This document provides an overview of taxation in Spain. It begins with definitions of taxes and what they are used for. It then contrasts what a world without taxes might look like compared to the important functions taxes fund. The history of taxation is briefly covered, noting its use throughout history. The main types of taxes in Spain are direct taxes on income and wealth and indirect taxes like VAT imposed on goods and services. Several key taxes are described in more detail, including income tax, corporate tax, inheritance tax, VAT, and excises.

1. TAX SYSTEM
IN SPAIN

2. INDEX:
1. What are taxes?
2. What are they for?
3. Imagine a world without taxes. How would it be?
4. Brief history of taxation.
5. Different kind of state taxes: direct and indirect taxes.
6. Main direct taxes in Spain.
7. Main indirect taxes in Spain.

3. WHAT ARE TAXES?
Francisco Pedrazo
Jose Barriga
Laura Ramos
Sofía Blázquez

4. A fee charged by a government on a
product, income, or activity.
A tax is a financial charge or other levy imposed upon a taxpayer by
the State, or by other administrative divisions (in Spain,
“Comunidades Autónomas”)
So, they are payments to the State, according to law, in order to
satisfy common needs of all citizens.

5. WHAT ARE TAXES FOR?
Basically, to finance the State.
Money provided by taxation has been used by
States throughout history to carry out many
functions.
Nowadays, some of these include expenditures
on health and education, the enforcement of law
and public order, infraestructures (roads,
bridges, railways, ports...), pensions for the
elderly, unemployment benefits, etc.

6. IMAGINE A WORLD WITHOUT TAXES
Daniel Pulido
Pablo Vallecillo
Laura Ramos
Sofía Blázquez
Víctor Durán
Alejandro Martínez

10. ● The government wouldn't be able to fix and clean our cities.
● We wouldn't have universal education or universal health
care.
● No retirement pensions, no unemployment benefits, no
social aids...
● The rich people would become richer, but poor would be
poorer.
● No taxes = no state. Society would become 100% in the
law of the strongest ,leaving people with less resources in
absolute misery.

11. A world without taxes would be a world in ruins, since
there would be no public funds and, therefore, would not
have hospitals, roads , schools and more public
organizations.

12. BRIEF HISTORY OF TAXATION
Víctor Durán
Alejandro Martínez

13. From the earliest human societies, taxes were
applied by the sovereigns, many of which were
destined for ceremonial affairs and the ruling
classes.
The first tax laws appear in
Egypt , China and
Mesopotamia. Ancient
cuneiform texts about five
thousand years ago talk about
it.

14. In the first human societies, taxes
favored the privileged classes,
impoverishing the rest of the
population.
Nowadays with tax
collection is intended to
improve social welfare.

15. Main taxes in Spain:
Direct and indirect taxes.
Paula Barrado
Helena Durán
Adrián Escalona
Cristina Gómez
Elena Margallo
Ana Laura Leo

16. Main State Taxes in Spain
In Spain, as in many other countries, there are two kind
of taxes: DIRECT and INDIRECT.
A direct tax is levied on sources of wealth, property or
income.
When people earns a salary, for example, this tax must
be paid.
An indirect tax is levied on the consumption or purchase
of good and services.
An indirect tax may increase the price of a good to raise
the price of the products for the consumers.

17. Direct taxes
● The Income Tax (In Spanish IRPF: Impuesto sobre la Renta
de las Personas Físicas)
● The Income Tax for Non Residents: for people obtaining some
incomes in Spain, but not living in Spain.
● The Corporate Income Tax (In Spanish IS: Impuesto sobre
Sociedades)
● The Inheritance Tax
● The Wealth Tax: It's a tax levied on personal assets. It is
charged from 700.000 €, with an exemption for real estate
assets of 300.000 € (This means only rich people pay this tax)

18. Indirect taxes
The VAT: Value Added Tax (in Spanish, IVA:
Impuesto sobre el Valor Añadido)
The Transfer Tax: It is levied on purchases of all
kind of goods and rights, on certain transactions
made by companies, and on acts wich must be
formally documented. It is the buyer who pay this
tax.
Customs Tax: It is levied on the import of goods.
Excises (in Spanish: Impuestos especiales).

19. Distribution of money obtained by the State
through taxes, in Spain
Income tax: 40%
VAT: 22%
Corporate Income Tax: 13%
Excises: 12%
Other kind of taxes: 13%

20. Amount of money obtained by the State through
taxes, in Spain, from the beginning of the crisis
until 2014. (IN MILLIONS OF EUROS)
Kind of tax 2007 2008 2009 2010 2011 2012 2013 2014
Income
Tax
72.829 71.835 64.235 66.977 69.803 70.619 69,951 72.662
V.A.T. 57.432 48.042 33.219 49.086 49.302 50.464 51.931 56.174
Corporate
Inc. Tax
44.712 27.323 20.096 16.198 16.611 21.435 19.945 18.713
Excises 20.256 20.060 19.841 19.806 18.983 18.209 19.073 19.104
Others 6.898 2.898 6.747 7.469 7.061 7.840 7.947 8.334
TOTAL 202.127 174.158 144.138 159.536 161.760 168.567 168.847 174.987

21. You can see that evolution here, from 2000 to 2014.
INCOME TAX
VAT
EXCISES
CORPORATE TAX

22. The Income Tax
The income tax is a personal,
direct and progressive tax on
income earned in a calendar
year by individuals resident
in Spain.
Personal income tax brings to the
state more than a third of what’s
collected .

23. 1. It's a direct tax: It is levied on sources of wealth,
property or income. When people earn a salary, this tax
must be paid.
2. It's a personal tax: It looks at the person, and her
payment capacity. This means it considers the family and
personal conditions of the taxpayer. (number and age of
children, elderly dependents, etc.)
3. It's a progressive tax: The levy rate (proportion on your
income that you must pay) increases while the income
increases. So, people with higher payment capacity will
pay proportionally more.

24. This is the exempt minimun in the Spanish Income Tax (if
the taxpayer has descendents, children under 3,
ancestors over 65, or some kind of disability)

25. There are also, in the Spanish Income Tax, some
discounts that consider different expenses the
taxpayer could have. They are called DEDUCTIONS
and REDUCTIONS.
Several examples are:
- personal and family minimum. The taxpayer can deduct from the tax base
an amount of money considered necessary to cover basic needs. It depends
on the circumstances of the taxpayer, but minimum is 5.500 €
- discounts to women that work out of home, and have small children.
- deduction for large family.

26. As we said, the levy rate (proportion on your income that
you must pay) increases while the income increases.
Taxable base, once deductions and
reductions have been applied.
Tax rate (from 2016 onwards)
EUROS Percentage
To 12.450,00 19,00
Next 7.750,00 24,00
Next 15.000,00 30,00
Next 24.800,00 37,00
Onwards (from 60.000 €) 45,00

27. However, this levy rate has an state part and a regional
part, so, in Spain, you may pay more or less taxes
depending on what “Comunidad Autónoma” you live in.
Maximum and minimum tax rate for
the Income Tax in each
“Comunidad Autónoma” (despite
being the Income Tax an State Tax)

28. The Corporate Income Tax
It is levied on companies or
other legal entities income.
Income is defined as the accounting
profit of the company, according to
current accounting regulation.
Nonprofit organizations are partially
exempt from this tax.

29. The levy rate for the Corporate Tax in Spain
depends on what kind of company is the taxpayer:
TAXPAYER 2015 2016
General rate 28% 25%
Startup companies 15% 15%
Companies with turnovers under 5 million euros and
with staff under 25 employees
25% 25%
It is estimated that Spanish companies will pay
2.641 millions less in 2016.

30. The Inheritance Tax
An inheritance tax is a direct tax paid by a person who inherits money
or property.
A gift tax is a direct tax paid by a person who receives a donation or
gift that exceeds certain amount.
Although, in practice, both taxes have a very different nature, they are
paid through the same tax, the inheritance and gift tax.
From the technical point of view, it is a direct, personal, subjective and
progressive tax on capital gains obtained by individuals.

31. ● The levy rate of this
tax depends on each
“Comunidad
Autónoma”
● So, it is not an
homogeneus tax for
all the country. It
depends on where it
is applied.
People in our region (Extremadura)
pay more inheritance tax than other
Spaniards:

32. The Value Added Tax (VAT)
It is an indirect tax that it is paid when we buy a product
or when we hire a service. VAT does not consider the
personal characteristics of the taxpayer.
It is a proportional tax. The levy rate doesn't increase with
the payment capacity of the taxpayer. It remains the same.
The general rate in Spain is 21%

33. GENERAL RATE
21%
REDUCED RATE
10%
MOST REDUCED RATE
4%
All kind of goods and
services, if they are not
levied by the reduced rates.
Some examples are:
clothes and shoes, gas,
phone, electricity, fuel,
tobacco, alcoholic
bevarages...
Fish, meat, water.
Bars and restaurants
services.
Hotel services
Passanger transport
Eyeglasses and contact
lenses
Bread, milk (animal), eggs,
cheese, fruits, vegetables,
legumes.
Books, newspapers, and
magazines.
Medicine for human beings.
Prosthesis and implants for
disabled people.
Specially protected housing
(subsidized housing)
There's been much controversy about several goods that used to have the
reduced rate and now have the 21%. These are:
Tickets for cinemas, theatres and shows.
Purchase of CDs and DVDs
Purchase of artworks
School supplies
It's been called THE CULTURAL VAT.

34. VAT in Spain, after the VAT rise in 2012

35. VAT Exemptions:
There are several goods that do not pay VAT,
because of their importance (health services,
social assistance, dentists...)

36. Excises
Excises are indirect taxes on the purchase or
use of specific products.
They are usually applied as an amount per
quantity of the product, e.g. per kg/per degree
of alcohol/per 1000 pieces, etc.

37. Excises in Spain are:
– Tobacco, Alcohol, Beer and Petrol. (These are the
same for all countries in European Union)
– Electricity and certain means of transport. (Not
harmonized at EU level)

38. In Spain, Canary Islands (in the Atlantic Ocean)
and cities of Ceuta and Melilla (in the north of
Africa) are not part of the territorial scope of
excise duties, althoug they are, of course,
Spanish territories.
This means a pack of cigarettes, for examples, is much cheaper
in Canary Islands than in the rest of Spain.

39. You can see here what part of the cigarette's price is
excise tax. (Average in the OECD countries)

40. ● Dealer: 0,95 €
● Excises: 2,35 €
● VAT: 1,05 €
● Manufacturer: 0,65 €
In Spain, a Marlboro pack costs 5 €

41. Regarding the fuel price in Spain:
Between 42% and
44% of the price
(dependig on the type
of fuel) comes from
taxes (VAT and
excises)