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Spanish Lower House Approves Draft Bills for Digital Services Tax and Financial Transactions Tax

On 30 July 2020, the Spanish Congress of Deputies (lower house of parliament) approved draft bills for a digital services tax (DST) and financial transactions tax (FTT). Both bills are now pending submission in the Senate for consideration and approval.

As previously reported, the draft bill for the introduction of the DST provides for the tax to be levied at a rate of 3% on digital services including online advertising, online intermediation services, and the sale of user data generated through a digital interface. The DST will be limited to companies with annual worldwide revenue exceeding EUR 750 million and revenue from digital service activities in Spain exceeding EUR 3 million. For companies that are part of a group, the thresholds will apply at the group level.

The draft bill for the introduction of the FTT provides for the tax to be levied at a rate of 0.2% on the consideration for the acquisition of qualifying shares issued by Spanish companies where:

  • the shares are listed on a regulated Spanish or EU stock market, or on an equivalent stock exchange market of a third country; and
  • the market capitalization value of the company exceeds EUR 1 billion as on 1 December of the year preceding the acquisition.

The FTT would also be levied on the acquisition of securities that correspond to depositary receipts representing qualifying shares as above, regardless of the place of establishment of the issuer of said securities, and on the acquisition of securities from the execution or settlement of convertible or exchangeable notes or bonds, financial derivatives, and financial instruments or agreements.

Both draft bills include that they will enter into force three months after they are published in the Official Gazette, as well as transitional provisions for determining if the relevant thresholds are met for the period between the date of entry into force and the following 31 December.

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