Digital Services Tax in Spain

The Spanish DST Bill has come into force in January 16, 2021.

The Spanish DST Law was approved in October 2020, although it came into force for the first time last January 16, 2021. Even though Spanish DST Law has been enacted, further regulation describing how to effectively settle the tax burden has not been released yet; therefore, there are still several outstanding practical issues concerning DST implementation (i.e. the self-assessment Form to be filled) which need to be clarified.

The Spanish Government has projected that it will raise €0.968m per year through DST.

The main features of this draft bill are as follows:

  • DST is acknowledged to be an indirect tax and as such it would not fall within the scope of Double Taxation Treaties signed.
  • Taxpayers: those legal persons or entities who meet the following requirements: (i) net revenues during the prior calendar year exceeding 750 million euros, and (ii) the total amount of revenues derived from the development of the activities subject to DST taxation in Spain during the prior calendar year exceeds from 3 million euros.

It is not relevant whether or not the taxable persons are established in Spain.

Corporate groups would need to determine whether these requirements are met at the group level. Thus, if both requirements are met on a group basis, every individual entity in the group which renders these services in Spain would be liable to DST regardless of the individual amounts of revenue.

  • Taxable revenues are those arising from the following activities: (i) online advertising services; (ii) data transmission services; and (iii) intermediation services.
  • Location of the users of the services: digital services are deemed carried out within the Spanish territory whenever the user is located in Spain. In particular, several localization rules have been set for each type of taxable digital service.
  • Taxable base: overall revenues obtained from the aforementioned activities, VAT excluded, constitute the DST taxable base.
  • Tax rate: Spain has also decided to adopt the rate suggested by the EU proposal and the DST will apply at a rate of 3 per cent.
  • Tax returns/forms: DST returns would be filed on a quarterly basis. Due to the lack of further regulation about DST for the time of coming into force of DST Law, the deadline to file DST self-assessment corresponding to the first quarter 2021 (first DST self-assessment due) has been postponed until July 2021.

The Spanish DST Law acknowledges that the foregoing rules are aimed at covering an intermediary period until the European DST Directive is finally approved, in which case local regulations would be amended accordingly.

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