Spain Economy

Spain Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax system

Basic data

Spain is the country with the fourteenth largest economy in the world and the fourth largest in the European Union. The country has a population of 47.3 million and a GDP (PPP) per capita of approximately 46 thousand USD. It is an economically very developed country, almost 99% of business companies are small and medium-sized enterprises. The services sector (75%), industry (16%), construction (6%) and agriculture and fisheries (3%) have the largest share of GDP. Spain has excellent trade relations with the countries of Latin America and North Africa.

According to, the country’s economy had a consolidated GDP growth of around 2% until 2020. However, the covid-19 pandemic has hit the country full force and the economy has suffered the worst recession in Europe, with GDP falling by 11% and expected to be one of the last economies in Western Europe to return to its pre-pandemic size before mid-2023 at the earliest. Real GDP grew by 4.5% in 2021, mainly thanks to a significant recovery in private consumption. Spain is the second most visited country in the world (2019 – 82 million tourists), however, the 14% share of tourism in GDP is the reason for the vulnerability of the Spanish economy in moments of crisis, such as the pandemic period. The government strives to increase the share of industry, aims to digitize the economy, meet climate goals, especially in the area of ​​energy transformation. The country’s long-term problem is high unemployment, which, however, is gradually decreasing and now hovers around 15% (2021), while unemployment among the generation under 25 reaches up to 30%. Inflation will reach a record of almost 7% this year, especially due to high energy prices.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 2 -11 5 5.4 3.2
GDP/population (USD/PPP) 43,812.40 38,326.80 41,523.60 46,275.00 49,008.00
Inflation (%) 0.8 -0.3 3 7.5 2
Unemployment (%) 14.1 15.5 14.8 14.2 13.3
Export of goods (billion USD) 325.7 298.7 407.4 412.9 420.5
Import of goods (billion USD) 361 314 431.8 470.5 475.7
Trade Balance (Billion USD) -29.7 -10.3 -17.6 -57.6 -55.5
Industrial production (% change) 0.8 -9.6 7.3 4 2.3
Population (millions) 46.7 46.8 46.8 46.7 46.7
Competitiveness 36/63 36/63 39/64 ON ON
OECD export risk ON ON ON ON ON

Source: EIU, OECD, BdE, Funcas

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -7.8
Public debt (% of GDP) 119.7
Current account balance (billion USD) 15.3
Taxes 2022
AFTER 20-30%
F.O 19-47%
VAT 21%

In January 2021, the state budget was approved. This is mainly characterized by an increase in spending in the social area. The state budget deficit reaches the level of -7.8% of GDP.

The government has introduced new tax obligations, for high income groups, a digital tax, a plastic tax and there is talk of other new tax changes.

Spain’s long-term problem is its high level of indebtedness. Although the government reduced the debt by small steps until 2019 by a few percentage points, however, the covid-19 pandemic, the war in Ukraine and the associated high energy prices changed everything, and it is expected that in 2022 the debt will again reach a level of around 120% of GDP. According to Brussels, Spain will not be able to reduce its debt in the near future.

The deficit of public finances at the end of 2021 was at the level of 6.6%.

Banking system

Spain has been a strong supporter of the European banking union and all its pillars since the beginning.

From his point of view (especially in the context of the pandemic), it is a priority that the unification of the market lowers prices, ensures the stability and protection of the internal market – to this end, he is planning structural reforms of the banking sector to make the implementation of the recovery plan as effective as possible.

Major banks operating in the country include Santander, BBVA, Bankia, Banco Sabadell and CaixaBank. Spanish banking houses have traditionally focused, among other things, on their interests in foreign markets, especially in Latin America.

The crisis of the Spanish economy (2008-2014) was largely linked to the crisis of the banking sector. The biggest problem was the financial situation of the banking sector, specifically a large share of so-called toxic assets, or credit involvement of banks in the construction sector and the real estate market. Banks thus felt the consequences of their lending activities during the construction boom. The so-called cajas (savings institutions), i.e., most often regional, savings banks (pawn shops) got into the biggest problems. Among the main steps that helped to recover the Spanish banking sector was the measure of the central bank (Banco de Espaňa) on the mandatory increase of the capital adequacy of banks to 9%, in the case of cajas to 10%, which represented a financial burden of about 50 billion euros.

In 2016, Spanish banks returned to profitability after the crisis, this development was also reflected in the improvement of the rating of Spanish banks, which was a sign of the ability to cope with losses and ensure the necessary stability.

In 2020, the crisis also affected the banking sector. One in four euros that financial institutions have lent to companies goes to sectors that have been hit hard by the pandemic. Spanish banking is now at a crossroads where prestige and reputation are at stake in lending to companies to maintain the country’s industrial structure and maintain profitability. In addition to the strengthening of internet banking services, in 2021 and 2022 there was also a reduction in operating costs and a reduction in the number of physical bank branches, digitization of processes, etc.

In the current crisis, Spain is counting on a high level of financial support from the Next Generation EU recovery funds, which should also strengthen the banking sector towards greater digitization and modernization.

Letters of credit in Spain are governed by the same international rules as in the Czech Republic.

Tax system

Constantly updated information on specific issues can be found on the website of the Financial Office of Spain – AgenciaTributaria.

The Spanish tax system can be divided into three basic levels of taxation, namely taxes set by the central government, taxes assessed by the governments of autonomous regions (AOs) and taxes determined by local authorities. The tax system recognizes taxes (impuestos), benefits and fees (tasas) and special fees (contribuciones especiales). Out of all of Spain, only AO Basque Country and Navarre have their own tax regime.

Exchange Controls: There are no exchange controls, but the government requires prior notification of certain capital movements under anti-money laundering and anti-terrorist financing regulations, for statistical purposes and to reduce tax fraud.

Taxes collected by the central administration: Personal income tax, Non-resident income tax, Corporate income tax, Inheritance and gift tax, Indirect taxes, Value added tax, Special taxes, Insurance premium tax, Property transfer tax and stamp duty, Excise duty tax, Import duty

Tax system of autonomies

Autonomies have the right to introduce their own system of taxation, which, however, must be based on the state tax system. Furthermore, they must follow the principle of territoriality, must not introduce customs taxes and must ensure the absence of economic and social privileges and respect the principle of solidarity with the rest of the autonomies.

These are, for example: Gambling taxes, Environmental tax, Hunting tax, etc.

In 2021 , there was an increase in some taxes (e.g.: VAT on sweet drinks, income tax for people with the highest incomes or green and digital tax).

Information also available at on the Deloitte website.

Spain Economy