The Government of Pedro Sánchez has approved in the Council of Ministers the tax that we know as the ‘Google rate’ that is levied on the activity of large internet companies. It is a new tribute that the Council of Ministers had previously approved in January 2019 but whose entry into force of this bill was delayed by the early calling of general elections in Spain. Now, Unidos Podemos and PSOE have taken up the idea and the tax has just been approved.
What exactly is the Google rate?
The large Internet multinationals hardly pay taxes on their activity in Spain. Google, Amazon, Facebook, Apple … taxed in 2017 in Spain the insignificant amount of 24 million euros, when their income is clearly much higher; is the greatest example. It is a tax for the giants of the digital economy that, thanks to the characteristics of their businesses, have been able to avoid the tributes that in theory they owe to countries where they have tens of millions of customers (and that, therefore, make them earn a lot money).
The Google rate -name baptized by the media when the intention to implement this tax was announced-, thus intends that large technology companies pay for what they really generate with their activity. In Spain, the government expects to earn between 800-968 million euros per year thanks to this tax, the philosophy of which is to achieve fairer taxation for all. Its official name is “Tax on Certain Digital Services” – IDSD- and the tax collection forecast coincides with the highest threshold of the range of the Independent Authority for Fiscal Responsibility (AIReF), which estimated this amount at 546 and 968 million.
What companies does it involve?
To all those technology companies with worldwide annual revenues of more than 750 million euros and whose revenues in Spain represent more than 3 million euros. Specifically, a 3% rate will be applied to online advertising services, online intermediation services and to the sale of data originating from information provided by the user during their activity. Examples of this will be: Telefónica, Google, Amazon, Uber, Airbnb, Apple and Facebook.
What companies are exempt from paying the tax?
Any electronic commerce activity that involves the sale of goods or services between users within the framework of an online intermediation service is excluded from this tax; and the sales of goods or services contracted on the network through the website of the provider of those goods or services where the provider does not act as an intermediary. Digital services carried out between entities that are part of a group with a direct or indirect participation of 100% will also be excluded from the Google rate.
Examples of companies that will be exempt: El Corte Inglés, Wallapop, Zara or Cabify.
Will it affect me as a consumer?
The ‘Google tax’ does not tax the user of digital services, so in principle it does not represent an expense for the consumer. However, a study by the consulting firm PwC presented in 2019 concluded that the standard will indirectly affect SMEs and consumers in our country with an impact of between 515 and 665 million euros, which would be about 30 euros for each Spanish digital consumer .
What will the Spanish government do with the money raised?
All money raised through the IDSD tax will later go to public spending.
