The first additional Provision of the Constitution establishes respect for the historical rights of the foral [regional] territories within the framework of the Constitution itself and of the Statutes of Autonomy.
From a financial point of view, both the Statute of Autonomy of the Basque Country and the Organic Law on the Reintegration and Improvement of the Foral System of Navarra establish that the tax and financial relationships between these foral territories and the State will be regulated by the Economic Agreement or Convention system.
In the foral system, the financing system is characterised because the Historical Territories of the Basque Country and the Foral Community of Navarra have the authority to maintain, establish and regulate their tax systems. This means the levying, management, settlement, collection and inspection of most of the state taxes (currently all of them, except for import duties and import levies on Special Taxes and on the Value Added Tax) correspond to each one of the three territories of the Basque Country and to the Foral Community of Navarra. These taxes are collected by said territories, and the Autonomous Community contributes to financing the general charges of the state that are not assumed, through an amount called a “quota” or “contribution”.
The economic quota or contribution is established every five years and is updated annually by applying an update index to the amount established in the base year. Said index is the increase of the tax revenue earned by the State in the convention or agreed taxes as from the base year until the calculation year.
The quota of the Basque Country is deposited at the end of every four-month period. The Navarra contribution is deposited at the end of every quarter. Both are applied to the State Income Budget.
At the present time the Special Agreement with the Basque Country and the methodology for determining the quota are governed by Act 12/2002 (PDF approx. 527.61KB) , as drafted by Act 28/2007, of 25 October, and in Act 29/2007 (PDF approx. 179.84KB), of 25 October, adopting the methodology for establishment of the quota for the Basque Country for the five-year period 2007-2011.
In the case of Navarra, the current Special Agreement is governed by Act 28/1990, of 26 December, adopting the Financial Agreement between the State and the Community of Navarra, as last amended by Act 48/2007, of 19 December.