Spanish IBI Tax Explained

“Nothing can be said to be permanent, except death and taxes”

Taxes are the one thing that no one can escape: it doesn’t matter whether you live in the UK or you live in Spain, you will have to pay your taxes. The only thing that differs from country to country is the different types of taxes that you will have to pay, and one of the Spanish taxes that you need to better understand is the IBI tax.

 

IBI or “Impuesto sobre Bienes Inmuebles” is the Spanish equivalent of council tax in the UK: it is a municipal property tax in Spain that is paid each year to your local council. IBI tax is calculated based on the value of your property, as registered with the Valor Catastral: this can be as much as 70 percent lower than its actual value.

Calculating the Amount of IBI Tax You Need to Pay

As with all taxes, the main question most people have is how much it’s going to cost them! The percentage you will pay will depend on the town hall region you live in, and the amount of service they provide: this can range from between 0.5% to 1.2% of the Valor Catastral value. The amount you pay will also vary based on the amount of land and the number of buildings you own.

TIP: If you are buying a resale property then it is important to make sure that the previous owners provide you with copies of any previous I.B.I receipts in order to verify that existing payments have been made. If the IBI payments from previous years haven’t been paid then you may be liable to pay these as the new owner as I.B.I is attached to the property, and not to the owner.

What is IBI Used For?

It always feels better to pay your taxes and know that it is being used for something significant! So you may be wondering what your IBI tax is being used for: in Spain, this property tax used to provide services and the infrastructure to the local area for example roads, rubbish collection, street lighting and general maintenance.

Because they serve such a valuable function, IBI taxes aren’t just paid by resident and non-resident homeowners. They are also paid by owners of garages, urban premises, agricultural land or buildings.

What Happens if I Don’t Pay My IBI Tax?

Failure to pay your IBI tax is certainly not recommended: if you don’t pay your tax bill within the required time frame then you will be charged a penalty fee which is between 5% and 20% of your original bill, depending on how late your bill payment is.  For example, if you pay the bill late but prior to the final demand being issued then you may get fined a penalty of 5%. Whereas if you pay your bill after the final notice, you may get fined a 10 penalty. Finally, Penalties of up to 20% can be levied for extremely late payment and ultimately failure to pay I.B.I on a property could result in the loss of the property.

Paying your IBI Tax

IBI Tax is paid annually, between September and December. The exact date that you will be expected to make your payment will vary slightly, depending on the municipality you live in. Most residents will be set a reminder to make their payment each year, but you shouldn’t depend on it. If you do receive a reminder letter, this will make it much easier to pay your IBI tax: simply take your letter to the bank and pay the amount detailed. Alternatively, you can pay via direct debit, making the process easier and spreading the costs.

If you don’t receive a bill, or have any confusion about what you should pay, visit your local town hall and ask them for a copy of your bill. You will have to take your property title deed and your official ID to make it easier to find the correct bill for you.

If you have recently purchased a property in Spain then you must register to pay your IBI tax within two months of your purchase. To do so, you will need to provide a photocopy of the title deeds (Escritura) and a copy of the last I.B.I receipt for your property: this is a fairly straightforward process.

 Are you thinking of moving to Spain? Looking for the perfect Spanish property to call your own? Then why not get in touch with our expert property team today. They’re perfectly placed to help you find the home of your dreams, and turn it into a reality.



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