Personal Income Tax: Comprehensive or Dual? A Comparative Study of the Portuguese and Spanish Systems DOI: http://dx.doi.org/10.18836/2178-0587/ealr.v6n1p72-90

Authors

  • João Ricardo Catarino ISCSP - Universidade de Lisboa
  • Margarida Vouga

DOI:

https://doi.org/10.18836/2178-0587/ealr.v6n1p72-90

Abstract

Abstract

 

The personal income taxation systems are changing rapidly around the globe. Portugal and Spain share the territory of the Iberian Peninsula for centuries and their economies are intensively interconnected. They have however adopted different tax personal income systems. Portugal introduced in 1989 a comprehensive or unitary system that follows the taxation trends prevailing in many European countries based on the concept of accrued income. The different types of income are taxed together, normally at progressive rates. More recently, many European states have evolved towards semi-dual taxation to adapt taxation on personal income to the challenges of globalization, off shoring and disintermediation. Spain has adopted a dual system model. This research points out the advantages and disadvantages of each model by comparing the solutions adopted in the Iberian countries, Portugal (which levies comprehensive income tax) and Spain (which has a semi-dual income tax). We argue that Portugal should adopt semi-dual income tax. This would simplify personal income tax and be more competitive internationally.

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Author Biographies

João Ricardo Catarino, ISCSP - Universidade de Lisboa

 

João Ricardo Catarino - Professor of Public Finance and Taxation - Institute of Social and Political Science - University of Lisbon (UL), Portugal. Integrated researcher at CAPP - Center for Public Policy and Administration, Referee in tax arbitrage in Portugal. Advisor of the Ministry of Finance of Portugal. Author of several papers and books on taxation and public finance.

Margarida Vouga

Margarida Monteiro Vouga - License and Master in Taxation (2002) at ISCAL – Institute of Accounting and Administration of Lisbon. Expert at the Financial and Accounting Expertise Unit (UPFC).  Researcher at CAAP – Centre for Public Administration Policies. Accountant (2000 and 2003). Member of the Portuguese Association of Accountants since 2000.

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Published

2016-01-12

Issue

Vol. 6 No. 1 (2015): Economic Analysis of Law Review

Section

Papers

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