Spain planning on going ahead with ‘Google tax'

The plan will go ahead despite threats of punitive US tariffs on French, Italian, and British goods

Spain will press ahead with the creation of a tax on certain digital services, following in the footsteps of France, Italy, and the UK, El Pais announced Thursday. This so-called “Google tax” could, however, raise the ire of the United States, which has already threatened France with sanctions over a similar levy.

In Spain, it is estimated that a tax similar to the one introduced in France could yield €850m a year.

According to sources close to the caretaker government, the ultimate decision to go ahead with the tax will lie with the next Spanish government, which is likely to be a coalition administration led by the Socialist Party (PSOE) with left-wing Unidas Podemos as partners. But the previous PSOE administration had already included such a tax in an agreement it reached in October 2018 with Podemos ahead of its failed attempt to pass the 2019 budget. The legislation was sent to Congress for approval, but it was abandoned after parliament was dissolved ahead of the recent general election.

The levy designed by Spain included a tax rate of 3%, which would be applied to certain digital services from tech giants whose global revenues exceed €750 million and whose earnings in Spain are greater than €3m. The decree defined three taxable factors in which the participation of end users is decisive for the creation of value: advertising aimed at the users of a digital interface (webpage, technological platform, software or social network); the supply of a platform that allows users to locate other users to trade with them (such as online retailer Amazon); and finally, the sale or transfer of data collected from the users of a website or platform.

Amid threats of punitive US tariffs in response to the introduction of such a tax, sources close to the caretaker finance minister pointed out that the planned Spanish legislation does not target companies according to their country of origin, and argued that the ideal approach would be for such measures to be approved on a joint basis across either European Union (EU) or OECD countries.  

Still, there are no plans for this to happen before the end of 2020 at the earliest, as El Pais stresses.

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