Spanish Taxes

Taxes in Castile

Ordinary Revenues, Extraordinary Revenues and the National Debt

Just like many other European nations the Castilians held to the notion of ordinary and extraordinary revenues. This meant that the king had to live on his own revenues and that for any extraordinary circumstances there were extraordinary revenues. The ordinary revenues where those the king had a right to at all the times. The extraordinary revenues could be granted by his subjects. What should also be considered in this chapter is the national debt that had crippled Spain.

Ordinary Revenues of the King:


In origin the Alcabala was a tax of 10% on the value of each sale, with buyer and seller each paying half. It looks like a modern VAT tax, but was not. In Value Added Taxes the seller deducts the amount of VAT he paid while buying the product from the amount he has collected from his buyer, so he only pays the state the VAT percentage over his margin. This VAT principle is crucial for resellers, because prices of their products would easily be inflated by at least two alcabala charges. There were however a lot of products and persons that were exempt from paying this tax. In general this system did not work, and so in 1523 the king made a deal whereby the towns represented in the Cortes paid him a fixed amount each year called abonnement général. As inflation was rampant in Europe at the time this meant that the value of this amount decreased each year. The kings therefore had to renegotiate the amount from time to time, and this meant the Alcabala got an element of consent into it.

Custom duties

The custom duties were levied on maritime trade and trade over land. For overseas trade a customs tax between 5 and 10% was levied. Over land custom duties were levied at the borders of the empire, but also on the border between Castile and Aragon, and internally on the borders with Navarra and the Basque seigneuries.

Other ordinary revenues

Among the other ordinary revenues we can mention those that came from the sale of monopolies in production and trade. The most important were those on salt, the trade of slaves to the Americas and the mercury mine in Almaden.

Extraordinary Revenues of the King:

Taxes on religious institutions

From the church the king got 2/9 of the church taxes. In order to enable him to grant pensions he also taxed a third of the income of the bishoprics. He furthermore taxed the church by special permission form the pope. The king was also grand master of the military orders of Saint James, Calatrava and Alcantra. Their income came directly to the crown and as these possessed vast tracts of land that could be rented out their revenue was considerable.

Taxes granted by the Cortes

Though the Cortes of Castile had convened for the last time in 1664, and can be said not to exist anymore in 1700, the title by which the crown levied some taxes still derived from their meetings. Upon these titles two taxes were levied: The servicio and the millones. Both were taxes that were levied by district on almost the whole third class. This had the nasty consequence that while the population declined, the remaining population in some districts was taxed so heavily that some villages were entirely deserted.

While the fixed height of the Servicio made that over time it was considered as an ordinary source of income, the same can not be said as easily about the Millones. The Millones had been granted for the first time in 1590 after the disaster of the Armada. Its first levy was granted for 1591 till 1596, with even the nobles and clergy paying, and under the condition of strict control of the Cortes on its collection and use. The task to check this was performed by the Cortes Commission of the Millones. From then on the Millones were renegotiated each term. This ended after the last meeting in 1664 proved that the Cortes were unable to bring in more money. From then on the king went directly to the capitals of the 20 provinces in order to get these taxes. The king could thus levy taxes without the consent of the Cortes, but the price for this was that the amount of 1664 became the fixed height of the Millones.

Precious metals from America

The council of the Indies was responsible for the administration of the precious metals arriving from America. The contents of the treasure fleet that arrived each year were partly for the king and partly for individual traders. The bullion for the king came from the king's rights as proprietor to one fifth of all minerals excavated, and from the excess of all taxes levied in the Americas.