• Economy minister aims to persuade EU not to levy budget fine
  • Interest costs lower than budgeted, fraud fight exceeds plan

Spain’s acting government targeted an extra 6 billion euros ($6.7 billion) a year from corporate tax as it tried to persuade the European Commission not to levy its first-ever fine for persistent budget breaches.

The Spanish authorities will increase revenue by bringing forward the payment schedule and increasing the minimum percentage that companies have to pay during the year, Acting Economy Minister Luis de Guindos said Tuesday at a press conference in Brussels. The plan will have to be confirmed once caretaker Prime Minister Mariano Rajoy has pulled together a majority in parliament to take office for a second time.

“The measure in corporate tax is powerful,” Guindos said.

Spain is negotiating with the European Commission over a new timetable for deficit reduction, as well as trying to sidestep sanctions after missing its target for a fourth straight year. Spain is proposing to bring its budget shortfall below the European Union’s 3 percent limit in 2017 instead of this year, Guindos said.

Government coffers are benefiting from interest payments 1.5 billion euros lower than expected this year while the money recovered from tax fraud investigations has exceeded government projections by 1 billion euros, Guindos said.

EU finance ministers agreed Tuesday that Spain and Portugal violated EU spending limits, an unprecedented move that paves the way for negotiations over possible financial penalties. The decision triggers a period of 10 days during which Madrid and Lisbon can try to make a case for leniency from the European Commission. If they are successful, the commission could reduce the penalties to as low as zero.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE