The Basque Tax System

The Basque Country has its own tax and finance system. It is derived from the historic rights of the "Territorios Forales" or areas with special rights and it has its own characteristics.

Its singular nature, recognized in the Spanish Constitution, is set forth in the Basque Country's Statute of Autonomy, which establishes that taxation and financial relationships between Spain and the Basque Country shall be regulated by the traditional "foral" system in the form of an Economic Agreement or Convention.

Under the Economic Agreement, the Basque Country has its own tax system with most of the powers to regulate and manage taxes usually available to countries with a Treasury system.

The Agreement also includes a set of regulations that guarantee harmonization between the Basque tax system and those in the rest of Spain.

The Basque Country's competencies in tax matters lie essentially with the governing bodies of the three historic provinces, Araba, Bizkaia and Gipuzkoa.

All taxes levied under the Basque system are managed and collected by the Foral (provincial) Treasuries as stipulated in the Economic Agreement. As far as direct taxation is concerned, the Basque Country has its own IRPF or Income Tax, and its own Company of Corporation Tax , as well as its own wealth and capital transfer taxes.

The main feature of the Basque Country's finance system is its capacity to collect almost all taxes making up the tax system itself, contributing towards financing Spanish State expenditure on matters where competences have not been transferred to Basque Country institutions. This contribution by the Basque Country to the State is called the Quota.