The Basque Country and Navarre's separate tax systems, explained

Key rules

• Where to file: If you live in the Basque Country or Navarre, you file with the local Hacienda Foral, not the national tax agency.
• Residence test: More than 183 days in the territory during the tax year makes you habitually resident there.
• Check, don't assume: Rates and allowances differ between the three Basque provinces and Navarre, and they change yearly.
• Family: Your spouse and children are not automatically tied to your territory.

Do the usual tax rules apply there?

Not fully. The Basque Country (Álava, Bizkaia and Gipuzkoa) and Navarre collect most of their own taxes and pay the State a contribution for common services. The Basque system is called the Concierto Económico. Navarre's is the Convenio Económico. If you become tax resident in either place, check the local rules instead of assuming the national ones.

VAT and customs still follow state rules. Income tax, wealth tax and inheritance tax are set locally. The rules also differ between the three Basque provinces and Navarre, so check the province you will live in.

Where you file

You file with the Hacienda Foral of your territory, not with the national tax agency. In the Basque Country that is the Hacienda Foral of Álava, Bizkaia or Gipuzkoa. In Navarre it is the Hacienda Foral de Navarra.

Foral rules apply if you are habitually resident there. That means you spend more than 183 days of the tax year in that territory. If that is unclear, the place where your main economic interests lie decides. After that, the last declared residence decides.

The same residence test is applied to each family member on their own. So your spouse or children may fall under a different territory from you, depending on where each of them lives and where their own interests lie.

Some cases are mixed, such as owning a company or working abroad. Ask the relevant Hacienda Foral before filing.

Income tax

Foral income tax scales differ from the national ones, and so do allowances and deductions. Roughly, the top rates are:

• Basque Country: about 49% to 52% at the top, with the highest bands starting around 300,000 euros.
• Navarre: around 52% on income above about 300,000 euros.
• Savings income: about 20% to 28% in the Basque Country and 19% to 28% in Navarre.

These are approximate. Scales are updated every year, so check the current scale with your Hacienda Foral.

Wealth tax

Both territories charge their own wealth tax, and it follows where you live.

• Basque Country: an exemption of around 800,000 euros for worldwide assets and 300,000 for your main home. Rates run from about 0.2% to 2.5%.
• Navarre: about 0.2% to 3.5% on net assets over 550,000 euros.

You would pay more than in Madrid, where a 100% bonus on wealth tax means residents pay none. You may still pay less than in some other regions.

Inheritance tax

In both territories, a spouse and children are generally exempt. Other heirs pay on local scales. In Bizkaia that is about 1.5% to 7.65%. In Navarre, other relatives pay from 0.8% to 8%, depending on kinship. Outside the foral territories, national rates run from 7.65 to 34 percent, with allowances and regional bonuses.

Succession follows the residence of the person who died, or where the property is. If your family is split between territories, check which rules apply before planning.

The questions below cover the most common doubts.

Frequently asked questions

Which tax office do I file with if I move to the Basque Country or Navarre?

You file with the Hacienda Foral of your province, not with the national tax agency (AEAT). In the Basque Country that means Álava, Bizkaia or Gipuzkoa, depending on where you live. Navarre has its own Hacienda Foral.

Does my spouse have to file in the same territory as me?

No, Spouses and children are not automatically tied to your territory. Each person's own residence decides which rules apply to them.

Is wealth tax higher or lower there than elsewhere?

It is higher than in Madrid, though possibly lower than in some other regions. Madrid applies a 100% bonus, so residents pay no wealth tax. In the Basque Country you pay 0.2% to 2.5% above the exemptions, which are around 800,000 euros for worldwide assets and 300,000 euros for your main home.

What happens with inheritance tax for my family?

A spouse and children pay nothing in both the Basque Country and Navarre. Other heirs pay from 1.5% to 7.65% in Bizkaia, with similar scales elsewhere in the Basque Country.