IEE criticizes the excessive tax burden on companies in Spain

In 2023, Spain reached a historic record in tax collection, surpassing the figures of 2019 by approximately 50 billion euros. However, despite this achievement, the Institute of Economic Studies (IEE) presented its Fiscal Competitiveness 2023 report with critical remarks on the high tax burdens placed on companies in the country. The study emphasized that while tax pressure in Spain was lower than the European Union average in 2022 at 38.3%, it was still concerning for the country’s economic development.

The IEE noted that corporate tax accounted for 2.7% of GDP and Social Security contributions were at 9.5%, both higher than the EU average of 3.3% and 7.1% respectively. The combination of these taxes in Spain exceeded the European average by 1.8 points, indicating that Spanish companies face a significant burden compared to their counterparts in other EU countries. Additionally, social contributions to Social Security in Spain were significantly higher at 25.2% compared to the EU average of 17.7%, whereas corporate tax was slightly lower at 7.2%.

The analysis revealed that Spain’s fiscal effort was nearly 18% higher than the EU average, making it one of the OECD countries with the highest tax burden. The Tax Competitiveness Index ranked Spain poorly among OECD economies, experiencing a decline over the last legislature despite improvements from the previous year. Despite achieving a record-breaking tax collection figure, Spain still lagged behind its ranking from two years ago, indicating a significant loss of fiscal competitiveness due to continuous tax increases imposed by the government.

The report also criticized property taxation in Spain, which was deemed unfavorable and ranked second worst in the OECD after Italy. Furthermore, personal income tax was noted to be significantly higher than both the EU and OECD averages at an alarming rate of 6.1% and 9%, respectively.

Overall, these findings indicate that despite achieving economic growth and reaching a new record for tax collection figures, Spanish businesses still face significant challenges when it comes to paying taxes due to their high levels relative to other EU countries.

By Samantha Johnson

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