This week a draft was approved in Spain that establishes a special tax for technology companies which many of them support for their Internet business. This rate is colloquially being called ‘Google rate’. But what does this rate mean? And what could be your future considerations?
What is this new Google rate?
The Google rate to a bill is approved by the Council of Ministers of Spain. It aims for large technology companies to pay their taxes in Spain. Although, this regulatory project calls it Google rate, it is not only directed to the giant of Mountain View, but also to other large companies in the Internet sector such as Amazon, Uber, Cabify and many others.
Therefore, this regulatory proposal requires large technology companies mainly those that provide their services over the Internet and do not avoid paying taxes in Spain. Technology companies that obtain certain economic benefits will be applied to this so called Google Rate.
To whom would this tax apply?
Not all the companies that carry out digital activities will have to pay this tax, according to the Project, two characteristics are established:
(i) Companies with a global turnover of more than 750 million euros
(ii) Companies with turnover in Spain greater than 3 million euros.
In addition, the companies susceptible to this payment are the technology companies related to targeted advertising. All technology companies with targeted advertising, which segment their users depending on their tastes or interests and information they obtain for example through cookies or some other interaction scheme will pay the Google.
How much is the Google Rate?
Technological companies that comply with the filters mentioned above are obliged to pay a 3% tax on the total income generated annually. Particularly, the Spanish government seeks to raise about 1,200 million euros.
What implications does it have for the future?
One of the main implications is that this treatment generates a strong precedent for possible related regulatory considerations. It can be replicated in other countries in the coming months or years.
Another consideration is that a specific scope of action is recognized for this type of company, called OTT because it is supported on the Internet, specifying that the segmentation of the users of a specific geographical area is exploited and therefore tax must be paid. It is worth mentioning that this is a normative proposal that should be defined in Spain its final applicability.
Also published on Medium.