The 2024 fiscal expenditure report, presented to Parliament, indicates that “the fiscal spending of Public Administrations, in nominal terms, showed an upward trend from 2015 to 2024,” remaining at 7.2% of GDP for the second consecutive year.
VAT expenditure and income taxes (IRS and IRC) stand out among the types of taxes, collectively representing over 80% of total fiscal spending.
In 2024, the fiscal expenditure of public administrations rose by 5.7% compared to 2023, “mainly explained by the increases in VAT and income tax expenditure, with variations of 415.5 and 335.1 million euros, respectively,” according to the report.
VAT accounted for 60.1% of fiscal spending, with the application of preferential rates responsible for 98.6% of VAT fiscal expenditure.
VAT expenditure grew by 3.5%, reaching approximately 12,250.2 million euros in 2024, according to estimates.
In terms of income tax, the spending increased by 335.1 million euros compared to the previous year, marking a growth of 25.2%, notably due to tax exemptions like the exemption for young homebuyers.
Income taxes correspond to about a quarter of total fiscal expenditure and saw an increase of 243.4 million euros compared to 2023, which “resulted both from an increase in IRC fiscal spending and a rise in IRS expenditure (with variations of 134.1 and 109.3 million euros, respectively).”
IRS expenditure totaled 2,755.3 million euros, a 4.1% increase from the previous year, due to “tax exemptions and collection deductions, which recorded an increase of 53.4 million euros (22.6%) and 41.5 million euros (6.5%), respectively, compared to the previous year.”
“The increase in exemptions predominantly resulted from the rise in fiscal spending associated with the Young IRS and individuals with disabilities,” the report notes.
Regarding IRC, the estimated fiscal expenditure of Public Administrations is 2,182.4 million euros, representing an increase of 6.5% from the previous year.
This increase is related to SIFIDE – Tax Incentive System for Business Research and Development (with an increase in fiscal spending of 114.5 million euros), as well as deductible amounts associated with the Tax Incentive Scheme for Corporate Capitalization (19 million euros in 2024).
