The average withholding rate on salaries in the Community of Madrid rose to 20.23% in 2021, the highest in all of Spain. Immediately below were Catalonia and Asturias, with respective withholdings of 18.11% and 16.63%. The country’s average, except for the two regional communities for having their own tax regimes, is 17.01%, according to statistics on the labor market and pensions in tax sources, published annually by the Tax Agency. The lowest withholdings occurred in Ceuta and Melilla, below 10%, and Extremadura.
The average rate shoots up in Madrid because of the high salaries that are received in the region, the highest in the entire country. According to figures from the Tax Agency, in the central community workers received an average salary of 30,958 euros, above the nearly 27,500 that were collected in Catalonia and Ceuta and far removed from the 24,907 in all of Spain. Given that the average rate on income above 30,000 euros is almost 23% in the country as a whole, those regions with a high percentage of this profile of employees see how their average retention grows.
Indeed, as shown by the data from the organization led by Soledad Fernández, in Spain there are just over four million people with annual remunerations above 30,000 euros (except again for the Basque Country and Navarra). Almost a quarter of them reside in Madrid alone, some 930,000 wage earners.
This causes the region’s average retention to skyrocket. Madrid, curiously, has relatively low rates in almost the entire scale of income segments, equal to the Spanish average or even below it in all brackets below 30,000 euros per year. The regional withholding rate, however, amounts to 25.27% for employees with income from 30,001 euros. As these taxpayers represent a notable percentage in Madrid, the average withholding becomes the highest in all of Spain.
The opposite case occurs in the Canary Islands, the Balearic Islands and Asturias, the autonomies with the highest withholdings in the income brackets below 30,000 euros per year. Wage earners from the Canary Islands who earn up to 6,000 euros have the highest rates in Spain, something that also happens to the Balearic Islands who receive between 6,001 and 18,000 euros and to Asturians who oscillate between 18,001 and 30,000 euros. However, by having few employees who exceed 30,000 euros (some 300,000 taxpayers as a whole), the withholding average for the three regions remains below the Spanish average.
The statistic in question, yes, only takes as a reference the taxpayers who received their salary in full during the whole of 2021, this being the only source of income. It leaves out, therefore, those who were both wage earners and pensioners and those who at some point in the year found themselves unemployed. In these two cases, the average withholding rates in Spain were 16.31% and 8.91%, respectively.
high salaries
The data from the Tax Agency allow one to get an idea of what the salary x-ray of Spain is by region, a variable that has a full impact on the average withholdings that workers support. The cases of Madrid and Catalonia are a good example to see how the tax scale works.
Madrid is the region with the largest number of taxpayers with incomes of more than 30,000 euros –some 930,000 people–, slightly above the 880,000 in Catalonia. But while the first has an average rate on these incomes of 25.2%, that of the second falls to 23.35%.
Why does this happen? To a large extent thanks to the salary reality of each one of them. While in Catalonia the average remuneration within the bracket that exceeds 30,000 euros per year stands at 50,900 euros, in Madrid it amounts to 57,400 euros, the highest in Spain. At this income threshold, the state average is 49,900 euros, although most regions range between 45,000 and 46,000 euros. However, in the sections below 30,000, the average figures for Madrid and Catalonia are close to those of the rest of the areas.
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