IBI – the Spanish council tax

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.

Many of the roads that you drive on, the lights that illuminate them, the hedgerows that border them, all of these are maintained by your local town hall. Many of the facilities that are provided for us, we take for granted. They remain in the background as we go about our business. However, they are essential to us being able to function and enjoy living in Spain.

The tax that is used to pay for many of these is called IBI. It stands for Impuesto sobre Bienes Inmuebles i.e.real estate tax. It’s common to most countries to have a property tax such as this that everyone, irrespective of status, who own property in a country must pay.

The cost

In some countries this property tax can consist of a very high monthly payment. Most people consider that the IBI in Spain is very reasonable in comparison to what they would have paid in their native country. It sometimes comes as a surprise that the yearly annual contribution is, just that, yearly and not a monthly debit.

How much you have to pay depends on the size, type and location of your property. The rateable value or ‘valor catastral’ is used to calculate the final charge and is recorded at the Catastral Registry. If you wish to check what your valor catastral is, it will be included on your IBI bill or the receipt if you opt for online payment.

The final amount of IBI is calculated according to the town hall’s rate. This can vary from between 0.4% to 1.30%. It is always worth checking what the rate is locally when purchasing a new property.

Tax collection

The collection of IBI is the responsibility of your local town hall. In some cases this has been delegated to a third party and, for example, in most parts of the Alicante province it is an organisation called SUMA that is responsible for collecting it on the municipality’s behalf.

SUMA has developed an easy-to-use website that means you can pay your IBI online provided you are not in arrears. If you are, then you must contact the office in person to make arrangements to check how much is owing. If your payment is late then you can expect that there will be a fine added to your bill.

SUMA are also responsible for collecting traffic fines and road tax and you should take a look at their website  https://www.suma.es . The website can be accessed in English and provides different payment options. It can be useful to arrange a direct debit as the timing of the IBI payment varies depending on the area in which you live. Setting this up on the website means you don’t have to worry about missing the window.

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.

The penalty

Of course, there are penalties if you miss IBI payments. Although you may not be aware that you have. The tax man will not come knocking on your door immediately. The emphasis has always been on the individual paying their taxes and when they miss, this then becomes a debt held against them. This can be recorded against your property, causing problems when you come to sell or bequeath it.

In some cases, unpaid taxes lead to the embargo of bank accounts. This is a common practice in Spain that often comes as a surprise to those from other countries. In the worst cases you are not able to access your bank account and make decisions about what is and isn’t paid. Not until the tax authority has taken its share. “Either way, it’s not an experience that most people wish to have 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.