The labor flow between the neighboring provinces of Lleida and Huesca, common in sectors such as agriculture and transport, would become a technical and legal problem with the entry into force of Catalonia's new singular financing model. According to 2023 data, nearly 9,500 employment contracts would be potentially affected, including 2,923 people residing in Huesca who work in Lleida and 6,631 residents in Lleida who work in Huesca.
“"It would be impossible to reconcile information from two independent databases to carry out refunds with the speed achieved now."
The dilemma is known as 'crossed withholdings'. If a Catalan company hires workers domiciled in Aragon, IRPF withholdings would be paid to Catalonia. However, workers would have to declare and request the tax refund in their community of residence, in this case Aragon, complicating management for the State Tax Agency, which would not have direct access to the fiscal data generated in Catalonia.
The IHE warns that the proposed model, which involves not only the collection but also the management, inspection, and liquidation of IRPF in Catalonia, would jeopardize the internal functioning of the Tax Agency and its capacity to detect fraud. Furthermore, this fiscal fragmentation would risk the funding of public services in net recipient communities of the fiscal redistribution system, such as Aragon or Andalusia, by reducing the common contributory base.
