The amount of income tax paid by families in Spain can differ by as much as €3,500 per year depending on where they live, according to a report by the tax consultants’ association (REAF).
The report says that the differences can be explained by differing rates and allowances applied by each autonomous region.
For example, a couple, with a toddler and a baby, with a mortgage and annual income below €43,000 would be expected to pay €3,697.33 in income tax (IRPF), if they lived in Extremadura, Asturias or Aragon.
However, if they lived in the autonomous region of Castilla y Leon the tax would be significantly lower at €249.35, almost €3,599 less. This is because the region provides tax allowances for children and help with childcare costs.
Many taxes have been raised since the crisis began including income tax and wealth tax. Valenti Pich, president of Spain’s Professional Association of Economists said “Above all, other taxes have either been created or have been increased, like those on legal health transactions and tourists occupancy”.
The national governments decision to raise income tax left the autonomous regions with little room for further increases. Regions like Madrid or La Rioja had lower rates than those applied in 2010 meaning they have more scope to apply regional increases, bringing them more in line with the remaining autonomous regions.
Some regions applied a 56% income tax on incomes over €300,000, one of the highest rates in Europe, only beaten in Denmark and Sweden. In some instances an income of €60,000 was liable to 47% tax, again, one of the highest rates in Europe.