Insight

The Spanish Government Insists on Raising Taxes

With a new government in Spain, big changes are coming to taxpayers.

Will Spain's New President Raise Taxes?
Mariano Roca López

Mariano Roca López

August 16, 2018 11:00 AM

Pedro Sánchez, the Spanish government’s new president, has set himself a clear goal: raise the tax burden in Spain. He expects that increasing the tax pressure of some of the main taxes, such as the personal income tax and corporate income tax, as well introducing some new taxes will create a whopping 13.5 billion euro increase to the Spanish budget. So far his ambitions have not been translated into specific measures, but we can briefly describe some of the ideas of the new president’s team:

Corporate income tax

They propose a minimum rate of 15 percent on the accounting result of multinationals, no matter what deductions might be applicable. They expect to collect from this measure around 4 billion euros, which would mean a 17.3 percent increase in the average tax burden on companies.

Personal income tax

Two months ago, the new president spoke about adjusting the personal income tax rate for taxpayers with annual incomes over 150,000 euros. As a result, the maximum personal income tax rate would reach 52 percent in regions like Asturias, Andalusia, and Catalonia (remember that tax rates depend partly on the rates established by the country and partly on the rates established by the autonomous regions). They also proposed raising the savings tax rates, which now stand between 19 and 23 percent, to 30 percent, for those taxpayers who earn more than 50,000 euros of incomes from savings.

Inheritance and gift tax

Today, autonomous regions manage this tax on their own, being able to determine how much of the tax is subsidized. As a consequence, in some regions, such as Asturias, an inheritance may be taxed at a rate of up to 36.5 percent, while in other autonomous regions such as Madrid or the Canary Islands, almost all of the tax is subsidized. This system, in which autonomous regions can favor their inhabitants with low taxes and compete in this regard with other autonomous regions, does not seem to convince Sánchez. Thus, everything points to the fact that the plan of the president is to establish the same tax rate in the Inheritance and gift tax for the entire country which, given the precedents, does not seem to be going to be equalized taking the lowest rates.

Apart from the previously mentioned measures, the new president has also announced others tax raises as well as new taxes, such as a new tax on banking institutions, the new so-called “Google tax,” or the increase in diesel oil’s tax rates.

It is clear that the current government is not short on ideas when it comes to increasing tax pressure. However, it won’t be easy to accomplish their plans after the Parliament's foreseeable veto of the spending ceiling, a necessary and unavoidable step prior to launching new tax measures. Sánchez would need the political support of various opposing political parties. Thus, the chief executive is faced with an insufficient majority to legislate in economic and tax matters, with the sole support of “Podemos” (the extreme left-wing party) and with some occasional support—depending on the initiative—from other minor parties, which means that the proposed tax initiatives seem to be nothing but electoral tactics to prepare the next general elections.

----------

Mariano Roca is a tax and private client practitioner focused on corporate and individuals advice (specialized in tax, wealth and inheritance advice for HNWI). He began his professional career in Cuatrecasas Gonçalves Pereira from 1997 until 2012. In 2012, he joined KPMG from 2012 until 2015 where co-led the family business and private client practice in the Barcelona, Girona, Balearic Islands, and Andorra offices. On January 2016, he joined Marco Legal, Abogados & Economistas, leading as a partner the firm’s tax department. Mariano has been listed in Best Lawyers since 2013 and won the “Lawyer of the Year” award in 2014 and 2015. He has been once again recognized with the “Lawyer of the Year” award in tax practice for 2018.

Trending Articles

Announcing the 2023 The Best Lawyers in America Honorees


by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

Announcing the 2022 Best Lawyers® in the United States


by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

2021 Best Lawyers: The Global Issue


by Best Lawyers

The 2021 Global Issue features top legal talent from the most recent editions of Best Lawyers and Best Lawyers: Ones to Watch worldwide.

2021 Best Lawyers: The Global Issue

The U.S. Best Lawyers Voting Season Is Open


by Best Lawyers

The voting season for the 31st edition of The Best Lawyers in America® and the 5th edition of Best Lawyers: Ones to Watch® in America is officially underway, and we are offering some helpful advice to this year’s voters.

Golden figures of people standing on blue surface connected by white lines

How To Find A Pro Bono Lawyer


by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

The Best Lawyers in Australia™ 2024 Launch


by Best Lawyers

Best Lawyers is excited to announce The Best Lawyers in Australia™ for 2023, including the top lawyers and law firms from Australia.

Australian Parliament beside water at sunset

How Palworld Is Testing the Limits of Nintendo’s Legal Power


by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

What the Courts Say About Recording in the Classroom


by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Inflation Escalation


by Ashley S. Wagner

Inflation and rising costs are at the forefront of everyone’s mind as we enter 2023. The current volatile market makes it more important than ever to understand the rent escalation clauses in current and future commercial lease agreements.

Suited figure in front of rising market and inflated balloon

The Upcycle Conundrum


by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

8 Different Types of Criminal Defenses in Law


by Best Lawyers

Learn about the different types of criminal defenses available in law, including innocence, self-defense, insanity and more. Protect your rights today.

Silver handcuffs laying on finger printed papers

Best Lawyers: Ones to Watch in America for 2023


by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

A Celebration of Excellence: The Best Lawyers in Canada 2024 Awards


by Best Lawyers

As we embark on the 18th edition of The Best Lawyers in Canada™, we are excited to highlight excellence and top legal talent across the country.

Abstract image of red and white Canada flag in triangles

Wage and Overtime Laws for Truck Drivers


by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

Choosing a Title Company: What a Seller Should Expect


by Roy D. Oppenheim

When it comes to choosing a title company, how much power exactly does a seller have?

Choosing the Title Company As Seller

The 2024 Best Lawyers in Spain™


by Best Lawyers

Best Lawyers is honored to announce the 16th edition of The Best Lawyers in Spain™ and the third edition of Best Lawyers: Ones to Watch in Spain™ for 2024.

Tall buildings and rushing traffic against clouds and sun in sky