The employers' association Pimec warns that the cold progressivity of the IRPF absorbs between 44 and 52 euros of every 100 that the company allocates to increasing salaries. For an employee to receive 100 euros net more, the company must spend up to 210 euros.
The Catalan employers' association Pimec has quantified a phenomenon that hampers the effectiveness of salary increases: the cold progressivity of the IRPF. According to the report presented this Thursday by its Observatori de la Pime de Catalunya, between 48 and 56 euros of every 100 that a company allocates to increasing an employee's salary do not reach their pocket. They get lost along the way, absorbed by the IRPF and social contributions.
In practical terms, if a company wants its worker to receive a net increase of 100 euros, it must spend between 180 and 210 euros. The rest goes to the tax authorities. The president of Pimec, Antoni Cañete, summarised it this way: “When a small or medium-sized enterprise allocates more resources to improving salaries, but an increasingly larger part of that effort does not reach the worker, the company assumes a much greater cost than the benefit that the worker ultimately receives.”
The study has been prepared based on nine real payrolls from the hospitality, metal, and cleaning sectors. The results show that the effective IRPF rate has increased by between 1.3 and 3.2 percentage points in the profiles analysed, without any change in their personal or family situation. This represents an increase of between 278 and 955 euros annually in the tax paid by each worker.
The report also reveals that, although gross salaries have grown by 22.1% between 2020 and 2025 —in line with accumulated inflation—, workers have lost between 2.8% and 4% of their net purchasing power. To maintain purchasing power, companies would need to raise salaries between four and eleven points above the CPI, with an additional cost of between 1,142 and 3,315 euros annually per worker. In a small business with ten employees, that additional cost exceeds 16,000 euros a year.
According to the report, 58% of this effect is due to the freezing of personal and family minimums, deductions, and other tax benefits. In other words, the IRPF brackets have not been updated with inflation, so salary increases intended to compensate for the rising cost of living end up being taxed more. This is known as cold progressivity: the taxpayer pays proportionally more tax without any explicit increase in rates being approved.
Cañete has made it clear: the employers' association is not calling for a tax reduction, but for a mechanism for “regular, transparent, and predictable” review of its parameters. The idea is that updating them —or not— should be an explicit decision within the budget debate, and not an automatic and silent adjustment. In the same vein, the president of Pimec's Commission on Economy and Taxation, Sílvia Gabarró, has emphasised that “we are not asking for a tax cut, simply that they do not automatically increase with the CPI.”
For the regional sphere, Pimec proposes moving towards a stable mechanism for reviewing the regional IRPF bracket, particularly focused on low and middle incomes. The intention is that the tax burden does not increase covertly through the non-update of parameters.
The report, titled “Increase in tax pressure due to the non-deflation of IRPF rates,” uses data from the Bank of Spain to attribute 58% of the additional cost to the freezing of minimums and deductions. The employers' association insists that the solution does not lie in lowering taxes, but in preventing them from rising on their own. For small and medium-sized enterprises, which operate with tighter margins, this loss of efficiency in salary increases represents an additional burden on competitiveness.
The next step, as explained by Pimec, is to take this proposal to the administrations to open a debate on the periodic updating of IRPF parameters. Meanwhile, companies will continue to pay up to 210 euros for a worker to earn 100 euros net more.
You may also like
