IBI in Spain: what is it and who pays?

You’re probably used to paying some form of tax for your property at home, so the IBI in Spain property tax won’t come as a total surprise if you’re thinking about buying a Spanish property. More or less every country has a procedure for collecting taxes to pay for the local infrastructure. Every day we are using facilities that need maintaining and replacing. In Spain, the tax that is charged to pay for these is called IBI.

Most European countries, and many around the world, have a procedure in place to collect taxes that pay for the local infrastructure, and Spain is no different. We all use roads, hospitals and other local amenities that need to be maintained and repaired at some point. 

In Spain, the tax that property owners pay to maintain all of these services is the IBI property tax. Just like in other countries, Spanish home owners pay tax so that amenities work well, such as street lighting and schools. In many cases, the local Spanish town halls collect the IBI in Spain property tax for their area to ensure services can be provided. 

IBI in Spain stands for Impuesto sobre Bienes Inmuebles, which loosely translates as a property or real estate tax. The town hall typically sends letters out to property owners in their area to notify them of their IBI payment for that year. The letter explains how and when to pay the IBI in Spain tax. 

The local authorities won’t notify you if you haven’t paid the IBI in Spain on time, so it’s important to keep on top of this annual payment to make sure you don’t face a fine. 

What is the IBI?

Put simply, the IBI is a property tax that every property owner in Spain has to pay to the local authorities for public services maintenance. In some areas of Spain, this may also be known as SUMA, after the agency that collects the tax in these regions.

The amount of the IBI tax to be paid on a property is based on a number of factors, including:

• The property size
• The size of the property plot
• A classification of the land the property is built on
• The property’s access to local services

Once this information is collated, the local authority calculates the taxable value of the property. This is called the valor catastral or cadastral value, like an official property valuation, which forms the basis on which the IBI tax will be calculated for each property in the local area. 

It’s good to know that the valor catastral is a valuation for a starting point for taxes, but does not correlate with market prices. 

Who pays the IBI?

All property owners in Spain have to pay the IBI property tax related to their property. It doesn’t matter if the property is a holiday home, or not your main residence, you will still have to pay the IBI tax as the property owner. 

There are some properties which don’t require an IBI tax payment. These include state or local authority buildings, embassies, established historic buildings and Red Cross property. 

Both Spanish residents and non-resident owners who hold property in Spain must pay the IBI tax. It’s also important to check your non-resident tax in Spain liabilities if you’re a Spanish property owner who lives in Spain for less than 183 days per year.

IBI in Spain is paid by the person who owns the property on the 1st January every year. If you gain ownership of the property after 1st January, the bill is still sent to the owner on the 1st January, and both buyer and seller can agree legally to split the payment proportionately between themselves. 

Make sure to confirm that the previous owner has paid their previous year’s IBI in Spain tax bill so that you are not liable for any unpaid tax fees on their behalf. If this is unpaid, you may also have to pay a fine for their non-payment. 

How much will the IBI cost?

IBI in Spain is calculated using the valor catastral or cadastral value of your property. Typically, this is around 30-40% lower than the actual value of your property and will likely be re-evaluated every 8-10 years. 

The municipal IBI rate is worked out using your property’s cadastral value. This varies from region to region, but is usually between 0.4%-1.3% of the cadastral value. The variation could be based on the region your property is located within, or the level of public services available in your area. 

When you purchase a property, it’s sensible to request the IBI tax history for that property. This should help you understand the payment history and the cadastral value of your property. 

Can I get a discount on my IBI?

Some local authorities or municipalities offer a reduction for early payment of the IBI property tax. You may also find that your local town hall will give you a discount for environmentally-friendly property improvements like solar panels. 

Family homes with three or more children may receive a discount in some areas. It’s helpful to check with the local authority where your property is located to see if they provide any reductions or discounts so that you can check if you match their criteria. 

When and how do I have to pay the IBI?

Your letter from your local town hall will fill you in on all of the essential information around IBI in Spain property tax payment. This will include the amount of tax you owe and the date by which it should be paid. The local authority will give you some payment options so that you can choose your most convenient payment method.

It will vary from authority to authority, but the IBI tax is set from 1st January every year and you will be given a time period to pay, such as between summer and winter. These periods typically vary between locations. You will probably be able to pay in one annual payment or in two instalments. These details will be in your IBI tax letter from the local authority. 

Payment options will likely include paying in person, paying through the town hall’s official website or paying by Direct Debit. If you set up a Direct Debit to pay your IBI in Spain, then the payments will be made each year you own the property without you worrying about missing a payment. Some local authorities even offer a small discount on IBI payments if paid by Direct Debit. 

Remember, even if you don’t get an IBI letter, you’re still responsible for paying this tax if you own a property and did so from 1st January. Check with your town hall if you don’t receive a letter so that you can avoid a late payment fine. 

Many people prefer to use a tax representative to ensure that their taxes, such as IBI, are paid on time and in full. Residents can have a more complicated series of taxes to pay and a tax representative can help those who are not confident in the language or with the Spanish taxation system.

What happens if you don’t pay the IBI in Spain?

There are penalties if you miss your IBI payments. The local authority may charge you a late payment fee of between 5%-20%, depending on the amount of time you have gone without paying. 

It’s important to note that if you continue not to pay your IBI property tax, there could be serious repercussions, including freezing your bank account until you pay the outstanding fees. This is a common practice in Spain and you may not be able to access your bank account until the situation is resolved. 

Even if the property is your second home, as the owner you must pay the IBI in Spain property tax. The emphasis has always been on the individual paying their taxes and when they miss payment, this becomes a debt held against them. Non payment can be recorded against your property, causing problems when you come to sell or bequeath it.

Most people won’t want to undergo this kind of experience and ensuring that your taxes are paid in a timely manner is essential to your enjoyment of your property in Spain. And, of course, it also means that facilities you use every day can be paid for and enjoyed.Spanish tax law and regulations can seem complicated, so it makes sense to always speak to a professional representative who can help you understand and support you in paying the correct taxes for your property.

Originally published on 25-10-2022 and updated on 05-6-2025