Catalonia postpones collecting personal income tax to 2028

The Catalan government has announced a delay to collecting and managing personal income tax to 2028. 

According to a deal struck between the ruling Socialist Party and pro-independence Esquerra Republicana to name Salvador Illa the current president of Catalonia, the region would be devolved additional powers from the central Spanish government, thus setting up a new financial model for Catalonia where Catalan authorities collect and manage taxes. Part of the new financial model is the creation of a new Catalan Treasury. 

The initial phase of the yet-to-be-established Catalan Treasury assuming "certain functions" in collecting and managing personal income tax has now been pushed back, authorities announced on Thursday. 

Taxes paid in 2028 will correspond to the 2027 financial year, and it's foreseen that by 2027, workers from the Catalan Treasury will participate in the income tax campaign.

The initial intention of the executive was that in 2026 work could begin on the collection.

The plan also foresees the development of a new technological platform for the Catalan Treasury, and includes the hiring of more than 700 workers for the 2027 campaign, with the expectation of reaching 360,000 taxpayers.

'Paradigm shift'

The agreement, which still requires approval by Congress, has been described as a "paradigm shift" in Spain’s financing system.

Until now, the system has been based on expenditure but will now shift toward being based on the revenue generated by each autonomous community.

The new model will also require Catalonia to respect the 'principle of ordinality,' which ensures that regions contributing more to the public treasury do not receive fewer resources per capita than those contributing less.

The proposal is designed to be applicable to other autonomous communities as well. While tailored specifically for Catalonia, it can be generalized and adopted by other regions that choose to implement it.

The ultimate goal is for the Catalan government to collect all its taxes directly. From these revenues, Catalonia will make a payment to Spain to cover its spending, as well as a 'solidarity contribution' to support communities with lower tax revenues.

Although no specific timeline for the full transition has been established, implementing the new system will require legal changes, including modifications to the financing law of autonomous communities.

The agreement was sealed after a meeting of the Bilateral Commission, attended by high-ranking officials from both sides, including Spain's minister of territorial policy, Ángel Víctor Torres, and Catalonia's ministers of the presidency and economy, Albert Dalmau and Alícia Romero.

"We are talking about a paradigm shift, a new financing framework aimed at improving public services in our country. One that moves toward a model based on shared responsibility, shifting from an expenditure-based system to one based on revenue," said Dalmau.