The Senate approved a new tax in October 2020 after Congress gave the green light to its processing in June of that same year. Finally, last Saturday, January 16, 2021, the Tax on Certain Digital Services, better known as the Google Tax, came into effect.
This tax will tax large technology companies with 3% of the income derived from online advertising services, data transmission and online intermediation. The payment of the tax will occur for each taxed service provision and the settlement will be quarterly.
As defined by the Government, current international tax regulations are based especially on physical presence and were not designed to compete with digital businesses. Therefore it can be said that the economy has changed a lot in recent times but the tax systems have not, at least not so much.
The intention of collection by the Government through the Google Tax is clear. In fact, the forecast is that about 970 million euros will be collected, yes, less than the proposed pre-pandemic figure, which was 1,200 million.
Not all EU countries have a Google Tax, but they are working on a global tax at the European level. In any case, other European countries were already considering similar taxes to achieve the same purpose, that large companies pay their tax quota. At the moment there is no consensus on the part of all the countries of the European Union to do it this way.
Companies affected by the Google Tax
It applies to all companies whose net turnover in the previous calendar year exceeds 750 million euros. And that also obtain more than 3 million income from activities subject to tax applied the rules to determine the taxable base. The tax is limited to only levying the following services:
- Data transmission services. Including sales or transfer of data collected about users that have been generated by activities carried out by the latter in digital interfaces
- Online intermediation services. The provision of multifaceted digital interfaces that allow users to locate or interact with other users. The delivery of implicit goods or services directly between users will also be applicable for the facilitation.
- Online advertising. The introduction, in a digital interface, of advertising aimed at users.
Therefore, the tax is levied on search engines such as Google, digital platforms such as Amazon and social networks such as Facebook. It may also affect multinationals for which their business is not exclusively based on user data.
Summing up, the Google Tax will be charged to large companies engaged in internet activity.
Payments, defaults and exemptions
Taking into account what is described in the previous section, it is paid by companies with revenues of more than 3 million euros. And also those that have worldwide annual revenues of 750 million euros. They include the aforementioned Google, Amazon, Facebook, Uber, Apple …, and many more. Companies seek to make taxation fairer in order to avoid the treasury.
And we will ask ourselves what would happen if the tax was not paid? Well, for now and although it has not been officially clarified if sanctions are expected. These will be 0.5% of the net amount of the turnover in Spain during the previous calendar year. On the other hand, it is expected that companies or companies that try to do tricks by hiding the IP, will also be sanctioned.
Only e-commerce that works without intermediaries and certain financial services are exempt from paying the Google Tax.
Does the Google Tax affect consumers?
Well, in principle as consumers it should not affect us, since it should not cause us to have any extra expenses. In any case, many specialized companies that have carried out various studies have confirmed that the Google Tax will imply a final cost for users.
And in what way could they do it? Well, very simple, as the large companies have to pay it, what they will do is pass the tax on the final price of the users.
In fact, some of these large companies have already spoken out on the matter and have confirmed that this will be the case.
- Amazon. It has stated that as of May 1, 2021, it will increase its rates to sellers by 3% for products sold in Spain.
Words from Amazon: “These surcharges will be included in your invoice or statement as a separate item per country“ - Google. The American giant was not going to be left behind, in its case the invoices for advertising served in Spain will rise by 2%. In this way, what they do is impose this rise on all customers who sign an advertising contract with Google Spain.
Google justification: “Taxes on certain digital services increase the cost of digital advertising.“