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Economic agreement and competency framework for the Basque Country / Spain2020-08-07T09:03:21+02:00

ECONOMIC AGREEMENT AND COMPETENCY FRAMEWORK FOR THE BASQUE COUNTRY / SPAIN

The financial and tax relations of the Basque Country with the rest of the rest of Spanish State are regulated by Economic Agreement Law 12/2002.

This law establishes the regulatory, management and tax collecting autonomy that make up the Basque Country (Araba, Bizkaia and Gipuzkoa) in terms of the main taxes, where the rules in force in the rest of the common territory are established as supplementary.

The competent institutions of the Basque provinces can maintain, establish and regulate their tax system within their territory. In order to manage, inspect, review and collect the agreed taxes, the competent institutions in the Basque provinces have the same powers and prerogatives as those of the Spanish tax authorities.

The distribution of competences for the main taxes based on the Economic Agreement Law is as follows:

TTAXES COVERED BY AUTONOMOUS REGULATIONS TAXES COVERED BY STATE REGULATIONS
Corporation Tax Non-resident income tax
Personal income tax Value Added Tax
Property tax
Inheritance tax Special taxes
Capital transfer tax
Local taxes Electricity Production Tax

In order to achieve tax harmonisation throughout the Spanish territory, the Basque provinces must use the following criteria:

  • The terminology and concepts must be adapted to state regulations.
  • They must maintain an overall effective tax burden equivalent to that in the rest of Spain.
  • They must respect and guarantee the freedom of movement and right of establishment of persons and the free movement of goods, capital and services throughout the Spanish territory.
  • They must use the same classification of activities of an industrial, commercial, services, professional, agricultural, livestock and fishing nature as in the common territory.
  • Principle of collaboration: In exercising their functions, Spain and the Basque provinces must mutually facilitate as much data and background as they deem necessary.