Basque Economic Agreement and Navarre Agreement: where your company pays taxes

They decide 3 different things that should not be mixed up: which Administration demands and collects each tax, which regulations apply to calculate it and which Administration inspects. In the same company they may not coincide, and that is where almost all mistakes begin.

The Economic Agreement with the Basque Country, Ley 12/2002 (the Basque Economic Agreement Act), and the Economic Agreement with Navarre, Ley 28/1990 (the Navarre Economic Agreement Act), are state laws and are in the BOE. What is not in the BOE is the rule that sets the rate, the base and the incentives for your company if it pays taxes under regional regulations: that is published in the Official Gazette of Bizkaia, in that of Gipuzkoa, in that of the Historical Territory of Alava and in the Official Gazette of Navarre. Looking in the BOE for the regional Corporate Tax is the most common starting mistake.

It is worth stating clearly: the Basque and Navarre regional regimes are not a bonus or a discount on the state law. They are their own regulations, with their own Corporate Tax, their own definitions of small company and micro-enterprise, their own incentives and their own forms. You cannot take a state figure and assume it is valid in Bilbao or Pamplona.

There are taxes where the regulatory capacity is full, such as Corporate Tax, and others where it does not exist. In VAT, both the historical territories and Navarre apply the same substantive and formal rules as the State: the only thing that changes is the Administration to which it is submitted and, in Navarre, the form.

The first question is not where you invoice, but how much. If the volume of operations of the previous financial year does not exceed 12 million euros, your company pays taxes in any case, and wherever it operates, to the Administration of its tax residence: the corresponding Provincial Council if it is domiciled in the Basque Country, the Hacienda Foral de Navarra if it is in Navarre and the Agencia Tributaria (AEAT) if it is in common territory. This applies to Corporate Tax and also to VAT.

Above that figure the rule changes. If your company operates exclusively in 1 territory, it pays taxes entirely to the Administration of that territory, even if the tax residence is in the other. If it operates in both, it pays taxes to both in proportion to the volume of operations carried out in each, regardless of where it has its residence.

The volume of operations is not the profit or the accounting result: it is the total amount of the considerations for deliveries of goods and provisions of services of all your activity, excluding VAT and the equivalence surcharge. If the previous financial year lasted less than 1 year, the operations are extrapolated to the year. In the first year of activity, that same year is taken into account, extrapolated to the year if it was shorter, and until the real data is known, the estimate of what is expected to be invoiced is used.

The 12 million figure is new. It applies to tax and settlement periods starting from 1 January 2026. Previously the threshold was 10 million, and that is the one that continues to decide the Corporate Tax for the 2025 financial year that is filed in July 2026. A company that invoiced between 10 and 12 million can, therefore, pay taxes jointly for the 2025 financial year and go on to pay taxes only to 1 Administration in 2026.

When there is joint taxation, the quota is distributed in proportion to the volume of operations carried out in each territory during the financial year, expressed as a percentage with 2 decimals. This is what in practice is called the relative turnover figure. It is not distributed by number of clients, nor by employees, nor by where the headquarters is located.

To know where each operation is understood to be carried out, specific rules apply. In the delivery of movable goods, the territory from which the good is made available to the buyer counts and, if there is transport, the place where the goods are when the dispatch begins. If you transform the goods, the territory of the last transformation process counts. In deliveries with the installation of industrial elements, the operation is understood to be done where they were prepared and manufactured provided that the assembly cost does not exceed 15% of the consideration. Deliveries of real estate are located where the property is and those of electricity where the generating centres are.

In the provision of services, the general rule is the territory from which they are provided, with 2 clear exceptions: services related to real estate are located where the property is, and insurance and capitalisation operations have their own rules. In addition, some operations are simply attributed to the tax residence of whoever carries them out: transport services, including removals, towing and cranes, leases of means of transport and deliveries of unprocessed natural products from agricultural, forestry, livestock or fishing operations.

Operations that, with these criteria, are considered to be carried out abroad are not left out of the distribution: they are attributed to both Administrations in the same proportion as the rest. And a company that does not carry out deliveries or provisions of services, for example a holding company that only has shares, pays taxes where it has its tax residence.

Because they are 2 different decisions. In joint taxation, your company calculates the Corporate Tax with 1 single set of regulations, that of the Administration of your tax residence, and then distributes the resulting quota between the 2 Haciendas. That is, you can calculate the tax with the regional rule and pay a part to the Agencia Tributaria, or calculate it with the state rule and pay a part to a Provincial Council.

There is an exception that turns the rule around. In the Basque Agreement, the company domiciled in the Basque Country that exceeds the threshold and carries out 75% or more of its operations in common territory is subject to state regulations. And vice versa: the one domiciled in common territory that exceeds the threshold and carries out 75% or more of its operations in the Basque Country applies the regional regulations, unless it is part of a tax group, in which case it only applies them if all of its operations are carried out in the Basque Country.

In the Navarre Agreement the mechanism is the same with 1 nuance: the one domiciled in Navarre that does 75% or more of its operations in common territory switches to state regulations, and the one domiciled in common territory that does 75% or more in Navarre switches to regional regulations, unless it is part of a tax group.

The inspection follows that same criterion: the Administration of the tax residence inspects, unless the 75% turn occurs, in which case the other inspects. If a debt or a refund corresponding to both arises from the inspection, the acting Administration collects or pays and the 2 compensate each other later.

The practical detail that surprises the most is that of payments on account: in the historical territories, the regional fractional payment form coexists, for those who apply regional regulations, and a different form for those who apply common regulations but pay into the Provincial Council, and that second form is not the same in the 3 territories. In Bizkaia it is form 218. In Gipuzkoa form 218 ceased to be valid from the second fractional payment of 2010 and instead form 202 is submitted to the Provincial Council itself, with the deadlines of the common regulations. It is advisable to check the form and the deadline at the headquarters of the territory that corresponds to you before each payment, because taking the form of the neighbouring territory is a frequent mistake.

VAT follows the same logic of threshold and distribution, but always with state regulations. Below 12 million in volume of operations, taxes are paid to the Administration of the tax residence. Above, if operating in both territories, taxes are paid to both in proportion, and your company submits the self-assessment to each one applying that percentage. The input quotas that you deduct take effect before both Administrations, whichever one demanded the tax.

Work withholdings are never prorated. They are paid in full to the Administration of the territory where the work or services are provided. When they are provided in both territories, or it cannot be determined where, they are considered to be provided where the work centre to which the worker is assigned is located. The Basque Agreement expressly resolves teleworking and work abroad or on board with the same criterion: the assigned work centre dictates.

The remunerations of administrators and board members follow another rule: they are withheld before the Administration of the tax residence of the paying company and, when that company pays taxes to both Administrations for Corporate Tax, its withholdings are distributed in the same proportion, applying the percentage of the last tax return submitted.

Be careful with the calendars, because they are not the same. In common territory, form 111 is quarterly for most companies, from 1 to 20 April, July, October and January, and is only monthly, from 1 to 20 of the following month, for those that have the status of a large company. The Basque regional form is submitted in the first 25 calendar days of April, July and October, and the fourth quarter until 31 January. The mismatch is a matter of days, but it generates avoidable surcharges when a company starts operating in both territories.

The tax residence of a company is not simply the address that appears in the articles of association. It is its registered office provided that the administrative management and the direction of the business are effectively centralised there. If this is not the case, the tax residence is where that management and direction are carried out. And if it cannot be determined either, the place where the greatest value of the fixed assets is located is taken into account. Permanent establishments of foreign entities follow the same criterion.

Below the threshold, the tax residence decides everything, and that is why it is the connection point that generates the most conflicts. Moving the registered office to Vitoria, Bilbao or Pamplona without moving the effective direction of the business does not change the tax residence: it only changes the paper, and usually ends in a verification.

Companies and permanent establishments are obliged to notify both Administrations of changes in tax residence that alter the competence to demand Corporate Tax. Before the Agencia Tributaria this is done with the census declaration, form 036, within 1 month of the change, and in parallel with the census declaration of the corresponding regional Treasury. If the registered office also changes, there is a corporate resolution to be elevated to a public deed and a registration in the Commercial Registry, which may be another registry if the province changes. Managora drafts the resolution and the minute, coordinates the notario (notary public) and tells you the day and time: the deed is signed by the administrator before a notario, in person or through a proxy with sufficient power, because the notarial public faith requires their appearance. Afterwards Managora takes care of the registry inscription and submitting the census declarations to both Haciendas.

When the 2 Administrations disagree, the matter is resolved in the Arbitration Board, which exists in both the Basque Agreement and the Navarre Agreement. It resolves conflicts over connection points, over the proportion corresponding to each Administration in joint taxation and over the domiciliation of taxpayers. While the conflict is resolved, the Administration that had been taxing the company continues to do so, and its agreements are only appealed before the Supreme Court. The company does not choose, but it does have a hearing, and the statute of limitations is interrupted when the conflict is notified.

In the rate, to begin with. For periods starting in 2026, the general rate is 25% in common territory, 24% in Bizkaia, Gipuzkoa and Alava, and 28% in Navarre, which from that year admits a reduced rate of 25% for entities that meet certain labour and equality requirements. The rates for small companies also differ, and the definitions of small company and micro-enterprise do not coincide between territories: the Basque regional one looks at the average workforce and the assets or the volume of operations, and the state one looks at the net amount of the turnover.

It is also noticeable in the payments on account. In common territory there are 3 fractional payments a year. Under Basque regional regulations there is 1 single payment in October, from which micro-enterprises and small companies are exempt, and in Navarre there is 1 single payment on account in the first 20 calendar days of October.

And it is noticeable in the incentives. The regional rules maintain their own regimes of accelerated depreciation and freedom of depreciation, and their own deductions for research, development and technological innovation, with percentages, requirements and limits on the quota that do not coincide with the state ones. Before budgeting an R&D project counting on a deduction, you have to check the rule of the territory that applies to it, because the same expense does not give the same tax credit in Donostia, Pamplona and Madrid.

What does not work is choosing a territory for the rate. The connection points are not optional: they are met or they are not met, and if they are not met, the Administration that is prejudiced claims it. Managora calculates your volume of operations and your relative turnover figure, determines which regulations apply to you, submits the Corporate Tax to each Administration with its percentage, adjusts the VAT and withholdings and processes, if necessary, the change of residence and the census declarations, with the signature of the administrator before a notario when the transfer is of the registered office. You can see the updated amount of each service in its file.