Spain: Final rules for digital services tax; first declaration is due July 2021

Decree finalizes the digital services tax procedures with certain minor changes from the procedures proposed in late 2020.

Decree finalizes the digital services tax procedures with certain minor changes

The Spanish tax authorities are preparing for the first digital services tax declaration to be filed in July 2021 for the first and second quarters of 2021.

Royal Decree 400/2021 (8 June 2021) includes regulations regarding the digital services tax and in particular with regard to the procedures relating to the tax. This decree finalizes the digital services tax procedures with certain minor changes from the procedures proposed in late 2020. Read TaxNewsFlash

Among the changes in the final version of the procedures are measures concerning the determination of the location of user devices. As well as determining the location of the user device, other requirements established under the final digital services tax rules concern the maintenance of records to be prepared for each quarterly assessment period and a registration requirement.

Guidelines for application of the digital services tax

The tax authority on 10 June 2021 issued, for public comment, a draft document with guidelines for establishing a framework for practical application of the digital services tax. Included in the draft document are measures addressing:

  • Taxable event of advertising: “Targeted” advertising by an entity is deemed to be the entity that uses the user’s data. Such data may have been collected previously or during navigation, and not necessarily collected from the use of digital interfaces. As such, it can be data provided by the user at the time of registration or at a different moment in time, as well as the data acquired from third parties. There will be only one taxpayer of such digital service per transaction (that is, the entity that includes the advertising in the digital platform) to avoid a “cascading” tax effect.
  • Taxable event of intermediation: An area clarified by the tax authority relates to the non-taxation in the event that the supplier does not act as “intermediary.” For purposes of determining the “intermediary,” it will be necessary to take into account the legal and economic substance of the transaction. The tax authority referred to several tax rulings in which the intermediary is deemed to be the entity that receives the fee commission depending on the conclusion of the contract on which it “intermediates.” In any event, the tax authority concluded that this issue must be analyzed on a case-by-case basis, according to the specific clauses of the contract or legal business established between the parties, and the underlying economic reality.
  • Non-taxation of digital services provided between related entities: The tax authority clarified that there is no taxation when services take place between entities of a group as long as there is a 100% ownership by the parent of the group.
  • Calculation of the tax base: The tax base for all types of digital services subject to the tax is determined on a transaction basis. The tax is calculated on a transaction-by-transaction basis, and not in an aggregate manner for a set of transactions for a certain period, regardless of the fact that settlement or payment is made for all transactions conducted in a given period. With regard to online advertising services, the following measures are to be considered:
    • If the advertising is the result of agreements between the taxpayer and the advertiser or its representative, each agreement for the provision of online advertising services (typically, corresponding to an advertising campaign)
    • If “programmatic advertising” such as when the ads are included in space advertising of the owner of the digital interface, whether directly or through a network of affiliation, and through platforms that serve to optimize and automate the sale of advertising spaces (known as “supply side platform”), the set of services provided to the taxpayer during the settlement period
    • If online intermediation services with an underlying transaction, each intermediation service conducted with respect to each underlying delivery of goods or provision of services that is facilitated by the digital interface
    • If  another online intermediation service, each contract between taxpayer and users, whose purpose is to open or renew the account
    • If the transmission or transfer of data, each contract entered into by the taxpayer with the purchaser whose objective is to provide a transmission service of data

Additionally, the draft guidelines address certain regularization processes as well as a penalty regime or interest for late payment.  

KPMG observation

According to recent informal meetings with the tax authority, it is expected that additional clarifications will soon be issued in a set of “frequently asked questions” (FAQs).

Digital services tax return

Order HAC / 590/2021 (published 11 June 2021) reflects finalization of the tax return (490 Form) for the digital services tax.

  • The new 490 Form will be available only in electronic format and must be submitted electronically.
  • The return is to be filed quarterly, during the month following the end of the corresponding quarter. However, the declaration for the first quarter of 2021 will be filed during the declaration period for the second quarter—that is, from 1 July 2021 to 2 August 2021 (28 July in case of direct debit).
  • The return must be submitted even if there is no amount of tax owed.
  • A new specific page of 490 Form (not provided in the draft) addresses regularization of provisional data—that is, information that is to be provided once the final amount is known. This procedure only refers to provisional data and this differs from the procedure established for amending incorrect data reported in a previous return.

KPMG observation

Most of the expected guidance and regulations regarding the Spanish digital services tax have been approved—except a modification of the census form that would communicate the condition of the taxpayer liable for the digital services tax. That is still pending final approval and is expected to be published soon.


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

Carlos Guerrero Ros | (+34) 91 456 34 00 | carlosguerrero@kpmg.es

Julio Cesar Garcia | (+34) 91 456 59 08 | juliocesargarcia@kpmg.es

Raquel Benito | (+34) 91 451 31 98 | rbenito@kpmg.es

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