Spain Suffers Under Europe’s Highest Tax Rate

March 1, 2012 Taxation in Spain

Flying Spanish flagMADRID – Recent tax hikes in Spain have raised the fiscal obligations for taxpayers to the highest level in the countries of the European Union.

According to new research published on February 29th by the Cato Institute of Economic Development, Spanish taxpayers now face a personal income tax rate of up to 56 percent, following the implementation of a new tax hike announced in December 2011.

From the start 2012 Spanish taxpayers will face a top personal income tax rate of 52 percent, the third highest in Europe after Sweden and Belgium, which have top tax rates of 56.4 percent and 53.7 percent respectively. The report pointed out that if the calculations were to take into account local taxes imposed by regional governments in Spain, the top rate would be as high as 56 percent.

The research claimed that Spain’s new rates for capital gains tax are also some of the highest in the world, being comparable to rates seen in Norway and Finland.

The authors of the report suggested that while some other countries in the EU faced high tax rates, they also enjoyed higher incomes per capita than Spain, allowing taxpayers to “withstand” their tax obligations. However, Spain “suffers from the worst of both worlds” with taxpayers facing high rates of income tax and low incomes levels. The researchers added that the financial conditions faced by taxpayers are compounded by the country’s exorbitant unemployment rate, which is currently estimated to be approximately 23 percent.

Photo by Ben Sutherland