All companies seek to reduce their tax payments to the minimum possible in order to achieve greater benefits.
Furthermore, one of the fundamental issues that determine how much they will pay depends on which autonomous community their registered office is located in.
In Spain, the different autonomous regions have a wide margin to regulate certain taxes, including those related to the rates paid by companies, which depend on where they have their tax domicile .
This scenario is the perfect breeding ground for stimulating the fight between the autonomous communities , with one goal: to get the headquarters of finland email list companies to move to their respective territories. This “competition” is known as tax dumping or unfair competition.
Start of marked textShare! In Spain, the autonomous communities enjoy a wide margin in terms of taxation of citizens and companies.End of marked text
How do communities attract businesses?
The same company can pay less taxes if it is located in one autonomous community or another, resulting in higher profits in its annual accounts. And it is precisely this issue that causes the different autonomous communities to fight to attract companies .
This is how companies and communities benefit from tax dumping
In order to attract more companies and, ultimately, more investment, many autonomous communities opt for a more friendly tax system. That is, they offer lower tax rates for companies.
Benefits for companies
Many companies establish their headquarters in the territories with the greatest tax advantages , even though their production or distribution centres are spread throughout the national territory.
Benefits for the Autonomous Communities
For the autonomous communities, the relocation of companies to their territories represents an additional source of income. This movement causes significant tensions between the different communities, which see their companies move to another autonomous region seeking better tax treatment .
Which taxes are affected by tax dumping ?
The Autonomous Communities act on certain taxes that affect both individuals and companies . To this we must add that the Basque Country and Navarre have a special economic agreement. In this case they would be out of place in the comparison.
Below we list the taxes that the autonomous communities can decide to raise or lower.
Wealth Tax
The Wealth Tax , also known as the tax on large fortunes , affects the assets of people who have more than a certain amount.
The current law sets the minimum taxable base for tax obligations at 700,000 euros . This amount, however, is the general rate and many autonomous communities establish their own scale.
Successions and donations
This indirect and progressive tax is one of the most controversial. The management of inheritances and donations is currently 100% transferred to the Autonomous Communities and in many communities the amount has been reduced to zero.
This situation has caused many citizens to change their residence to these autonomous regions when they want to make a donation or see that the end of their life is approaching.
Environmental taxes
The so-called green taxes are designed primarily to discourage polluting behaviour. In other words, companies that pollute must pay.
One of the most common complaints in this area is that raised between communities with industries that are located in border areas . The reason is that many companies are located where it is more profitable from a tax point of view, but, as they are border areas, their activity affects populations in both communities.