The next steps for the Catalan Treasury: experts, working group, and master plan

Spain is preparing to undertake a 180-degree turnaround in one of the basic pillars of the State: its tax administration . The transfer of all taxes, starting with personal income tax, and the introduction of new limits on inter-territorial solidarity are long-standing demands of Catalan nationalism and, as of this Monday, the pillars of the "bilateral" financing model that Catalonia will adopt.

This was agreed upon yesterday in a "basic" document by the central and regional governments, which for now provides no details about the timeline or what its impact will be on the coffers of the various administrations. Now, a working group with representatives from both governments will move from principles to specifics. At the same time, several laws will also need to be amended in Parliament.

The "foundations" of the new model were formally agreed upon at the meeting held yesterday by the bilateral commission between the State and the Generalitat , chaired by the Minister of Territorial Policy, Ángel Víctor Torres, and the Minister of the Presidency, Albert Dalmau.

The latter emphasized that the changes to be introduced will comply with the principle of ordinality . That is, in the ranking of public resources per inhabitant of the 15 autonomous regions under the common regime, none will lose positions before and after the leveling and solidarity mechanisms are applied.

Thus, unlike the Basque Country and Navarre, Catalonia will continue to contribute, but less than now. This will inevitably affect the rest of the autonomous regions, although in the press conference following the bilateral meeting, Minister Torres did not specify whether the government will increase contributions to the other regions or whether there will be temporary mechanisms in place to address the drop in revenue they will experience.

It's also unknown how much the Generalitat will collect through the Catalan Tax Agency (ATC) with the change in model, nor what additional revenue the Catalan government will receive. The group of experts appointed by President Salvador Illa a year ago, which continues to work, will provide details on this last issue.

Temporal coordination?

Another unknown is the degree of collaboration between the ATC and the Treasury. The agreed text speaks of a "federal" approach, with a "network model" and "coordination rules." However, this contradicts the agreement signed a year ago by ERC and the Socialists, in which the Republicans pledged to support Illa's investiture. In return, it was established that the ATC would "manage, collect, settle, and inspect all taxes" and that this would begin with the next personal income tax campaign, corresponding to this year and which taxpayers must complete in the spring of 2026.

The document approved by the bilateral meeting emphasizes that the ATC's assumption of new powers will be "progressive" and opens the door to "future agreements on other taxes" beyond personal income tax. The goal is to replicate the agreement reached by the two governments earlier this year, which will allow the ATC to participate in the collection of vehicle registration taxes in the near future.

Albert Dalmau made no secret of the fact that, in the initial phase, both tax authorities will have to cooperate, given the stark contrast in IT and human resources. The ATC employs around 850 people, and with the various calls underway, it is expected to surpass the 1,000-person mark in the coming months. This will be four times fewer than the more than 4,000 employees available to the state treasury in Catalonia. Its revenue collection is also very different: the ATC's 5 billion euros from its own and ceded taxes contrast with the 30 billion euros the Treasury receives from the Personal Income Tax (IPRF) alone.

Torres and Dalmau insisted that the new model for Catalonia will be "generalizable" to all autonomous regions under a common regime that so desire, so Catalan financing will be "bilateral" and "multilateral" at the same time, they said.

The first step

Before the end of the month, the Generalitat (Catalan Government) plans to publish its new master plan for the Treasury , which will outline the phases of its growth. It was drafted by Indra, and this assignment was included in one of the credit supplements that the Parliament approved this year to allow for more spending despite the budget extension.

Once the new model is fully implemented and all taxes are collected by the Generalitat (Catalan government), the two administrations will share the revenues in a percentage that has not yet been disclosed and that must be specified in the new Organic Law on the Financing of the Autonomous Communities (Lofca).

Additional mechanism

The figures and results are unknown, but the methodology that will be followed is not. The calculation will take into account the cost of the services provided by the State in Catalonia. The allocation of resources and the application of equalization mechanisms will be simpler than at present, they assure, with no advance payments and fewer special funds to finance the responsibilities shared by all communities.

However, the Generalitat has powers not available in other regions, such as its own police force , which is deployed throughout the country. Another change underway is the transfer of the Cercanías ( local rail) service, which will be operated by a joint venture.

These powers will receive state funding, with a percentage, methodology, and frequency yet to be determined, and their calculation will be done separately. Another significant change would be the strengthening of the Parliament's powers to legislate on taxation .