Tuesday, September 22, 2020
ISChamber News

E-commerce in Spain

E-commerce-related activities are now being regulated more specifically by Spanish legislation.

Therefore, in transactions involving e-commerce, regard should be had to legislation on distance sales, advertising, standard contract terms, electronic signatures, data protection, intellectual and industrial property, and ecommerce and information society services. Apart from these specific laws, it is also necessary to look to the general legislation on civil and commercial contracts.

In any event, the Spanish legislature is currently making resolute headway in regulating transactions of this nature. Examples of its aim to legislate on matters relating to new information technologies include the e-commerce and Information Society Services Law, and, more recently, Electronic Signature Law 59/2003.

A fundamental point to bear in mind when undertaking any initiative in the area of electronic transactions: the applicable legislation varies depending on the potential recipient of the related offer. Consequently, there is greater leeway for the parties to agree if the transaction takes place between companies (business to business, B2B) than if the commercial dealings are between a company and a private consumer as the final recipient (business to consumer, B2C), since, among others, consumer protection legislation will apply in the latter case.

In the tax sphere, e-commerce raises tax issues that can be addressed with difficulty from a purely Spanish perspective. Perhaps for that reason, unlike other occasions, the Spanish tax authorities have not seen fit to adopt unilateral measures, preferring to wait until a consensus is reached on the measures to be adopted regionally and even worldwide. As will be explained below, the process of reaching a consensus on the VAT treatment of "online e-commerce" is fairly advanced, as is shown by the recent approval of the EU Directive on e-commerce and its consequent transposition into Spanish law from July 1, 2003 onwards.

As for the direct taxation issues (the existence of permanent establishments, the legal characterization of income, the transfer pricing problem and the application of the "place-of-effective-management" rule) it is foreseeable that consensus will take the form of a coordinated, more uniform interpretation of the various criteria determining the tax treatment of e-commerce, rather than a legislative change.As will be explained later, an example of this greater coordination is the amendment made to the commentaries on the OECD Model Convention.

1. Civil and commercial legislation
1.1. Civil and Commercial Codes

Electronic contracts are fully subject to the rules established by the Spanish Civil Code on obligations and contracts and by the Commercial Code.
Electronic contracts are also subject to EC Regulation 593/2008, of June 17, 2008, on the law applicable to contractual obligations (Rome I) which supplements the legislation existing in this area and which was already reflected in EC Regulation 864/2007, of July 11, 2007, on the law applicable to non-contractual obligations (Rome II). EC Regulation 593/2008 will apply to contractual obligations in the civil and commercial matters in situations involving a conflict of laws.
Both the Civil Code and the Commercial Code were amended by Law 34/2002 on E-Commerce and Information Society Services in order to specifically establish that in contracts concluded by automatic means, there is consent from the moment acceptance is expressed.
1.2. Distance sales
Equally applicable to electronic sales is Retail Trade Law 7/1996 in its Chapter on distance sales. This Law defines “distance sales” as sales concluded without the simultaneous physical presence of the buyer and the seller, where the seller’s offer and the buyer’s acceptance are conveyed exclusively by a means of distance communication of any nature and within a distance contract system organized by the seller. Therefore, sales made by telematic means would be treated as distance sales, although the specific legislation on information society services and e-commerce would preferentially apply.
This Law establishes that distance sale offers must contain at least the following:
The seller’s identity.
The special features of the product, the price, and the shipping expenses and, if applicable, the cost of using the distance communication technique if it is calculated on a basis other than the basic rate basis.
The payment method, and delivery or types of fulfillment of orders.
The period for which the offer remains valid and, if applicable, the minimum term of the contract.
The existence of a right to withdraw or terminate the contract and, if applicable, the circumstances and conditions in which the seller could supply a product of equivalent price and quality.
The out-of-court dispute resolution procedure, if applicable, in which the seller participates. In sales of this type, consumers are also afforded a number of rights, such as:
The need for their express consent to the distance transaction, so that the failure to reply cannot be construed as acceptance of the offer.
Prohibition on unsolicited shipments, where such shipments include a request for payment.
The right to withdraw (with exceptions in cases such as the sale of assets subject to financial market rate fluctuations that the seller cannot control) within seven days from the receipt of the product, the exercise of which is not subject to any formality or penalty.
However, please note that distance sales, in which a consumer takes part, are regulated by Legislative Royal Decree 1/2007, of November 16, 2007, approving the Revised General Consumer and User Protection Law and other supplementary laws.
1.3. Consumer protection
Whenever e-commerce activities are targeted at consumers, it is also necessary to comply with consumer protection legislation, regulated in Legislative Royal Decree 1/2007, of November 16, 2007, approving the Revised General Consumer and User Protection Law and other supplementary laws. This Law, which since December 2007 constitutes the main regulation to be considered in the relation with consumers and users, revises and repeals the following laws:
General Consumer and User Protection Law 26/1984.
The Package Travel Law.
The Law on contracts concluded outside commercial outlets.
The Law on liability for damage caused by defective products.
The Law on safeguards in the sale of consumer goods.
In this regard, the referred Legislative Royal Decree regulates the clauses which are deemed unfair in dealings with consumers.
It should also be noted that Law 22/2007, of July 11, 2007, on the distance marketing of consumer financial services shall also been taken into consideration when dealing with consumers in the financial sector. The purpose of this Law is to implement Directive 2002/65/EC of the European Parliament and of the Council of September 23, 2002. The Law extends the protection granted by the general Law to the users of remote financial services by establishing, among others, the generic requirement to provide the consumer with precise and exhaustive information on the financial contract prior to its signature and by granting the consumer the right to withdraw from the distance contract previously concluded.
Also, if in making the contract there is an intention to incorporate predisposed clauses into a plurality of contracts, regard must be had to Standard Contract Terms Law 7/1998, the former Article 5.3 of which (now Article 5.4) is implemented by Royal Decree 1906/1999 on telephone or electronic contracts with standard terms.
The referred Royal Decree establishes the requirements that must be met by distance contracts concluded by telephone, or by electronic or telematic means and which contain standard contract terms. “Standard contract terms” means pre-formulated terms the inclusion of which in a contract has been imposed by one of the parties (regardless of who actually drafted them, or their external appearance, scope, or other circumstances) and which have been drafted for inclusion in numerous contracts.
Royal Decree 1906/1999 does not apply expressly to certain types of contract such as, for example, government contracts, employment contracts, contracts for the incorporation of companies, contracts for regulating family relations, contracts relating to financial services that are regulated by their own specific legislation, and so on.
Conversely, the rules imposed by this Royal Decree apply to those contracts which contain standard contract terms that have been adhered or consented to in Spain, whatever the law applicable to them.
To such effect, Royal Decree 1906/1999 imposes the following obligations when contracting by telephone or by electronic or telematic means with standard contract terms:
To provide the consumer with prior information on all the terms of the contract at least 3 days before the conclusion of the contract, and to send the consumer the full wording of the standard terms by any suitable means.
To send to the adhering party a receipt and information on all the terms of the contract concluded. This information must be sent immediately or when the good is delivered or when the contract is concluded, and it must be in writing or on another durable medium proposed by the adhering party and that is fit for the communication effected.
The adhering party can exercise the right to withdraw from the contract, without incurring any penalty or expense, within seven business days, according to the official calendar of the adhering party’s place of habitual residence. Time in the seven-day period will start running upon receipt of the merchandise when the purpose of the contract is the delivery of goods or from the conclusion of the contract when the contract is for the provision of services. If the information on the standard terms or the documentary confirmation is provided after the delivery of the merchandise or the conclusion of the contract, time in the seven-day period will start running from the performance of this obligation.
The pre-formulating party also has the burden of proving that it has performed the duties imposed by the Royal Decree. Such duties include that of ensuring the existence and content of prior information on the terms, the delivery of the standard terms of, and documentary support for, the contract and, if applicable, the express waiver of the adhering party to the right of withdrawal.
In this same framework of consumer protection, as a result of Directive 1999/44/EC, Law 23/2003 on Consumer Goods Sale Warranties was enacted. This Law, which was revised in the aforementioned Legislative Royal Decree 1/2007, contains a draft of measures aimed at ensuring a minimum uniform standard of consumer protection. The main innovative feature of this Law was the establishment of a free 2-year warranty for consumers on all consumer goods, a safeguard which has been included in the aforementioned Royal Decree. The Law aims to offer consumers a range of possible remedies when the goods acquired are not in keeping with the terms of the contract, enabling consumers to demand their repair or substitution.
1.4. Other recent applicable regulations
Due to its particular importance in electronic commerce it is worth underscoring the recent approval of Payment Services Law 16/2009, of November 13, 2009 which aims to adapt Spanish legislation to Community legislation in order to create a common legal framework that helps the operation of the single market in payment services.
The new Payment Services Law mainly affects the payment transactions that are most commonly used in an electronic commerce environment: transfers, direct debiting and cards, establishing as a general rule that the payer and the payee of the transaction must each bear the charges levied by their respective payment services providers and allowing merchants to charge a supplement or make a discount according to the payment instrument used, a practice which until now prevented agreements between card issuers and stores.
This Law establishes the rules of access to the market by payment providers, creating a new category of payment services providers known as “payment institutions”, which will benefit competition in the market and the security of consumers. Similarly, the Payment Services Law regulates, among other aspects, the authorization regime (consent and withdrawal of consent) of payment transactions, the execution (receipt, refusal, revocability) of payment orders, requests for refunds, the liability of payment services providers, out-of-court complaint and redress procedures for the settlement of disputes and the rules on penalties applicable to payment services providers.
Lastly, worthy of note is the recent entry into force of Law 29/2009, of December 30, 2009, modifying the legal regime governing unfair competition and advertising in order to enhance consumer and user protection. Special mention should be made of the unfair practice status to be granted to the making of unwanted and reiterated proposals by telephone, fax, e-mail and other means of long-distance communication, unless such proposals are legally justified for the purpose of complying with a contractual obligation. Moreover, when issuing such communications, traders and professionals must use systems that enable consumers to place on record their opposition to continuing to receive commercial proposals from such traders or professionals. Thus, when making such proposals by telephone, calls must be made from an identifiable number.
1. Problems, general principles and initiatives taken in relation to taxation   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 2006/112/EC of November 28, 2006 on the common system of value added tax, which entered into force on January 1, 2007 and has been amended several times since then. This Directive recasts in a single legal text the main rules governing VAT and, in particular, those contained in the Sixth Directive (77/388/EEC), in Directive 2002/38/EC as regards the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services, and in Directive 2001/115/EC with a view to simplifying, modernizing and harmonizing the conditions laid down for invoicing in respect of value added tax, all of which are consequently repealed.   Council Regulation (EC) no. 1798/2003 of October 7, 2003 on administrative cooperation in the field of value added tax and repealing Regulation (EEC) no. 218/92 on administrative cooperation in the field of indirect taxation (VAT) as regards additional measures regarding electronic commerce. This Regulation has recently been amended by Council Regulation no. 143/2008 of February 12, 2008 and by Council Regulation no. 37/2009 of December 16, 2008, which applies starting January 1, 2010. The amendments mainly affect the rules and procedures for the exchange by electronic means of value added tax information, in light of the changes introduced in the place-of-supply rules.   It should be noted that the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied services were in force temporarily until December 31, 2006. Council Directive 2006/138/EC of December 19, 2006 amends Directive 2006/112/EC on the common system of value added tax as regards the period of validity of the value added tax arrangements applicable to these services, extending such period of validity until December 31, 2008. In turn, Council Directive 2008/8/EC of February 12, 2008 amends, effective January 1, 2009, Directive 2006/112/EC, extending the above-mentioned period of validity to December 31, 2009. In addition, although Directive 2008/8/EC will be transposed in several phases, the first of which entered into force on January 1, 2010, it should be noted that that Directive amends Directive 2006/112/EEC as regards the place of supply of services. Among the changes introduced by the Directive, of note is the replacement of the current general rule for the place of supply of services (supplier’s place of business) with the rule that the place of supply of services to a taxable person acting as such (i.e. a trader or professional) shall be the place where that person has established his business (recipient’s place of business). The general rule for services supplied to non-taxable persons remains unchanged (i.e. the place where the supplier has established his business). The additional changes introduced with effect from January 1, 2015, with respect to electronically supplied services are discussed in the section on the indirect taxation of e-commerce.   The provisions of these Directives and their transposition into Spanish law are examined in the section on the indirect taxation of e-commerce.

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