IEE criticizes the excessive tax burden on companies in Spain

In 2023, tax collection in Spain reached a new record, surpassing the figures of 2019 by approximately 50 billion euros. Despite this achievement, the Institute of Economic Studies (IEE) presented its Fiscal Competitiveness 2023 report with criticism for the high tax burdens placed on companies in the country. The report highlighted that tax pressure in Spain in 2022 was at 38.3%, which is still concerning for the country’s economic development.

The study emphasized the corporate tax in Spain, which accounted for 2.7% of GDP and Social Security contributions at 9.5%, higher than the EU average of 3.3% and 7.1% respectively. The report noted that the combination of these taxes in Spain exceeded the European average by 1.8 points, with social contributions to Social Security being significantly higher at 25.2% compared to the EU average of 17.7%. However, corporate tax was slightly lower at 7.2%.

The IEE indicated 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 due to continuous tax increases imposed by the government. Despite improvements from the previous year, 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 Tax Competitiveness Index revealed that Spain ranked poorly in terms of tax competitiveness among OECD economies, experiencing a decline over the last legislature despite improvements from the previous year.

The report criticized not only property taxation but also property ownership costs and inheritance taxes, which are some of the most burdensome in Europe.

In summary, while Spanish companies contribute more to GDP than their counterparts in other European countries through their corporate taxes and Social Security contributions combined; however, personal income tax is too high compared to both Europe and OECD standards.

Overall, this article highlights how high taxes can negatively impact a country’s economy and individuals who pay them

By Sophia Gonzalez

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