Origin of the Economic Agreement

After the abrogation of the foral historical rights or Fueros, once the Second Carlist War finished at the end of the 19th century, the Economic Agreement was enacted as the system for the contribution of the Basque provinces to the finances of the Kingdom of Spain; system which acknowledges the Foral Deputations the capacity to collect their own taxes in order to defray not only their own expenses but those which are common in the Spanish state as well.

The first Economic Agreement was signed in 1878 and since then it has been resigned in several occasions, being in force up to nowadays with the only exception of Franco’s dictatorship era, during which it was suspended in Gipuzkoa and Bizkaia until 1981 when it was reestablished. Its last renovation took place in 2002.

What is the Economic Agreement nowadays?

The Economic Agreement is the financing system of the Basque Country, by virtue of which the financial and tax relations between the Basque Country and the Spanish state are set up.

The 1978 Spanish Constitution, nowadays in force, safeguards the Economic Agreement as part of the core of the foral historical rights of Álava, Bizkaia and Gipuzkoa and lays down its general updating within the framework of the Constitution and of the Statute of Autonomy of the Basque Autonomous Community.

What does it aim to?

Within the acknowledged competences of the Economic Agreement, the Basque Country collects the taxes paid by Basque citizens in order to fund the public services they receive.

The General Assemblies, Juntas Generales, of the Historical Territories (Álava, Bizkaia and Gipuzkoa) pass by the regulation and quantification of taxes that citizens must pay and the Foral Deputations, Diputaciones Forales, are in charge of their collection and administration.

The closeness to citizens of the abovementioned Institutions guarantees the proper adaptation of taxes and public services to the real needs of the population in the Basque Country.

What is the Quota or Cupo?

The Quota is the financial transfer the Basque Country must pay to the Spanish Treasury in order to fund the competences the Spanish state carries out to the benefit of the residents of the Basque Country. This is due to the fact these competences are kept by the State and are not assumed by the Basque Country, i.e. the Army, Foreign Affairs, the Royal Household and so on.

The Basque Country pays for these competences in accordance with its wealth (6.24 per cent of the total Spanish state income) regardless the amount of their income or its financial situation.