Spain raises taxes amid pandemic while all of Europe lowers them

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In the current context of the pandemic we are experiencing, the actions of each government in terms of social and economic measures are different. Spain has taken a somewhat different course from the rest of European countries, which have chosen to reduce taxes and even eliminate VAT in the case of Greece.

The new budget plan of the Spanish Government raises a tax hike on high incomes, large companies and an increase in property tax. Personal income tax on income of more than 300,000 euros per year will increase by 2%, while that of capital income will rise by three percentage points and the wealth tax will add one more point.

At general levels diesel VAT will go up —Although this rise could be eliminated if an amendment agreed with Citizens goes ahead— and sweetened or sugary drinks, something that will affect all citizens. A tax on plastic (on products packaged in plastic) is also planned to be given at the European level. All these increases respond to a historical social expenditure that includes injections in the Minimum Vital Income, the pensions (+ 0.9%), he IPREM (Multiple Effects Public Income Indicator that represents the granting of aid, subsidies or unemployment subsidy. It experiences a rise of 5%) or the salary of civil servants (+ 0.9%), among others.

Variation of taxes in Europe
Carlos Gamez
Personal income tax calculation: in which communities do you pay more for this tax?

The Executive intends with these changes increase social spending by 196,000 million euros initially, a figure that can reach up to 239,000 million. In addition, it plans to double spending on infrastructure to 11,500 million euros to devote to the aforementioned social issues.

Italy and Germany lower taxes

European governments are acting differently, generally opting for lower taxes. Italy and Germany, for example, have announced extensive measures to reduction of taxes and aid to SMEs, as well as exemption from local taxes, and child allowance and family aid in the German country.

The Italian executive studies reduce taxes on labor increasing allowances for workers. Thus, the measures are focused on increasing public investments to alleviate the economic shock that many families have suffered during the coronavirus crisis.

Portugal lowers personal income tax and the price of electricity

Portugal will reduce company taxes by 6,000 million euros and by eliminating corporate tax on those sectors that have been most affected by the pandemic. The Portuguese government lower taxes on electricity permanently and the IRPF tax rate will be lowered, reducing the tax cost of workers by 200 million.

It has also announced an increase in pensions and an increase in monthly unemployment benefits to a maximum of 503 euros. The toilets that are exposed to the contagion of Covid-19 will receive a compensation equal to 20% of your base salary up to a maximum of 219 euros.

France exempts business taxes

France has decreed a postponement of 20,000 million euros to those companies destined for production, thus exempting them from paying taxes. The French Prime Minister has announced the creation of 160,000 jobs for the next year 2021 and has launched the call plan France Relaunch, endowed with 100,000 million euros to boost the economy after the pandemic.

In contrast, France, which imposed a curfew on its territory a few days before Spain, has registered 14,620 fines for non-compliance with the curfew that began on October 17 and that a week later it was expanded to 46 million people between 9:00 p.m. and 6:00 a.m.

Greece eliminates VAT

Greece, for its part, has decided eliminate VAT in full until March 2021. Prime Minister Kyriakos Mitsotakis has announced measures aimed at protecting jobs and people with fewer resources, such as a significant reduction in Social Security contributions of three percentage points.

Employees subject to a temporary employment regulation file they will continue to receive the aid of 534 euros until the end of the year, while the State will continue to pay its contributions to Social Security. Likewise, the State will continue to guarantee bank loans to companies affected by the pandemic.

United Kingdom lowers VAT by 15%

VAT in the UK plummets 20% to 5% in food products and basic necessities, which will mean a reduction in VAT of 20,000 million pounds. In the Netherlands the most prominent measure is the reduction of personal income tax.

What do the Spanish think of the tax increase?


According to the DYM survey for 20 minutes, the majority of Spaniards are against a general rise (66.2%), but for certain products or services this opinion differs, although on the rise in VAT on diesel, private health and private education there is a majority rejection (76.6%, 66.3% and 59.7% respectively).

Pedro Henar

The tax increase on sugary drinks has generated some division since 50% of those surveyed support it, while 46.2% reject it and 3.8% do not take a position. The possible measures that would have more citizen support would be a increased taxes on tobacco, alcohol and plastic packaging.



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