New taxes in Spain: Digital Services Tax and Financial Transactions Tax

The Spanish parliament has approved on October 15 two news laws[1] creating the tax applicable on determined Digital Services and the Financial Transactions Tax.

Please find below the main features of both taxes, that will enter into force on 16 January 2021, i.e. 3 months after their publication.

• Digital Services Tax

Building on the OECD Action 1 of BEPS[2] regarding the Tax challenges arising from digitalisation, this tax will levy 3% on online advertising, intermediation and sales of date obtained from information supplied by Spanish users.

The Spanish entities as well as foreign companies established or not within the European Union (EU) with net revenues exceeding EUR 750 million worldwide and EUR 3 million in Spain in the previous years will subject to this indirect taxation.

Amongst others, are excluded of its scope, the sales of goods or services made online through the website of the supplier of those goods or services in which the supplier does not act as an intermediary, the sales of goods or services between users in the context of an online intermediation, the supply of intermediation services where the sole or main purpose is the provision of digital content.

The taxpayers should pay the Tax quarterly with an additional requirement for the companies not established within the EU, which are imposed to designate a representative in Spain.

The penalty shall consist of a pecuniary fine of 0.5 percent of the net turnover of the previous calendar year, with a minimum of EUR 15,000 and a maximum of EUR 400,000 for each calendar year in which the breach has occurred.

• Financial Transactions Tax

In line with other EU Member states and the proposal of the EU Commission, Spain has decided to tax, at a rate of 0.2% on the amount paid (or the last closing market price), the acquisition of shares in listed Spanish companies with a market capitalization above EUR 1, 000 million.

Likewise, certificates of deposit representing the shares of Spanish companies and acquisitions of securities with the aforementioned characteristics deriving from the execution or liquidation of convertible debentures or bonds or any derivative financial instrument will be also subject to taxation.

However, the tax will not impact the following acquisitions:

• Derived from the issuance of shares and public offerings of sale (Initial Public Offerings), as well as the instrumental acquisitions prior to said operations made by placers and insurers;
• Transactions necessary for the functioning of market infrastructure;
• Restructuring transactions;
• Transactions taking place between companies in the same group; or
• Temporary sales.

This Spanish tax will be paid monthly, irrespective of its residence, by the investment services company or credit institution acquiring the Spanish shares on its own behalf, in which case it will be liable as a taxpayer, or on behalf of third parties, in which case it will have the status of a substitute for the taxpayer. Thus, the taxable person will be the financial intermediary who executes or receives the purchase order. Moreover, the acquirer should communicate the information about the taxable transaction and its amount.

No specific penalty regime has been included in the Law. However, a reference is made to the general penalty regime of the Spanish General Tax Law.

[1] Law 4/2020 and Law 5/2020 on October 15, 2020

[2] Base erosion and profit shifting framework (BEPS) of Organisation for Economic Co-operation and Development (OECD)