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Glossary of terms

Adjustments to taxation

Mechanism set up by the Economic Agreement with the purpose of improving the accuracy of the assignment of income to the Basque Country. This mechanism is required due to the lack of correspondence between the administration which effectively levies taxes according to the allocation criteria and the administration under whose jurisdiction the taxable events occur. The most relevant adjustments concern Value Added Tax and Excise Duties.

Agreed taxes

Tax figures regarding which the Economic Agreement distributes the competences and which are part of the Historical Territories tax systems.

Agreed taxes subject to autonomous legislation

Agreed taxes which, in accordance with the Economic Agreement, are subject to the legislation approved by the General Assemblies of the Historical Territories.

Agreed taxes subject to common legislation

Agreed taxes which, in accordance with the Economic Agreement, are subject to the legislation applicable in the common territory. In this case, the General Assemblies of the Historical Territories have limited capacity, basically in relation to formal aspects, to amend the common territory legislation.

Allocation criteria

Criteria laid down by the Economic Agreement in order to assign and distribute the regulation, levying and inspection capacity between the Basque Country and the State administration related to each of the agreed taxes.

Assumed charges/competences

Group of competences and expenditure that are executed and assumed by the Basque Country.


Name in Basque of Arabga, one of the three Historical Territories, former Provincial Council.

Attribution Rate

Percentage which represents the contribution of the Basque Country to finance the State expenditure that has not been effectively assumed. This rate is determined basically in accordance with the income of the Historical Territories relative to that of the State. Since 1981 it has been fixed at 6,24%.

Armour (Blindaje)

Judicial review regime (approved by the Organic Law 1/2010, February 19) based on the amendment of the inadequate judicial review regime which was in force. The amended system implied that the Normas Forales which establish and regulate the fundamental aspects of tax figures were to be reviewed by the contentious-administrative courts and not by the constitutional courts as the rest of the legal instruments regulating such aspects are. Once the Organic Law was passed, the Constitutional Court became the competent jurisdiction.


Name in Basque of Vizcaya, one of the three Historical Territories, former Provincial Councils.

Board of Arbitration

Committee in charge of solving conflicts which rise between the Basque Country and the State administration or between the Basque Country and the Autonomous Communities, in relation to the application of the Economic Agreement to particular tax relations and to other matters concerning the distribution of competences. This Committee is made up of three experts of renown prestige and broad professional experience in tax and finance matters.

Business turnover

Proportion of transactions which is assigned to each of the territories, Basque or Common. This proportion is used to distribute levying and inspection competences concerning Value Added Tax and Corporate Income Tax between the Basque administration and the State administration. It is also used to distribute legislative competence in the Corporate Income Tax.

Common Territory

The portion of the Spanish State territory where the legislation enacted by competent institutions other than the ones of the Basque Country and the ones of the Foral Community of Navarre is applied.


It is the common and colloquial expression used to refer to the legal system to which a citizen was subject. In the case of the Basque Historical Territories, it was equal to a general law comprehensive of different kind of legal instruments and which was, all in one, constitutional law, civil law, criminal law and procedural law. Its origin relies in the network of customs and usages developed during the times.

Euskadi/Basque Country

Refers to the political region (Autonomous Community) formed by the provinces of Araba/Álava, Bizkaia and Gipuzkoa.

Foral/Historical Rights

Group of public and political rights, constitutionally protected, the Historical Territories of the Basque Country are entitled to, due to historical reasons.

Foral Deputation

Provincial Government ruling a Historical Territory elected by the General Assemblies of the Territory. It administers, regulates, levies and collects the agreed taxes in the Territory and basically spends in Social Services and public works (mainly territorial roads).

Federalism (symmetric/asymmetric)

Constitucional system which distributes powers or competences between, at least, two autonomous levels of government. In the case of symmetric federalism, all the institutions at the same level have the same powers or capacities whereas, in the case of asymmetric federalism, there are differences in the assignment of competences within the same level of government.


System to distribute the payment of the total collection of certain public income among the neighbours of each village, who were registered in the census taking into account the fireplaces or fogueraciones. This system was in force until the beginning of the 19th century.

Foral Veto/Pase

Mechanism to control the power of the seignior executed by the General Assemblies, which prevented arbitraries and guaranteed the performance of the regulations within the Fuero by the governors.

General Assemblies

The General Assemblies are the most democratic institutions for citizens’ participation in the Historical Territories of the Basque Country. Being a parliamentary assembly approves the law in matters within its competence and controls and supervises the activity and performance of the Foral Deputation, government of the Historical Territory.


Name in Basque of Guipúzcoa, one of the three Historical Territories, former Provincial Councils.

Historical Territories

Historical Territory is the name given to each of the territorial entities of the Basque Country Autonomous Community, Araba, Gipuzkoa y Bizkaia, by the Basque legal system.

Imputation Índex

See Attribution rate above.

Joint Committee on the Economic Agreement

The highest committee set up by the Economic Agreement for the tax and financial relations between the administration of the State and the administration of the Basque Country, of equal composition, in charge of making the most relevant decisions concerning the Economic Agreement in financial and tax issues, i.e. the amendments of the Economic Agreement law, the approval of the Quotas, the commitment for budgetary stability and so on.

Legal Coordination and Evaluation Committee

Committee for the relations between the State administration and the Basque Country administration, of equal composition, basically in charge of disciplining the collaboration and coordination performances in tax issues for the correct application of the Economic Agreement.

Non-agreed income

Budgetary income of the State, which are not within the framework of the Economic Agreement regime, and so they are of the exclusive competence of the State. The Basque Country takes part in them by means of the application of the attribution rate.

Non-assumed charges/competences

Group of competences which are not executed by the Autonomous Community of Euskadi, either because they are legally reserved for the State or because they haven not been effectively assumed or assigned to the Basque Country yet.

Non-assumed competences

See Non-assumed competences above.

Norma Foral

Legal regulation of the highest rank and general nature enacted by the General Assemblies.

Place of transactions

Several rules set up to determine in which cases transactions subject to Corporate Income Tax or to Value Added Tax take place in the Basque Country.

Provincial Council

The Provincial Council is the executive branch of each of the three provinces that, currently, make up the Autonomous Community of the Basque Country – Araba/Alava, Bizkaia and Gipuzkoa. It in turn reports to the General Assemblies, the legislative branch that passes the budget, elects the Provincial Council Chairman and oversees the work of the executive branch.

The provincial councils enjoy a high degree of autonomy and have extensive powers in areas such as urban planning, roads and public works, the environment, cultural heritage or social welfare. Yet tax collection is the most characteristic power of the Provincial Councils. All the taxes, whether direct (personal and corporate) or indirect (VAT, alcohol, fuel) are collected by the Provincial Councils in their own territories.


Amount the Basque Country must pay to the State in order to finance the competences which have not been effectively assumed or assigned to it.

Quota Law

It is a five-year Law which regulates the determination of the Quota

Statute of Autonomy

It is an Organic Law specifying the economic and political competences of an Autonomous Community. On the expenditure side, the Statutes of all the Autonomous Communities have many similarities. On the revenue side the Statutes of Navarre and the Basque Country states that these Autonomous Communities will have a Foral Legal System of financing whereas the other Autonomous Communities have a Common Legal System of financing.


The Central Government of Spain.

Updating Index/Rate

Rate used to fix the amount of Quota to be paid to the State in each of the subsequent years during the validity of the five-year period Quota Law. The rate shall be applied to the Quota of the first year of the period. Its quantification is calculated in accordance with the evolution of the budgetary income of the State.

Unilateral Risk

Particular feature of the Economic Agreement regime, which means that the Basque Country must bear the financial consequences derived from the execution of its competences laid down in the Economic Agreement. As a result, the Basque Country must pay the same Quota amount regardless of the decision its institutions adopt.