Spain's tax competitiveness slides to 34th in OECD as fiscal pressure runs 17% above EU average, business lobby warns

The ranking slide

Spain ranks 34th among the 38 OECD economies in the 2025 International Tax Competitiveness Index, published by the Washington-based Tax Foundation and presented in Spanish by the Instituto de Estudios Económicos (IEE). The country has lost five positions since 2018 and scores 57.9 points out of 100, placing it 11.5 points below the EU average and 12.2 points below the OECD mean. The IEE, which is tied to the CEOE employers' federation, warns of a continued deterioration in Spain's relative fiscal competitiveness, driven by rising regulatory complexity and taxes that generate larger economic distortions. Estonia, Latvia, New Zealand, Switzerland and Luxembourg lead the ranking with systems described as simpler, more neutral and better oriented toward investment and growth.

Pressure gap in numbers

Using the Tax Foundation index as a base, the IEE built its own normative tax-pressure indicator, which measures the burden arising from the legal design of the system. By that gauge, Spain's tax pressure is almost 17% above the EU average and 18% above the OECD average. In collection terms, the tax-to-GDP ratio rose by 2.3 percentage points between 2018 and 2024, while the European average fell by 0.6 points. Tax effort (the burden relative to economic capacity) stood 14.1% above the EU mean at end-2024; direct-tax effort, covering IRPF and the corporate tax, was 16.5% higher. The IEE notes that part of the gap reflects structural factors such as higher unemployment and the shadow economy, and estimates that converging with European averages on those fronts could lift revenue by more than 39 billion euros without raising tax rates.

Corporate and savings bite

Spanish businesses face a combined tax burden of up to 47.5%, nearly ten points above the EU average of 38%, according to IEE figures. After paying the corporate income tax, distributed profits are taxed again under the personal income tax, and companies also carry social-security contributions that amounted to 9.5% of GDP in 2024, the fourth-highest share in the EU. In that year, businesses supplied almost 34% of public revenue, compared with 26% for their European peers. The IEE says this triple load hurts investment, competitiveness and corporate growth.

Capital-gains and savings taxation

Tax on capital gains from share sales reaches 30% at the top rate in Spain, against an EU average of 18% and an OECD average of 20%, according to a joint report by the IEE and the EFPA financial planners' association. The effective tax charge on investment returns is 29%, seven points above the EU mean. For investment funds, Spaniards pay 27% versus the EU 21%; for bank deposits, 30% versus 25%. The IEE argues that successive tax hikes between 2020 and 2024 have significantly increased the fiscal load on financial products, discouraging saving and potentially reducing capital-allocation efficiency. Spanish households already bear a tax effort 16.5% above the EU average.

When financial products face a high tax burden, especially in the early stages of wealth accumulation, saving and investment are discouraged.

Business leaders react

IEE president Íñigo Fernández de Mesa said Spain suffers a "continued deterioration of its relative fiscal competitiveness" owing to "ever-greater regulatory complexity, a higher tax burden on investment, and the presence of taxes that generate larger economic distortions." IEE director general Gregorio Izquierdo stressed that the gap has a structural character and that convergence on unemployment and the informal economy could yield over 39 billion euros in additional revenue without rate increases. The CEOE separately warned that Spain's tax pressure is 17% above the European and rich-country averages, calling it a drag on the national economy. The editorial line of La Razón described the situation as one in which rising collection records coexist with worsening infrastructure, stagnant civil-service pay and the executive's failure to table a budget for three years.