Tax Newsletter - October 2020 | Legislation

The laws on the tax on financial transactions and on the tax on certain digital services have been published

The October 16, 2020 edition of the Official State Gazette (BOE) published Law 4/2020 on the tax on certain digital services (IDSD) and Law 5/2020 on the financial transaction tax (ITF), both dated October 15, 2020. The two taxes come into effect three months after publication of their laws, namely on January 16, 2021.

The versions published in the BOE match those sent to the lower house of the Spanish parliament, because no amendments were added by the upper house. The only difference is a minor error in the law on the tax on certain digital services. In an alert published on October 9, 2020 (see here) we summarized the main features of both taxes.

You are reminded that the tax on certain digital services must be assessed quarterly, so the first assessment will be for the first quarter of 2021. This makes final provision four of Law 4/2020, relating to the self-assessments for the second and third quarters of 2020 void of content.

The financial transaction tax is to be assessed monthly, so the first assessment will be for transactions performed in the first half of January 2021. Another relevant date for this tax is Wednesday December 16, 2020, which is when any Spanish companies with a market capitalization above one billion euros must be identified. It is the transfers of shares in these companies that will be subject to the new tax in 2021.

Publication of the reference rates for calculating the annual equivalent rate for fourth calendar quarter of 2020, for the purpose of characterizing certain financial assets for tax purposes

The September 28, 2020 edition of the Official State Gazette (BOE) published the decision of September 23, 2020, by the Office of the General Secretary for the Treasury and International Finance, which, as is now the custom, sets out the reference rates that will apply for the calculation of the annual effective interest rate for the purposes of characterizing certain financial assets for tax purposes, this time for the fourth calendar quarter of 2020. The rates are as follows:

• Financial assets with terms of four years or less: -0.359 percent.
• Assets with terms between four and seven years: -0.221 percent.
• Assets with ten-year terms: 0.210 percent.
• Assets with fifteen-year terms: 0.509 percent.
• Assets with thirty-year terms: 0.873 percent.

In all other cases, the reference rate for the period closest to the period when the issuance is made will be applicable.