Spain to propose digital services tax beginning 2019

By Alma Virto

The Spanish government will propose a temporary tax on digital company revenue this year and will aim for the new tax to take effect in 2019, Román Escolano, head of Spain’s Ministry of Economy, Industry, and Competitiveness, has confirmed.

Following the informal meeting of EU economic and financial affairs ministers held 27–28 April in Sofia, Bulgaria, Escolano said that it is urgent to approve the digital company tax. He said the revenue will be used to fund increased pensions, as directed by Spain’s finance minister, Cristóbal Montoro.

According to Escolano, Spain’s new tax on digital companies will be in line with the European Commission’s proposal for a digital services tax.

As such, the tax is expected to be a temporary, three-percent tax on digital firm revenue. The tax would apply to revenues generated from activities where users play a main role in value creation. It would also only apply to companies with total annual worldwide revenues of €750 million and EU revenues of €50 million or more.

The digital services tax would apply until international consensus is reached on a common way for taxing the digital economy.

Spain is following actions taken by the United Kingdom, Italy, France, and Germany, Escolano said. 

During the informal ECOFIN meeting, ministers discussed the EU Commission’s proposal for taxing the digital economy including the Commission’s proposal for an interim tax on revenue generated by certain digital activities, which has already motivated several Member States to take unilateral action.

Escolano has expressed that the implementation of this interim tax does not mean that the debate about taxing digital economy will not continue.

Declarations also were made in February expressing Spain’s intention to tax the revenues of the large digital companies by Maria José Garde, Spain’s Deputy Director General for International Taxation at the Ministry of Finance and Public Administration and current Chair of the OECD’s Global Forum.

Garde said that the tax would be provisional until the OECD achieves international consensus in how to tax the digital economy.