Wealth

Spain’s super rich bounce back after crisis

But tax data from 2015 also highlights unequal nature of country’s economic recovery

A yacht in the exclusive Sotogrande community, in Spain’s southern Cádiz province.
A yacht in the exclusive Sotogrande community, in Spain’s southern Cádiz province.julián rojas

Spanish income statements from 2015 show that only 7,194 individuals declared more than €600,000. That number is 31% lower than the 10,425 in this bracket in 2007, but well above the 4,000 declaring this amount during the worst moments of the economic crisis.

However, the majority of Spanish taxpayers in 2015 – almost 11 million out of just over 18 million in total – had a taxable income of up to €21,000.

Experts believe middle and lower income earners in Spain bear a greater tax burden than in other European countries

These new tax office numbers published Tuesday do not present any real surprises. Barely 4% of taxpayers, or around 690,000 people, declared more than €60,000 in taxable income in their 2015 returns.

The 2015 fiscal year was one of strong economic recovery, with a 3.2% increase in GDP. According to the tax office data, the declared incomes of the wealthiest – defined as those who declared more than €600,000 – grew 41% in total to €5.75 billion. That is an an average of €799,286 per head. In contrast, the total combined income declared by all taxpayers only increased 4.1%.

The total combined income of people who declared between €30,000 and €600,000 also grew – by 13%. But for the group declaring between €12,000 and €30,000, the rise was just 1.5% – a figure below even GDP growth. This suggests the year’s recovery was somewhat unequal.

At the bottom of the earnings table, almost 6.5 million people reported that they made less than €12,000 in 2015. If the threshold is extended to €21,000, 11 million taxpayers in Spain are included, or more than half of the people who declare income. Another 6 million respondents are situated in the €21,000 to €60,000 bracket. From these figures, it is easy to determine which groups are the principal supporters of Spain’s public finances: the bulk of tax revenue comes from middle and lower income earners. Of the €364 billion declared in total by all taxpayers, around €300 billion corresponded to the income of those making €60,000 or less.

The majority of Spanish taxpayers in 2015 declared a taxable income of below €21,000

That means more than 80% of the taxable income in Spain does not come from people who can be considered wealthy. Experts therefore believe that middle and lower income earners in Spain bear a greater tax burden than in other European countries.

In light of these figures, is is not surprising that former Spanish economy minister Elena Salgado described it as being difficult to tax the rich because “they were slipping through the net.” For salaried employees, it is difficult to “escape” because they are subject to deductions, unless they are paid under the table and do not report their earnings. But for the rest, it is easy: they can declare income via a corporation or simply declare less than they actually make.

“This snapshot is an image of the fiscal conscience that exists in Spain,” explains Francisco de la Torre, a tax office inspector, currently on leave and acting as a spokesperson for Ciudadanos on the issue of taxes.

English version by Henry Hahn.

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