Except for Spain’s commitments to the European Union on value added tax ("VAT"), at present there is no tax regime in Spain which specifically regulates the trading of goods and services on the Internet. Therefore, the same taxes and the same rules as those for other forms of commerce apply.This approach is in tune with the principles enunciated by the Spanish Tax Agency in the Report of the Commission analyzing the impact of e-commerce on the Spanish tax system prepared by the Office of the Secretary of State for Finance.

With respect to VAT and formal VAT obligations, the three basic bodies of legislation emanating from the European Union are as follows:

– Council Directive 2002/38/EC of May 7, 2002 amending temporarily Directive 77/388/EEC (Sixth Directive on the uniform basis of assessment for VAT) as regards the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services, which was transposed into Spanish law in 2003 through the relevant amendments to VAT Law 37/1992.

– Council Regulation (EC) No. 792/2002 of May 7, 2002 amending temporarily Regulation (EEC) no. 218/92 on administrative cooperation in the field of indirect taxation (VAT) as regards additional measures regarding electronic commerce.

– Council Directive 2001/115/EC of December 20, 2001 amending Directive 77/388/EEC with a view to simplifying, modernizing and harmonizing the conditions laid down for invoicing in respect of VAT.The terms of this Directive have been transposed into Spanish legislation through Royal Decree 1496/2003 regulating billing obligations. This Royal Decree takes effect from January 1, 2004.

The first two bodies of legislation referred to are temporary in scope since they must be reviewed by the EU Council before June 30, 2006, which must either adopt the necessary measures on an adequate mechanism for taxation in the place of consumption or extend the three-year period.

The provisions of these Directives and their transposition into Spanish law are examined in the section on the indirect taxation of ecommerce.