Spanish Finance Ministry Unveils New Regional Financing Model to Boost Equity and Solidarity
Spain's Finance Ministry has introduced a new regional financing model designed to promote equity, fiscal responsibility, and increased funding across autonomous communities by 2027.
- • María Jesús Montero presented the new regional financing model to the Council of Fiscal and Financial Policy.
- • Communities may choose the new model or keep the existing one under the 2009 law.
- • The model is projected to add €20.975 billion in resources by 2027, totaling €224.507 billion.
- • It reduces funding disparities and includes a climate fund and VAT sharing mechanism for SMEs.
Key details
On January 16, 2026, María Jesús Montero, Spain's Minister of Finance and First Vice President of the Government, presented a new regional financing model at the Council of Fiscal and Financial Policy (CPFF). This ambitious proposal seeks to strengthen inter-territorial solidarity and address funding disparities among Spain's autonomous communities.
The new model permits regions to choose between it and the existing system, a continuation of a provision from the 2009 financing law. It aims to increase total funding to €224.507 billion by 2027, delivering an additional €20.975 billion compared to current levels. Montero highlighted that the model benefits all regions by ensuring those with greater tax capacity contribute more, while regions with lower income receive net support.
Importantly, the model focuses on equity rather than ordinality, with the goal of reducing per capita funding differences from €1,500 to €477. It uses updated criteria for adjusted population that consider demographic and socio-economic factors, addressing regional public service needs in healthcare, education, and more. The proposal expands regional tax capacity to enhance fiscal autonomy and responsibility.
New features include the creation of a climate fund and a mechanism to share VAT revenues from small and medium enterprises, while guaranteeing no community loses funds compared to the previous system. Montero emphasized her commitment to dialogue with regional governments and opposition parties to refine the proposal, reflecting the government's willingness to replace the outdated 2009 financing framework with a more just and sustainable model.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.
