Spain’s controversial system of paying performance-related bonuses to tax inspectors is coming under increasing scrutiny.

It comes after analysis earlier this year claimed that some officials could theoretically receive around €36,000 a year in variable payments.

The incentive scheme operated by the Tax Agency, the Agencia Tributaria (AEAT), came under fire following a report into its so-called ‘productivity supplement’, or complemento de productividad.

The report’s authors, international lawyer Robert Amsterdam and former UK Treasury adviser Chris Wales, launched a blistering attack on the system, with Wales accusing Hacienda of displaying ‘mafia-like’ behaviour.

Speaking at an event in Madrid in April, the pair called for the incentive system to be abolished and for structural reforms to the country’s tax administration.

‘We urge Spaniards to demand structural changes,’ Wales said.

‘This is not a problem of the tax rate, but of structure, extortion and mafia-like behaviour.’

Amsterdam went further, claiming inspectors effectively receive ‘part of what they have managed to seize’.

However, the AEAT disputes the central premise behind such criticism, maintaining that inspectors’ bonuses are not commissions on individual tax assessments or fines.

Spain does have a substantial performance-related pay system within its tax authority, but inspectors do not simply receive a fixed percentage of the money they recover from an individual taxpayer.

How the bonus system works

According to the report, the AEAT spent more than €282million on productivity-related remuneration in 2024.

The authors say the bonus system effectively involves two broad pools.

Approximately 70% is distributed across the Tax Agency’s workforce of around 26,000 employees, while the remaining 30% is directed towards its much smaller inspectorate, comprising roughly 2,500 officials.

Using those figures, the report calculates that a theoretical average inspector could receive around €30,000 annually from the 30% pool, plus more than €6,000 from the general pool.

That produces the eye-catching figure of around €36,000 in potential annual variable remuneration.

But the authors themselves acknowledge that this is a theoretical average, rather than evidence that every inspector receives €36,000.

‘Obviously, in practice some will receive more and others less,’ the report states, adding that the AEAT does not provide numerical examples showing precisely how individual awards are calculated.

Do inspectors make more money by catching you?

The AEAT says an inspector’s bonus does not depend directly on how much money they extract from an individual inspection.

Instead, officials, teams and units accumulate points according to a performance assessment system, but it is all rather opaque.

The report says those assessments can include factors such as dedication, quality of work and cooperation, as well as the work carried out on individual cases.

Each inspection can generate points affecting not only the individual inspector but their wider team and unit.

The authors describe the resulting competition for the bonus pot as a ‘zero-sum’ system, because the amount received by one official or unit affects what remains available for others.

They argue this creates problematic incentives even without a straightforward commission being paid on individual tax bills.

The link to how much Hacienda collects

Perhaps the most contentious element is the relationship between bonuses and the Tax Agency’s overall results.

The report claims the overall amount available for bonuses can rise or fall according to overall collection results.

In other words, an inspector does not simply receive, for example, 1% of a €100,000 tax adjustment imposed on a business.

But if the agency collectively achieves stronger collection results, the total pool of money available for productivity payments can increase.

The report’s authors argue that this creates an indirect financial relationship between revenue collection and officials’ remuneration.

€282million bonus system

The sheer size of the scheme has also fuelled calls for greater scrutiny.

The report questions an AEAT assertion that only 1.4% of an inspector’s remuneration depends on the results of their activity, arguing that insufficient numerical evidence has been published to demonstrate how that figure was reached.

It also raises concerns about what the authors describe as the absence of an independent external audit specifically examining the bonus system, and calls for greater transparency over exactly how payments are calculated.

The row comes as Spain’s tax system faces broader criticism from the country’s self-employed workers.

The National Federation of Associations of Self-Employed Workers (ATA) recently estimated that Spain’s more than 3.4 million autonomos spend an average of 226 hours every year dealing with administrative, tax, employment and Social Security obligations.

ATA valued that lost time at around €3,390 per self-employed worker per year, or approximately €11billion across the country.

Its president, Lorenzo Amor, has accused Spain’s growing regulatory burden of ‘suffocating’ the self-employed.