💸 5 reasons why everyone complains about Spain's tax man

That guy, he just wants more, and more, and more…

Madrid | Nov. 4, 2025

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Well, at least you get to keep a little. Photo by Towfiqu barbhuiya on Unsplash

5 reasons why everyone hates Hacienda

Back in New York City in the 2000s, the cliche was that all conversations revolved around two subjects: sex and real estate. In Spain today, you can add a third obsession: taxes. It sorta doesn’t matter whether you’re a bohemian freelancer in Lavapiés, a middle manager in Valencia, or a Catalan factory owner with exactly 12 employees since 1543 — you have a story.

Someone will sigh and tell you about the time Hacienda slapped them with a mysterious fine they only discovered months later in their buzón electrónico (which they didn’t even know existed). Someone else will grumble that they’re paying more now than their parents did, even though their purchasing power has plunged. And if you’re talking to a twenty-something with a Twitch channel, they’re probably calling you from the house they moved to in Andorra.

Some of this is perception. Spain’s overall tax take as a percentage of GDP is actually lower than the EU average (around 37% vs 40%, per Eurostat). But the topline number doesn’t tell the whole story. The tax code’s complexity — and the way it seems aimed squarely at the middle class — don’t help. Plus, the experience for many taxpayers is that dealing with Hacienda just feels punitive, bureaucratic, and joyless. No fun!

Looking at all that, it makes sense that Spain is ranked 33 out of 38 OECD countries in the Tax Foundation’s International Tax Competitiveness Index.

Which is a shame, because Spain really is the dream — sun, tapas, universal healthcare, and three-hour lunches. But then tax season arrives, and suddenly you’re Googling “how to open my buzón electrónico” like it’s a horror movie.

This guide is here to help you avoid that panic. Think of it as a roadmap to where the Spanish tax system hurts the most — and how to keep those bruises to a minimum.

So let’s break it down. Here are five big reasons why people rage at the tax man.

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1. Bracket creep = stealth tax hike

Ask anyone in Spain why they feel poorer now than 10 years ago and you’ll hear two words: inflación and tramos. The first is obvious — Spain saw a surge in consumer prices after 2021, just like the rest of Europe. The second is trickier (but related): income tax brackets.

Unlike countries like Austria, Denmark and the Netherlands, Spain does not automatically adjust its IRPF (income tax) brackets for inflation. In fact, it hasn’t since the current ones were put in place in 2016. So when prices rise and salaries nudge up, you can easily find yourself paying more tax at your highest rates — or even find yourself in a higher bracket — without being any richer in real terms.

Economists call this “fiscal drag,” a regressive burden that hits the poor and middle class. Others call it “bracket creep.” Either way, to normal people it’s basically a stealth tax hike.

Between 2021 and 2024 — when inflation totaled 17.8% — the average middle-class Spaniard paid about €458 more in income tax simply because the brackets didn’t budge, according to the Funcas think tank. The government, meanwhile, pocketed an extra €9.7bn ‼️ in revenue.

Some regions — especially Madrid and Andalucía — have made a point of deflating their brackets by 2–4% in recent years to counteract fiscal drag. But nationally, no adjustment has happened in a decade.

The government knows that fiscal drag is a quiet moneymaker. It doesn’t require passing a tax hike; you just let inflation do the dirty work.

This is one reason why Spaniards who consider themselves clase media feel squeezed. They’re not imagining it. Their real disposable income is under pressure, not just from higher grocery bills but from a tax system that pretends their salaries are growing faster than they are.

Even the Taxpayer Defense Council (El Consejo para la Defensa del Contribuyente), an organism that advises Hacienda, says it “doesn’t seem reasonable” that rising prices should lead to an increase in taxpayers’ tax bills — that is, that people whose real income has barely changed bear a higher tax rate simply because the nominal value of their income has grown with inflation.

In its annual report, the council took pains to note that it is “mathematically undeniable” that not indexing for inflation “leads to an effective increase in the tax burden that affects less well-off people more severely.”

The cruelest bit for the council? The personal and family minimum — that is, the part of income that is tax-free because it is considered essential for subsistence — has been set at €5,550 for years. According to the council’s calculations, if it had been updated in line with accumulated CPI inflation since 2006, it would be at €7,681, a 30% increase.

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2. The autónomo squeeze

Spain has never been kind to freelancers. For years, freelancing was basically code for trabajar en negro — dodging taxes by working off the books.

And, okay, sometimes that’s true. You’ve paid a plumber in cash at least once — no hace falta la factura (don’t deny it). But for the 3.4m autónomos in Spain, freelancing is how they earn a living, start a business, and maybe someday make it big. It’s baby entrepreneurship, Spanish-style.

The problem is that Spain’s deep distrust of the self-employed means the tax system has long punished autónomos for not becoming funcionarios or corporate lifers. That’s why social media is full of viral videos of autónomos — both well-paid and just getting by — complaining about how much more taxes they pay than regular employees.

Let us count the ways.