The Effect of the “Google Tax” on Spain

Published on 4 November 2020

Despite the fact that at the OECD level no agreement has been reached about how to approach the taxation of digital services, the Spanish government decided to approve the so-called “Google Tax,” which will enter into force definitively on 16 January 2021.

This new tax applies to certain online publicity and intermediation services – for example, those provided by Google, Facebook, Booking, Airbnb, Amazon, etc., as well as to the sale or assignment of data collected from users. It is important to note that the sale of goods or services through a provider’s webpage, where said provider does not act as an intermediary, is excluded. Here is where the question arises of whether Netflix, HBO, etc. would be subject to the tax. In principle, however, the government’s intention is for these digital platforms to be taxed for the business that they generate in Spain.

In order to determine whether the rendering of digital services is carried out in Spain, the location of the user at the time the services are rendered will be used. In this respect, and as a personal opinion, it causes certain unease which specific data will be transferred to the state regarding each user, since in the end it is the users, with their online activities, who cause this tax to accrue.

Finally, it is known that this tax is aimed at large companies in the digital sector, and specifically United States companies, whose turnover exceeds 750 million euros (3 million in Spain); this means that retaliation from the US government cannot be ruled out. If to this we add scarce collection and the harmful effect on other taxes (VAT, corporate income tax), we cannot affirm that this tax will have a positive net effect on national budgets.