The improvement in employment levels has been a determining factor in raising the country's fiscal pressure
In 2018, the increase in active population in Spain has been a key factor in raising the country's fiscal pressure, which is at its highest level since 2007, one year before the economic crisis.
The tax or fiscal pressure refers to the taxes with which legal entities and natural persons contribute to the state through the GDP (Gross Natural Product). According to the General Intervention of the State Administration (IGAE), the increase in the tax burden is due to multiple factors, such as the collection of Personal Income Tax (IRPF), the number of Social Security affiliates, social contributions or the collection through the Tax on Production and Imports, among others.
This is why the improvement in employment was a great boost. They managed to raise 425,394 million euros, that is, they were able to increase the GDP to 35.20%, which is an increase of 0.73% compared to the previous year, when it stood at 34.47%. The historical maximum reached in 2007 was 36.7%.
However, although the fiscal pressure has increased, Spain is still behind many countries of the European Union. In fact, it is the tenth country in terms of fiscal pressure. The top-ranking countries with the highest fiscal pressure are France (48.3%), Belgium (47.3%) and Denmark (46%). The average fiscal pressure in the Member Countries stands at 40.3%.
It should be noted that, in terms of tax pressure on the employee, also known as the tax burden suffered by the worker, Spain ranks second in countries with the lowest tax burden with a percentage of 21.3%, while the European average stands at 28.4%.
B Law & Tax
International Tax & Legal Advisors