Paying council tax in Spain

Spain, like most other countries, has a system whereby property owners contribute to the maintenance of local infrastructure. Here, the tax is called IBI. In this article we explain what IBI is, when you pay it and why it’s important.

IBI stands for Impuesto sobre Bienes Inmuebles or, literally translated, Real Estate tax. It’s a type of taxation that most of us are familiar with. You own a property and therefore are required to contribute through tax to the maintenance of local roads, water and drainage and other services that we use on a day-to-day basis.

Most people find that the IBI fees are lower than what they would expect to pay in their home country. They’re also paid out in one chunk rather than spread monthly across the year. Although the tax is a national one, it is controlled by the town hall and goes directly to them, or through a tax collection service such as SUMA.

It is important to note that IBI is payable whether you are a resident or a non-resident. There is no complex system of reminders here either if you have not informed the authorities of your eligibility to pay this bill. The omission can come to light at any point and you will be required to pay four years back tax with interest accrued.  

When and how to pay it

The timing of your IBI payment will depend upon the area where you live. Different town halls have a different calendar for this particular tax collection. In most parts of Alicante SUMA has been given the job of collecting your IBI. The website for SUMA is quite user friendly and can be changed to English  https://www.suma.es . You can also pay traffic fines and road tax and can access their taxpayer’s calendar from the same website.

If you have used a fiscal representative they can organise a direct debit for you that means that money is taken automatically each tax year without you having to worry about making the payment. If you miss the payment window it becomes more awkward to settle and you may need to go to the SUMA office to pay. You may also be fined and have interest charged.

How much to pay

How much you pay depends on the size, type, location and condition of your property. The rateable value, valor catastral, determines how much you will pay and is assessed by a valuer working for your local authority. The valuation is recorded at the Catastral Registry office, which is usually based at the town hall. The valor catastral will be recorded on your IBI bill or your receipt in cases of online banking.

The other factor that will determine exactly how much you pay is the rate charged by your local town hall. This can vary significantly from between 0.4% to 1.30%.

Usually your IBI will be consistent over years but occasionally there is a review which might see your property given a different value. If you have had home improvements done then you can expect the value of your property to change to reflect this. 

What happens if you don’t pay

If you miss a payment of IBI the Spanish Tax Authority will know. This does not mean that they will come knocking on your door immediately. However, it will be on record and will need rectifying at some point in the future. So, when you come to sell your property, or bequeath it, any debts will come to light and will need to be paid before the property can change hands.

You should also be aware that if you have had home improvements carried out and have not informed your town hall, they can charge you retrospectively for the difference in IBI that you should have been paying since the work was carried out. Over years this can mount up so is best avoided.

IBI fees are not extortionate in Spain. It’s a simple process to establish a direct debit when you first purchase your property. Doing so avoids unpleasant surprises at a later date and ensures that this is one tax that you really don’t have to worry about.