Spanish Prime Minister Mariano Rajoy declared on Saturday the latest draft of the controversial European Union budget was unacceptable.
The proposed seven-year budget would turn Spain into a net contributor to the EU for the first time by cutting aid and subsidies.
European Union chief Herman Van Rompuy proposed a compromise draft EU budget on Wednesday, aiming to go part way to meeting spending cut demands from Britain, Germany, Sweden and the Netherlands.
Mr Van Rompuy's draft would cut €80 billion (£64bn) out of the roughly €1trillion (£800bn) budget for 2014-2020 proposed by European Commission president Jose Manuel Durao Barroso.
France had already rejected the proposal on Thursday, saying that the limits it proposed on farm subsidies were unacceptable.
Spain, however, was objecting to other provisions.
The country fears losing about €20bn (£16bn) of fishery, agricultural and development funds in the 2014-2020 budget.
"The first draft presented by Mr Barroso seemed to us a good document to start talks.
"The one that Mr Van Rompuy presented later is unacceptable," Mr Rajoy said in Cadiz at a summit of Latin American and Iberian leaders.
Britain has threatened to veto the budget because cuts do not go far enough and EU officials are looking at ways to manoeuvre around a potential veto.
But Mr Barroso commented: "There's a contradiction when some countries that say they want to make growth a priority will not support the main instrument to invest in growth that we have at the European level."