Spain’s lower house of parliament approved a new tax package on Thursday, including a three-year extension of a modified temporary bank windfall tax, in a last-minute deal with smaller parties.
The bill passed by a narrow 178-171 vote, reflecting the challenges faced by the governing coalition, which must balance concessions to both hard-left Podemos and center-right Catalan separatists Junts.
The centerpiece of the fiscal package is a new requirement that large Spain-based companies with annual revenues exceeding 750 million euros ($785 million) pay a minimum tax of 15% on their consolidated profits, in line with a European directive. Prime Minister Pedro Sánchez hailed the legislation as “landmark,” emphasizing that it would ensure Spain’s access to 7.2 billion euros in European recovery funds.
The European Commission had previously sued Spain, along with Cyprus, Poland, and Portugal, for failing to implement these rules to curb fiscal dumping by the end of 2023. The government’s approval of the tax package was also seen as critical for next year’s budget.
The package includes a three-year extension of the annual bank windfall tax, which will now be linked to lenders’ net interest income and commissions, with rates ranging from 1% to 7% based on lending income volumes. For banks with annual volumes exceeding 5 billion euros, the rate will be set at 7%, affecting major institutions such as Santander, BBVA, and Caixabank. This amendment was secured after Junts’ support was obtained by allowing regional governments to collect the tax revenues.
Banking associations AEB and CECA have expressed their intention to challenge the measure in court, citing concerns over legal uncertainty and its potential impact on competitiveness.
