In Spain, there is a widespread perception that taxes are high and that “we pay more than other countries in the European Union.” But what do the actual data say? Below, we review recent figures, common myths, and what we can really observe when comparing taxation across countries.
Currently, the tax burden in Spain (tax and social security revenue as a percentage of GDP) has increased significantly, reaching around 38%, although it remains below the EU average, which is approximately 41%. Specifically, Spain is still below countries like France, Germany, or the Nordic countries, which are known for their strong welfare states.
It is true that Spain has one of the highest top personal income tax rates (IRPF, in Spanish) in Europe. However, the tax system has become more progressive, as we have mentioned in previous blog posts. This means that those with higher incomes pay a greater proportion of their income in taxes, while those earning the minimum wage bear a lower tax burden, for example, they pay little or no income tax.
On the other hand, Spanish companies face a relatively high tax burden compared to other EU countries, and regulatory complexity especially affects SMEs, according to
data from the Institute of Economic Studies (IEE). Even so, it is important to consider available tax incentives, regional deductions, effective tax rates, and other mechanisms that businesses may benefit from.
Ultimately, the answer to our question is: only in some specific areas. Most citizens’ perception of “paying more” stems from the feeling that public services are not up to expectations, considering the total amount of taxes and contributions paid.
Lucía Luengo Aguado.