The failure to update the IRPF rate to inflation caused tax revenue to increase by almost 2.3 billion last year. The calculation is official. It is reflected in the Annual Progress Report that the Ministry of Economy sent to the European Commission on Thursday night. The document confirms that the lack of deflation, an issue that has been part of the public debate in recent years, is generating considerable additional income for public coffers.
Read more How many troops does the United States have deployed in Europe and where are they?
The Government explains to Brussels in the report that “the non-deflation of the tax bases in the Personal Income Tax” already reaches “an increase in revenue of more than 0.1% of GDP. Indeed, Economy details that the State collected an additional 1,137 million last year due to this non-update of the bases and the autonomous communities collected an extra 1,157 million. In total, revenues grew in 2025 by 0.14% of GDP thanks to this decision demanded by several parties across the parliamentary spectrum, from the PP to Junts.
Spain has not approved a deep tax reform in this legislature. There are no parliamentary numbers for it. But the Government has been able to advance in specific tax modifications that bring additional income to the public coffers of 6.2 billion each year, according to the calculation Spain communicates to Brussels. The figure results from raising certain taxes and also from approving new tax figures.
Specifically, the Government has been collecting since last year 0.39% of GDP from the aforementioned tax modifications. The commitment made with Brussels is to achieve a structural increase in public revenues of up to 0.4% of GDP, so that the combination of the approved or modified tax figures, added to the non-deflation of the IRPF, allows Spain to meet the tax commitment.
The only significant tax reduction affects the rate applicable to SMEs and micro-enterprises
Among the new taxes approved that are generating extra income stands out the Temporary Solidarity Tax on Large Fortunes, which aims to tax net assets exceeding 3,000,000 euros and collects 623 million per year. It is a complementary figure to the Wealth Tax, so a deduction was established on the quota actually paid in the same of 100%. This avoided double taxation. Several autonomous communities, in fact, have decided to recover Wealth Tax to prevent the revenue from ending up in the Tax Agency. This is the case of Madrid.
Read more Germany assumes the withdrawal of U.S. troops and calls on Europe for more responsibility in defense
In 2024, a new non-harmonized tax was also approved that falls on the consumption of new products related to tobacco. Specifically, the figure taxes liquids that, containing or not nicotine, can be used in electronic cigarettes or vaporizer devices. It also affects electronic cigarettes. Between this new tax and the increase in the Tobacco Products Tax, the Treasury estimates that revenues will increase by 466 million per year.
The IRPF also underwent a specific change in the last legislature to raise the savings tax rates. Specifically, the rate applicable to the part of the savings taxable base exceeding 200,000 euros was raised (by 1%, up to 27%) and a new bracket was created for amounts over 300,000 euros (with a rate of 28%). Revenues have increased by 222 million each year with this change. In 2024, the 28% rate from 300,000 euros was increased to 30%, increasing revenue by 250 million euros annually. In total, the combination of both decisions will mean an increase of almost 500 million euros.
In the Corporate Tax, several regulatory changes have significantly increased revenue. The establishment of a minimum taxation of 15% has increased revenue by 621 million annually. The same has happened with the measures of the so-called OECD Pillar II, which includes a minimum tax to be fulfilled that collects 1,708 million more each year. Finally, the limit on the consolidation of losses in groups has led in 2025 to an increase in revenue of 4,323 million. Part of the measure expires in 2026, so an annual increase in revenues of 2,629 million is estimated until 2029.
Brussels demanded Spain increase revenues by 0.4% of GDP and the Government comfortably complies
On the revenue reduction side, the reduction of the rate applicable to SMEs and micro-enterprises means a loss of 307 million in 2026, which increases to 614 million in 2027 and 921 million in 2028. This measure was a demand of Junts in the tax package approved in December 2024.
Read more A brawl in Arroyomolinos ends with two injured by stabbing
