In 2023, Spain achieved a historical record for tax collection, surpassing the figures from 2019 by approximately €50 billion. Despite this success, the Institute for Economic Studies (IEE) released its report on Fiscal Competitiveness 2023 and criticized the high tax burden on businesses in the country. The report highlighted that Spain’s corporate income tax at 2.7% of GDP is higher than the EU average of 3.3%, while social security contributions at 9.5% are also above the EU average of 7.1%. The study revealed that the combination of these taxes exceeded the European average by 1.8 points, with social security contributions being significantly higher at 25.2% compared to the EU average of 17.7%.

The IEE showed that Spain’s fiscal effort was almost 18% higher than the EU average, making it one of the OECD countries with one of the highest tax burdens. This high fiscal effort led to a decline in Spain’s Tax Competitiveness Index compared to previous convocations, despite improvements compared to the previous year. The report pointed out that Spain still lagged behind its ranking from 2019 due to continued tax increases imposed by the government, resulting in a significant loss of fiscal competitiveness among OECD economies.

The analysis also criticized company taxation in Spain, citing it as one of the heaviest in OECD economies, almost 30 percent higher than the EU average. Property taxation in Spain was also noted as unfavorable, being ranked as second worst in OECD after Italy. Additionally, personal income tax was found to be more expensive than both Europe and OECD averages by an estimated amount of around €6 billion annually.

Overall, while Spain has achieved great successes in collecting taxes and attracting foreign investment due to its favorable business environment and low unemployment rates

By Samantha Johnson

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