On the fifth anniversary of what is popularly called the “Google tax,” a group of experts in economics and tax law, with whom DEMÓCRATA has been able to speak with this Wednesday, has reached a conclusion after analyzing how that tax figure works, the tax approved by the Government of Pedro Sánchez in 2021 to tax certain services of large digital companies and help finance public services: between 2021 and 2025, the “Google tax” has raised 68% less than what was expected when it was approved.
The conclusions, set out in the work of Gregorio Izquierdo Llanes, Fernando Pinto Hernández, Alfredo Miguel Cabezas Ares, Cristina Enache, Íñigo Egea Pérez-Carasa and César García Novoa, form part of the latest study by the Instituto de Estudios Económicos (IEE), Tax on certain Digital Services (IDSD), presented at an event at the CEOE that this newspaper attended.
The difference is considerable: 3,290 million euros between the income the Government expected to obtain and what was actually collected. To put it in perspective, DEMÓCRATA has turned to the latest General State Budgets approved by Sánchez, corresponding to 2023. In that year, the Ministry of Transport allocated 3,343 million euros for the Atlantic and Mediterranean railway corridors: 1,648 million for the first and 1,695 million for the second. Had the projections for the Google tax been met, the additional income would have been practically equivalent to that annual investment. The comparison illustrates the magnitude of the shortfall, although it refers to an unfulfilled tax forecast, not to resources that the Treasury would have had available.
However, the collection is only one part of the problem. The report questions the economic effectiveness and the legal fit of a levy which, according to the specialists, can generate costs higher than the revenue it provides to public coffers. Although it targets large technology multinationals, part of its burden ends up being passed on to the companies that use their services. Added to this are problems of double taxation, administrative complexity, and the risk of commercial retaliation by the United States.
A forecast of 968 million euros per year that was never met
The Tax on Certain Digital Services (IDSD) was approved by Law 4/2020 and entered into force on the 16 January 2021. Its creation responded to a difficulty in international taxation: large technology platforms could obtain income in countries where they lacked a sufficient physical presence to be taxed on their profits in accordance with traditional rules.
Spain opted to establish a 3 % charge on certain digital income, while the OECD was negotiating a multilateral solution.
The economic memorandum of the law projected a collection of 968 million euros annually. Actual revenue has fallen far below that. In 2025, the Ministry of Finance collected approximately 410 million, the 42.4 % of that estimate.
The accumulated balance shows the discrepancy more clearly. Between 2021 and 2025, the collection amounted to about 1,550 million euros, compared with the 4,840 million that would have been obtained if, during the five fiscal years, the initial annual forecast had been met. The difference, 3,290 million, represents the 67.98 % of what was expected.
The conclusion is reached by comparing the estimate included in the approval of the tax with the income actually recorded. Therefore, it does not depend on a political assessment of its results.
For Gregorio Izquierdo Llanes, managing director of the IEE, and the professors Fernando Pinto Hernández and Alfredo Miguel Cabezas Ares, of the Rey Juan Carlos University, the issue goes beyond an unfulfilled revenue forecast.
Their analysis argues that the tax has not satisfactorily achieved any of its three objectives: to obtain the expected revenue, to effectively tax the digital economy, and to serve as a transition toward an international tax agreement. The authors also question the relationship between the revenue collected and the economic and administrative costs that its implementation generates.
Enache: a 3 % tax that can absorb 60 % of profit
The economist Cristina Enache, of Tax Foundation Europe, places one of the main weaknesses of the tax in its design: the Google rate taxes gross revenue, not profits. Therefore, its application does not depend on the profitability of the activity and can be required even when the company records losses.
The report explains it with an example. If a company obtains 100 euros in revenue subject to the tax and 15 euros in profit, the 3 % levy amounts to three euros, equivalent to 20 % of its earnings. If the profit is reduced to five euros, while keeping the same taxable revenue, the fee represents the 60 %.
They are not general effective tax rates for technology companies, but a hypothetical case that makes it possible to understand how a tax calculated on revenue absorbs an increasing proportion of profit as margins decline.
Enache also warns that the economic burden does not necessarily fall on the companies required to pay the tax. Platforms can pass part of the cost on to their customers through price increases, commissions, or surcharges.
The report includes two examples. Amazon announced in 2021 a 3 % increase in certain tariffs on its platform, while Google introduced a 2 % surcharge on advertising served in Spain. The companies that use these services to advertise or sell their products, including numerous SMEs, thus bear higher costs.
According to the estimates collected by the IEE, the cost passed on to Spain’s business fabric could be between 160 and 230 million euros per year. The figure is approximately between the 39 % and 56 % of the 410 million collected in 2025.
This is an estimate of the economic impact of the tax, not a figure that Spain’s Tax Agency requires directly from Spanish companies.
Enache also includes international research on the pass-through of digital taxes that calls into question that their cost falls exclusively on multinationals. Part may end up affecting advertisers, sellers, and consumers, with consequences for digitalization and competitiveness.
Egea: administrative costs and double taxation
Íñigo Egea Pérez-Carasa, senior associate in the Financial and Tax Department of Cuatrecasas, analyzes the practical and legal difficulties of a tax that levies certain services of digital advertising, online intermediation, and data transmission.
The IDSD applies to groups whose worldwide turnover exceeds 750 million euros and whose income subject to the tax in Spain exceeds three million euros, in accordance with the legal rules for calculating.
One of the main difficulties consists in determining where users are located and what income should be attributed to Spanish territory. For this, companies need localization systems, transaction records, and documentation on the methods used to calculate the taxable base.
Egea also warns of the risk of economic double taxation. Income subject to the IDSD may also form part of the profits that are subject to corporate income tax in the multinational’s country of residence.
As Spanish law configures the IDSD as an indirect tax, it is normally not covered by the compensation mechanisms provided for in international agreements to prevent double taxation of income.
The result may be an additional tax burden that is not neutralized by the usual conventional instruments, to which are added the compliance costs for the affected companies.
García Novoa challenges the legal nature of the tax
The professor César García Novoa, from the University of Santiago de Compostela, raises an objection that affects the foundations of the levy: its legal nature may not correspond to the classification assigned to it by law.
Law 4/2020 defines the IDSD as an indirect tax. García Novoa argues, however, that the nature of a tax must be determined by what it actually taxes, not by the name chosen by the legislator.
From that perspective, he considers that the IDSD has features of a direct tax on a component of business income. If this interpretation were to prevail, conflicts could be raised with the international agreements signed by Spain to prevent double taxation.
The professor also questions the method used to determine the taxable base. The tax attributes income to Spain through formulas based on the location and participation of users, rather than calculating individually the profit obtained in each transaction.
This difficulty is related to a transformation of the digital economy: large platforms can create value through data, intangible assets, and user participation without needing to have physical establishments in all the countries where they operate.
For García Novoa, the limitations of the traditional rules of international taxation do not justify any tax solution. The new levies must respect the principles of economic capacity, legal certainty, and international coordination.
His analysis also calls into question the fact that the thresholds established concentrate the application of the tax on certain large multinational corporations, mainly American, which may give rise to controversies about its possible discriminatory character.
These objections constitute a doctrinal interpretation of the legal fit of the tax. They do not amount to a general judicial declaration of incompatibility of the IDSD with international agreements.
United States: the risk of reprisals over oil, wine, and manufactures
Commercial controversy is another of the risks examined in the study.
On 14 January 2021, two days before the entry into force of the Spanish tax, the Office of the United States Trade Representative (USTR) concluded that the rate was discriminatory or restrictive for U.S. trade.
Pressure regained relevance again in February 2025, when the Trump Administration ordered a review of investigations related to digital taxes in several European countries, including Spain.
The report warns that any reprisals could affect activities unrelated to the tech business. Olive oil, wine, and certain Spanish manufactures are among the sectors potentially exposed to tariff measures.
If those measures materialize, they would harm exporting companies that are unrelated to the provision of digital services. The IEE presents this scenario as a commercial risk, not as an economic harm already quantified.
A gradual repeal with an estimated impact of 539 million on GDP
Specialists propose moving toward a gradual and conditioned repeal of the tax.
According to the economic estimates compiled by the IEE, its elimination could increase Spanish GDP by 539 million euros per year, as a consequence of the reduction of costs and distortions associated with the levy.
The figure is a projection developed from the assumptions of the economic analysis. It does not represent an increase in activity already observed, nor does it guarantee that the suppression of the tax will produce exactly that outcome.
Experts consider linking its elimination to the entry into operation of the OECD Pillar One, designed to redistribute part of the taxing rights over the profits of large multinational companies to the countries where their consumers and users are located.
Another possibility would be to reach an agreement with the United States that would offer guarantees against the imposition or reactivation of commercial tariffs related to the Spanish rate.
Five years after its implementation, the international solution that was supposed to replace these national levies has still not materialized. Meanwhile, Spain maintains a tax which, according to data examined by the IEE, has brought in €3,290 million less than expected and whose economic and legal design specialists who have participated in the study question.