Catalonia to collect personal income tax starting January 2026 in new financial model

Catalonia will begin collecting personal income tax (IRPF) starting in January 2026.

This is the main outcome of a key meeting held on Monday between the Spanish and Catalan governments to lay the groundwork for a new financial model for Catalonia.

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.

However, he acknowledged that there are "complex" aspects that need to be addressed to make it work, and ruled out the possibility of the Catalan tax agency fully collecting the IRPF as early as next year.

"We need to look at how we strengthen the Catalan tax agency so it can fully manage certain taxes. It currently has 850 employees, while Spain’s tax agency in Catalonia has 4,400. So, there is still significant work ahead," he admitted.

Representing the Spanish government, Minister Torres welcomed the agreement, saying it reflects the "unique characteristics and needs of Catalonia."

"What we’ve established today is very important. We’ve been working with an expired financing system from 2014. This agreement is a clear step toward a model that takes into account the distinct features of each region," he said.

ERC wants control over all taxes

The proposal stems from a political agreement between the Socialists and the pro-independence Esquerra Republicana (ERC), in exchange for ERC’s support for Salvador Illa as Catalan president.

However, the negotiations have been challenging, and it remains unclear whether the proposal will fully satisfy ERC’s demands.

ERC’s first reaction came shortly after the announcement. Party spokesperson Isaac Albert described the initial agreement as something that “sounds good,” but stressed that ERC “has to continue pushing.”

Albert called for “more concreteness and less theatrics,” and described the announcement as merely “a starting point.”

On Sunday, ERC leader Oriol Junqueras increased pressure on the Socialists, stating that negotiations were still ongoing and that his party was not satisfied with the current draft.

He urged the Socialists to show “courage,” warning that ERC “will not settle for anything less than what is best for Catalonia.”

One of ERC’s key demands is for Catalonia to gradually assume full control over all tax collection.

Criticism within Socialists

Any final agreement will still have to pass through the Spanish Congress. Some Socialist members from other autonomous communities, especially Castilla-La Mancha and Asturias, have already voiced opposition to the deal. 

The Spanish government, for its part, say the new legal framework could be extended to other regions that wish to adopt it, and that it will respect the "unique features" of each territory. 

Spain's first deputy PM, María Jesús Montero, said that the government "will never promote any policy that causes territorial imbalance."  

Montero said that the new system aims to "deepen regional powers" while ensuring "equal opportunities for all regions." 

Similarly, Spain's defense minister, Margarita Robles, assured that the new model will not generate “inequality” with the rest of the territories of the State.

“Everyone is very aware that the issue of regional financing needs to be reconsidered, and therefore we will let the experts work,” she said.

Junts: Agreement is 'disappointing'

All Catalan parties in parliament met with the Catalan government ahead of the Bilateral Commission to receive explanations about the agreement.

Reacting to it, the pro-independence party Junts described the meeting as "very disappointing," saying it confirmed that "there is no new financing model, neither singular nor plural."

"Of the €22 billion in taxes that Catalans pay and that leave without returning, how much do we recover through this agreement? So far, zero," said Antoni Castellà, the party’s vice president.

The party argues that the new agreement merely allows the Catalan government to carry out an "administrative management" of personal income tax, while Spain "will continue to make the decisions."

PP: Model 'cannot be generalized'

The conservative People's Party (PP) warned that the proposal for singular financing “cannot be generalized.”

“It’s either singular or it’s general,” said the party’s secretary general in Catalonia, Santi Rodríguez. “We don’t buy it. This is an attempt to conceal what they’re really trying to agree on."

Rodríguez said that the new system “could be contrary” to regional laws, and stressed that the model should be agreed upon with the other autonomous communities.

Rodríguez reiterated that his party supports improved financing for Catalonia but emphasized that it must be done in a “fair, balanced way and without privileges.”

He also insisted that any agreement must be discussed with the other regions and ratified by Congress. “It cannot be the result of a pact between just two political parties,” he concluded.