taxes (if any), obtained by the taxpayer on the provision in the Spanish territory of the digital services subject to DST, following the DST location rules. Depending on the services rendered, special rules for determining the taxable base will apply.

The tax rate will be 3% on the taxable base derived from DST services.

Other important considerations

The DST will accrue when the taxable service is provided or executed. However, if partial or total fees for the services are received, the DST will be accrued when the payments are received.

The tax period will be quarterly and will coincide with the calendar quarter.

Apart from the general tax penalties stated in the General Tax Act, a special penalty regime will apply regardless of whether the necessary systems, mechanisms, or agreements are in place to determine the location of the users in the Spanish territory. The maximum penalty will be EUR 40,000 and the minimum will be EUR 15,000 per year the taxable payer has not accomplished the implementation.

To date, the Spanish Authorities have not published official interpretative guidance related to the DST. But, we understand that the authorities are working on it. Consequently, interpretation of the wording of the DST Act could lead to controversy regarding who may be a taxable payer and what constitute taxable events.

Amparo Sanchis Sierra
amparo.sanchis@bdo.es

Álvaro Gómez-Elvira
alvaro.gomez@bdo.es