Day 1 of the Spanish Digital Services Tax: And Now What? A Wave of Tax Policy, Legal Interpretation and Compliance Challenges

The Spanish Digital Services Tax came into force on 16 January 2021 after a long and turbulent journey with the ambition to serve as an interim measure pending the long-awaited multilateral solution. This article aims to critically analyse the main features of the tax and further reveal and assess the primary challenges that its implementation and day-to-day management are likely to prompt, specifically: the vague delimitation of some of its provisions with the subsequent damage to legal certainty, the (almost) unfeasible access to the data required to calculate the relevant taxable revenues that render the tax ultimately unworkable, and the tax planning opportunities that may be exploited by taxpayers to minimize their tax liabilities, inter alia.

Finally, the doubtful consistency between the design of the tax and the alleged tax policy guideline behind it (i.e., the ‘value creation" principle) is assessed. Ultimately, the question remains of whether this path is genuinely worth exploring. Are we really willing to endanger fundamental principles of the rule of law for a temporary patch targeting a few multinationals?

Day 1 of the Spanish Digital Services Tax: And Now What? A Wave of Tax Policy, Legal Interpretation and Compliance Challenges Articles