How taxes and money are shared between Spain and the Basque Country

Automatic summary, not yet reviewed

1. A new Economic Agreement (Concierto Económico) with the Basque Country is approved, with an indefinite character, regulating which taxes Basque institutions can manage and how their financial relations with the State work.
2. The Foral Deputations (Diputaciones Forales) can maintain, establish and regulate their own tax system in their territory, and they manage, inspect and collect their taxes.
3. The Basque tax system must respect solidarity, follow the State's general tax structure, and keep an overall effective tax burden equivalent to that of the rest of the State.
4. The Basque Country pays the State a quota (cupo) as a contribution to State costs not assumed by the Autonomous Community. The quota methodology is approved every five years by law and updated each year.
5. The quota is calculated with consumption adjustments for VAT and special taxes, and offset by the share of non-agreed taxes and other revenues. Payment is made in three installments: May, September and December.
6. For taxes such as personal income taxincome tax The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings., corporate tax or VAT, when someone operates in both common and Basque territory, they pay both administrations in proportion to the volume of operations carried out in each territory.
7. Joint bodies are created to resolve conflicts: a Mixed Commission for the Economic Agreement that approves amendments unanimously, a Commission for Coordination and Regulatory Evaluation, and an Arbitration Board whose decisions can only be appealed before the Supreme Court.
8. The law entered into force the day after its publication in the Official State Gazette (Boletín Oficial del Estado), but with effects from January 1, 2002.

Who it affects

• People who live or work in the Basque Country: Their taxes (personal income tax, wealth tax, inheritance and gift tax, VAT and others) are managed by the Foral Deputations under Basque rules.
• Companies with a tax domicile in the Basque Country: They pay taxes under foral rules and, if their volume of operations exceeds 6 million euros, they may pay both administrations in proportion to their operations.
• Companies operating in both common and Basque territory: They split their taxes between the State and the Foral Deputations according to the volume of operations in each territory.
• Non-residents with income in Spain: One administration or the other collects the tax depending on where the income is obtained or deemed obtained.

Words worth knowing

Concierto Económico (Economic Agreement)

Agreement regulating tax and financial relations between the Spanish State and the Basque Country.

Diputación Foral (Foral Deputation)

Governing body of each Basque historical territory (Álava, Gipuzkoa and Bizkaia) that manages and collects its taxes.

Territorios Históricos (Historical Territories)

The three territories that make up the Basque Country for the purposes of the Agreement: Álava, Gipuzkoa and Bizkaia.

Cupo (quota)

Amount the Basque Country pays the State as a contribution to State costs not assumed by the Autonomous Community.

Punto de conexión (connecting factor)

Criterion (residence, tax domicile, place of the transaction) that decides which administration can collect a tax.

income tax

The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries