Spain: Draft legislative proposal for digital services tax

Spain: Draft proposal for digital services tax

The Spanish government on 18 February 2020 gave its approval for draft legislation to impose a tax on certain digital services. The tax would be imposed at a rate of 3%.


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The draft digital services tax legislation will now be sent to the parliament, thus starting the next phase in the legislative process. The draft law has not yet been published; thus, the following information aims to provide an overview about the proposal. 


The draft digital services tax legislation generally resembles a proposed EU directive as well as the digital services tax measures in France and Italy. The draft legislation in Spain is a second attempt to enact a new tax that would apply to certain digital services; an earlier draft was considered in January 2019.

The digital services tax proposed in Spain is conceived as a transitional and unilateral measure that would apply until future legislation in Spain transposes an EU directive for the taxation of digital services or until a consensus for the taxation of digital services is reached by the Organisation for Economic Cooperation and Development (OECD) and the G20 countries.

The Spanish government expects that the proposed digital services tax would raise approximately €968 million a year.  

Digital services tax, details

In general terms, the proposed digital services tax would be levied on provisions of certain digital services—all of which have in common that value is created by online user interactions in Spain, by which user data is exploited, and ultimately revenue is generated. This is referred to as “user value creation.” 

Accordingly, Spain’s proposed digital services tax would not only affect “digital companies” but also would affect digital business models. The fact that the tax would focus on services rendered, without regard to resulting profits, may explain why the tax has been designed as an indirect tax such as a value added tax (VAT), and thus would fall outside the scope of income tax treaty relief measures.

Taxpayers subject to the tax

Companies that operate globally and have a “significant digital footprint” in Spain would be subject to the proposed digital services tax if the following two thresholds are satisfied (at the consolidated group level):

  • Net turnover of more than €750 million (globally)
  • Total revenues from taxable provisions of digital services in Spain of more than €3 million 

Taxable services

The digital services tax would be levied solely on provisions of certain digital services rendered in Spain (i.e., where the services somehow involve users located in Spain). The definition of “digital services” therefore would be critical because it would define the type of services that would be subject to the proposed tax. These would include:

  • Online advertising services targeted at users—that is, services consisting of the placement by an entity on its own or on a third-party digital interface, of advertising targeted at the users of that interface (in other words, any form of commercial digital communication aimed at promoting a product, service or brand, and targeted at the users of a digital interface based on the data gathered by them)
  • Online intermediary services—that is, those made available to users of a multi-sided digital interface that facilitates either the underlying supply of goods or services directly between users, or the locating of and interaction with other users (digital platforms)
  • Data transmission services—that is, the transmission of data collected about users generated by the activities of users on digital interfaces

The draft digital services tax legislation in Spain also would address various situations that would not be taxable, and many of these would coincide with those situations noted in the EU’s proposed directive. 

Place of supply of digital services

The provision of digital services would be deemed to take place in the tax territory where any of its users are located. The term “user” would be broadly defined to apply to any person or entity using a digital interface. A user would be deemed to be located in Spain under various rules, all of which have in common the fact that the critical factor would be where the device enabling the services (e.g., a mobile phone) is located at each moment.

There would be a general assumption whereby a particular device of a user would, in principle, be deemed to be located based on its Internet Protocol (IP) address. Nonetheless, evidence to the contrary could be allowed to disprove this assumption.  

Tax base

The tax base would be the amount of gross revenues earned by the taxpayer for each provision of taxable digital services in the tax territory. The draft legislation would provide rules for determining the portion of revenues to be taxed in each transaction that, for the most part, would depend on the proportion of worldwide users located in Spain. 

Tax rate

The tax would be imposed at a rate of 3%.  

Compliance aspects

The new digital services tax would be self-assessed by taxpayers on a quarterly basis. For 2020, transitional rules would apply so that only one payment (instalment) of the tax would be due at the end of the year, presumably based on 100% of taxable amounts received during the year.

Taxpayers would be subject to certain formal obligations, such as: (1) having to appoint a representative for those taxpayers not established in the EU; (2) having to determine that systems, mechanisms or arrangements are set in place to allow for the determination of users’ devices located in the tax territory of Spain; and (3) recordkeeping to establish proof identifying the place where the digital services were provided.


For more information, contact a KPMG tax professional in Spain:

Julio Garcia Muñoz | +34 91 456 5908 |

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