Illa Accuses Ayuso of 'Siphoning Prosperity' as Bank Data Contradicts Claim

Illa accuses Ayuso of 'siphoning prosperity' while banking figures nuance the narrative

Salvador Illa argues that the Community of Madrid benefits from economic activity generated elsewhere in Spain, accusing it of "siphoning prosperity" from other autonomous communities. The argument rests on two familiar pillars: the so-called capital effect, which concentrates headquarters, ministries, and public bodies in Madrid, and fiscal dumping in taxes like Wealth and Inheritance. The response from the other side is equally predictable: Madrid contributes most to the regional financing system, and lowering taxes falls within its competencies.

Up to this point, it is the usual script. What becomes interesting is digging into what exactly "having a headquarters" means for a company. Of the nine largest Spanish banks, only one—Bankinter, the fifth largest—keeps its fiscal domicile in Madrid. Santander is based in Cantabria, BBVA and Kutxabank in Bilbao, Unicaja in Malaga, Abanca in Galicia, and Ibercaja in Zaragoza. CaixaBank and Sabadell, according to data cited in this debate, have reportedly returned to Catalonia in recent years, with Sabadell moving back in early 2025 during BBVA's takeover bid.

Corporate Income Tax is not collected by the region

The nuance that dismantles much of the narrative is jurisdictional. Corporate Income Tax (Impuesto de Sociedades) is not a regional tax: it is collected by the State and not distributed to regions based on where a company's registered office is located. This means that a company's fiscal domicile barely affects the revenue of the autonomous community hosting it. Personal Income Tax (IRPF), however, trinc residency: here, ministries, operational headquarters, and public bodies concentrate high salaries lived and taxed in Madrid.

This is the area where the capital effect has real traction. Not in the registered head office, but in skilled employment and declared annual payrolls. The discussion on fiscal balances changes results significantly depending on how the burden distribution is measured. And this is precisely where the exchange of accusations gets stuck.

Fiscal dumping: competition or tax haven?

The second front is regional taxation. Madrid offers rebates on Wealth and Inheritance taxes, attracting taxpayers and assets from other regions, something read from Catalonia as unfair competition. The counter-argument is that lowering taxes is a legitimate competency and that Madrid is not responsible for other regions being "wasteful tax hells," as one participant in the debate claims. At its core, the clash is not about who siphons whom, but whether taxation should be harmonized or competitive.

While the debate continues in offices, the banking data leaves an uncomfortable curiosity for both sides: most major entities do not pay taxes in Madrid, and those that returned did so to Catalonia. The narrative of fiscal domicile as a great regional prize currently lacks the ammunition both camps assume it has.