Tax agreed under state regulations that is harmonised at a European level. It is a tax borne by the end consumer and, therefore, does not entail a cost for entrepreneurs or professionals, as input tax can be deducted from output tax.

The general tax rate is 21%.

There is also a reduced rate of 10% applicable to certain supplies of goods and the provision of services, such as most food, water, housing, passenger transport, restaurant and hospitality in general, …

In addition, there is a super-reduced rate of 4% applicable to supplies of flour, milk, cheese, eggs, fruits and vegetables; books, newspapers and magazines; medicines for human use; certain social housing;

A mechanism has been established to refund VAT paid in Spain by entities resident in an EU member country or with which Spain has signed a reciprocity agreement. The deadline for applying for said refund is September 30 of the following year.

Tax agreed under autonomous regulations, therefore having full regulatory capacity in the Basque Country, levied on inter vivos and onerous transfers of all kinds of goods and rights, corporate transactions and documented legal acts (public deeds).

There are a number of exemptions with respect to corporate operations, meaning that corporate restructuring operations, the establishment of companies, increases in capital, contributions from shareholders that are not considered to be increases in capital, among others, are not taxed.

A general rate of 7% is set for onerous transfers, with a reduced rate of 4% in the case of properties used for housing (with the latter being 2.5% under certain circumstances).

A tax rate of 1% is set for non-exempt corporate transactions (reduction in capital, liquidation of companies, etc.).

Tax agreed under autonomous regulations levied on the lucrative transfer of all types of goods and rights between private individuals.

This tax is levied on heirs, beneficiaries and recipients resident in Spain for all the assets they receive, whether located in Spain or abroad.

In the case of non-resident beneficiaries, these will be subject to this tax for a liability based on Spanish-source income and must be taxed in Spain on the acquisition of goods and rights, whatever their nature, that were located, could be exercised or should be completed or fulfilled in Spanish territory.

The taxable base is the net value of the assets and rights acquired.

The Basque Country has regulated significant reductions (95%) for transfers of family businesses, main residences and according to the degree of kinship (parents to children), setting very reduced rates for direct relatives (1.5%).

All of this has created a very advantageous Inheritance Tax compared to the rest of Spain.

Property tax is a tax agreed under autonomous regulations levied on the equity of individual taxpayers.

In general, these taxpayers will be:

• Resident individuals for all their assets worldwide.
• Non-resident individuals for the assets they own in the Basque Country.

Equity is understood to be all assets and rights in their name, once reduced by the charges and encumbrances that bring down their value and their debts at December 31.

An exemption limit below which this tax is not paid has been set at 700,000 euros for Gipuzkoa and 800,000 euros for Araba and Bizkaia.

In addition, specific exemptions have been set for certain assets, which include: main residence, assets and rights required to carry out an economic activity and, under certain requirements, equity holdings in companies.

The regulation of the laws on local tax authorities is the responsibility of the competent institutions in the three provinces, under the terms established in the Economic Agreement Law.

The local tax system in the provinces basically matches that of the rest of Spain.

Among the existing local taxes, it is worth mentioning:

• Property Tax (IBI): Tax levied by local councils, the taxable event is made up of the ownership of urban and rural properties and properties with special characteristics, with any of the following rights: property; right in rem to the usufruct or over the buildings subject; administrative concession.

The taxable base of the tax is made up of the “cadastral value” of properties and it is charged annually.

• Business Tax (IAE): A tax levied by town councils: the taxable event of the tax consists merely of engaging in economic activities in Spanish territory, regardless of whether or not they are carried out in a specific location. It is annual, exempt for the first two years and is only paid starting from a turnover of 1 million euros (Araba and Gipuzkoa) or 2 million euros (Bizkaia).
• Tax on Constructions, Installations and Works (ICIO): A tax levied by town councils, levied on carrying out any construction, installation or work for which obtaining the corresponding building or town planning licence is required.
• Tax on the Increase in Value of Urban Land (IIVTNU): Tax levied by the town councils on the increase in value experienced by land of an urban nature disclosed as a result of a transfer of ownership or any right in rem to the limited enjoyment of ownership over them.

In the Basque Country, as in the rest of Spain, there are various special taxes that emanate from European regulations, such as:

• special taxes on consumption (alcohol and alcoholic drinks, beer, hydrocarbons and the tobacco industry),
• special tax on certain means of transport,
• tax on electricity, which is levied on the consumption of electricity.
• Special tax on non-reusable plastic packaging.