Spain to start taxing DST on January 2021

Oct 22, 2020 | Digital Services, VAT Updates

VAT Updates Europe

The Spanish government has released the Spanish Digital Service Tax (DST) legislation (1) which will come into force on 16/01/2021 and whose main aim is to tax big Digital Service companies. This approach was introduced by France on 2019 and the tax was also known as “GAFA tax”, meaning it was primary aimed to Google, Apple, Facebook and Amazon (2).

Spain states this law will tax digital services for which Spanish users contribute to generate and add value by original content creation, which at the same time is used by companies to generate revenue.

Since the DST is focused on rendered services, without considering the nature of the provider, this new tax shall not be considered as an income or wealth tax, but rather as an indirect tax, more alike to VAT.

Find below a description of the Spanish DST main characteristics.

Taxable digital services:

  • The placing on a digital interface of advertising targeted at users of that interface (“online advertising services”).
  • Services consisting of making available digital interfaces to users which allow them to find other users and interact with them, and which may also facilitate the provision of underlying supplies of goods or services directly among users (“online intermediation services”).
  • The transmission (including sell or cession) of data collected about users which has been generated from such users’ activities on digital interfaces (“data transfer services”).
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Considering the nature of the current law, the following activities are excluded and not subject to taxation:

  • sales of goods or services contracted online through the website of the provider of those goods or services, in which the provider does not act as an intermediary;
  • deliveries of underlying goods or services that take place between users, within the framework of an online intermediation service;
  • the provision of online intermediation services, when the sole or main purpose of said services provided by the entity that carries out the provision of a digital interface is to provide digital content to users or provide communication services or services payment;
  • the provision of financial services regulated by regulated financial entities;
  • the provision of data transmission services, when performed by regulated financial entities;
  • the provision of digital services when they are carried out between entities that are part of a group with a direct or indirect 100 percent share.

Taxable persons:

Companies subject to DST need to exceed the following two thresholds:

  1. a) that the net amount of its turnover in the previous calendar year exceeds 750 million euros; and
  2. b) that the total amount of their income derived from the provision of digital services subject to tax, once the rules provided for in article 10 have been applied, corresponding to the previous calendar year, exceeds 3 million euros.

Having these two thresholds in place will ensure only big tech companies with an important presence in Spain are taxed.

Taxable base:

For Online advertising services, the tax rate will be applied to the proportion of the income that represents the number of times the advertising appears on devices that are located in Spain with respect to the total number of times it appears in any device, regardless of where they are.

For Online intermediation services in which there is facilitation of deliveries of underlying goods or services directly between users, the tax rate will be applied to the proportion of the total income  obtained represented by the number of users located in Spain with respect to the total number of users who take part in that service, wherever the place they are located.

The taxable base of the other intermediation services will be determined by the total amount of income derived directly from users accounts that were created with a device located in Spain and allow them to access to the digital interface, regardless of the time the account was created.

For Data transfer services, the taxable base is the proportion of the total income representing the number of users who have generated said data that are located in Spain with respect to the total number of users who have generated said data, irrespective the place where they are located.

Tax rate: 3%

Filing frequency: Quarterly


If you believe this development impact your business, do not hesitate to contact GVC.


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