What is Google tax and who does it affect?

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The Government of Pedro Sánchez has approved the so-called 'Google tax' which taxes the activity of large internet companies. This is a new tax that the Council of Ministers had previously approved in January 2019 but whose entry into force was delayed by the early convening of general elections in Spain. Now, the political party Unidas Podemos and PSOE (Spanish Socialist Workers' Party) have taken up the idea again and the tax has just been approved.

What exactly is the Google tax?

The big Internet multinationals such as Google, Amazon, Facebook and Apple hardly pay any taxes on their activity in Spain. In 2017, Spain levied a very small amount of 24 million euros, even though the income of these conglomerates is clearly much higher.

So the Google tax intends to make the big tech companies pay for what they really generate with their activity. In Spain, the government expects to earn between 800-968 million euros annually thanks to this tax, whose philosophy is to achieve fairer taxation for all. 

What companies are involved?

All those technology companies with annual worldwide revenues of more than 750 million euros and whose revenues in Spain represent more than 3 million euros will be included under this new tax. Specifically, a 3% fee will be applied to online advertising services, online intermediation services and 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.

Which companies are exempt from paying the tax?

Excluded from this tax are all e-commerce activities involving the sale of goods or services between users within the framework of online intermediary service, and sales of goods or services contracted on the network through the website of the supplier of those goods or services where the supplier does not act as an intermediary. Digital services between entities that are part of a group with the direct or indirect participation of 100% will also be excluded from the Google fee.

Examples of companies that will be exempt are El Corte Inglés, Wallapop, Zara and 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 a cost for the consumer. However, a study by the consulting firm PwC presented in 2019 concluded that the rule 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.

All the money collected through the IDSD tax will later be used for public spending.

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