Last updated on April 24th, 2020 at 03:09 pm.
If you’ve bought a property, you’ve likely come across IBI in Spain. This tax is basically Spain’s equivalent of council tax.
Impuesto sobre Bienes Inmuebles, or IBI, is a tax that every property owner in Spain has to pay. Either your local town hall or SUMA offices will collect the payment, which they use to finance local services. The local authority collects this tax annually and failure to pay can lead to fines and interest. Actually, taxation in general can be complicated in Spain and you could be subject to fines or penalties if you miss a deadline or don’t do your taxes properly. Advisably, you should seek fiscal advice from an expert to avoid possible complications.
Although every local authority collects IBI yearly, different amounts are due at different times depending on your region. In this article, we explain the basics of IBI, how local authorities calculate the amount, and how you pay.
IBI in Spain: How is calculated?
IBI calculations are relatively similar to the British council tax band system. The local council will calculate IBI according to the rateable value of your property, or the valor catastral. The valor catastral is determined according to:
- lease details
- cost of improvements
- construction cost of the property.
With this information, the local authority will compile a report and a valuer will assess what the rateable value should be.
This valuation is then recorded at the Catastral Registry, which is a central record agency. However, it’s important to note that this organisation is different from the Land Registry. This registry is usually based at your local town hall. You can find out how much the valor catastral is by looking at your IBI bill or receipt if you do online banking.
Is IBI the same everywhere?
No. Different town halls will charge different rates and your local authority will make a difference to how much IBI tax you must pay. The rates can vary a great deal, ranging between 0.4% and 1.30% – and this is a factor to take into consideration when you are buying a home. However, homeowners generally find that IBI in Spain is far cheaper than equivalent taxes in their home country.
Will my IBI payments change?
Yes, they might. Occasionally, there is a review of the valor catastral in your local area. In theory, this should happen every ten years. Following this review, you might find that your rateable value increases and you will be charged more for your IBI. This may be the case if, for example, you have completed a structural change to your property such as adding a swimming pool or building an extension. In some cases, the local council can even charge you backdated tax if you have made home improvements and not informed the authorities correctly.
Will I be fined if I miss my IBI payments?
Yes, you will. However, it is important to know that often, Spanish local authorities will not chase you up immediately if you miss an installment. Instead, the council will hold a record against your property that will come to light when you want to sell or bequeath it. Therefore, it’s very important to keep you with your payments. After all, you don’t want any nasty surprises when your home is on the market.
How do I pay?
Depending on which region you live in, either the town hall or SUMA will collect your IBI. In most parts of Alicante, it’s SUMA. They’re the agency that is also responsible for things like speeding fines and vehicle tax. They have their own website where you can pay your bills. The process is quite simple providing you pay within the specified voluntary period and have the bill to hand.
On your bill from SUMA, you will find a reference number and your NIE tax number. With this information, you can pay online by credit or debit card. The website is relatively easy to navigate and there is an English version. Alternatively, you can pay your IBI in Spain directly at a SUMA office or by telephone using your card.
IBI in Spain: Keep on top of your payments
As with most taxes in Spain, it is important to keep on top of the IBI and make sure that you do not let any debt build. As mentioned earlier, the Spanish authorities may not contact you immediately and it could cause problems for you in the future. However, you needn’t let IBI cause you stress. The payment processes are often very simple, and if you keep an eye on your bills, it’s very easy to make sure your payments are up to date.
If you have any doubts about IBI or any other Spanish tax don’t hesitate to contact us and we will offer you a free fiscal consultation with no obligation.