SPAIN Law and Practice Contributed by: Rubén Canales and Ignacio Temiño, Abril Abogados
7.4 Free and Reduced-Price Offers In Spain, sales promotions with accompanying gifts are legal but subject to certain rules. Retail commerce regulations regulate these types of sales where the purpose is promoting sales, another product, a free service, or a specially reduced price. This gift/prize can be offered to the consumer automatically or by participating in sweepstakes or contest. If the gift consists of entry into a sweepstakes, the applicable regulations must be observed. The gift/prize must be provided within three months of the moment when the consumer fulfils the condi - tion of the promotion (usually the purchase). Moreover, any gift that has been offered on the packaging of the product must be available for at least three months from the end of the promotion. Specific regulations apply to particular types of goods. For example, it is prohibited to offer any kind of promotional gifts in the medicinal and pharmaceutical sectors. In any case, it is considered a misleading commercial practice and, thus, unfair, to describe a product as “free”, “without charge” or similar if the consumer has to pay anything beyond the unavoidable expenses of responding to the offer and arranging delivery. 7.5 Automatic Renewal/Continuous Service Offers Consumers must be informed in a clear and compre - hensible manner about the duration of the contract, and in the case of automatic renewal of subscriptions, about the conditions for termination; ie, how to com - municate their wish to terminate the contract and when it should be communicated. Customers must be informed about the automatic renewal and termination conditions of the subscrip - tion, regardless of the sales channel or whether the initial transaction is initiated by the advertiser or the customer. The only requirement is to clearly inform the customer, prior to the subscription purchase, of the initial price and the price applicable to the renewal. Notices when the subscription is about to renew are not required but recommended. Typically, reminders
The only restriction is that participants must not make an additional payment in order to participate. Exam - ples of additional payment are premium SMS or pre - mium calls. Standard postage, SMS or call charges would generally not be regarded as additional pay - ments (unless the call takes too long, or several stand - ard SMS messages are required). Prior purchases of products without extra charges, or a condition that participants be a client of the sponsor, are not con - sidered to be additional payment. However, for chance-based sweepstakes/prize draws, gambling regulations apply, and a gaming tax of 10% of the prize value should be paid. Conversely, skill- based contests without any element of chance fall outside the scope of gambling regulations and are not subject to this tax. Regardless of the promotion type, winners should be aware of potential tax obligations. Prizes exceed - ing EUR300 may be subject to personal income tax, requiring winners to pay withholdings or deposits in advance, as stipulated by current tax laws. 7.2 Contests of Skill and Games of Chance Whereas games of chance require an element of luck or chance, in a skill-based contest the winner must be chosen based on skill and no element of chance must be involved. It is crucial to ensure that skill-based contests remain entirely free from any element of chance; eg, if the win - ners are chosen based on skill but, in the event of a tie between finalists, a draw is held to determine who will be the overall winner, then it would automatically become a game of chance. Even promotions that award prizes to the first 100 par - ticipants can sometimes be deemed chance-based. This occurs when the element of skill involved is mini - mal or non-existent. 7.3 Registration and Approval Requirements No major requirements exist in relation to chance- based sweepstakes and contests. Notably, there is no requirement to obtain a licence, authorisation, or make any prior notification to the authorities.
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