Introduction – What is IBI Tax in Spain?
IBI tax (Impuesto sobre Bienes Inmuebles) is a property tax charged by the town hall in your local area. It is essentially the equivalent of council tax paid in the UK although it is generally much cheaper. In some parts of Spain it may be known as SUMA tax.
As is the case in the UK, IBI tax in Spain goes towards the upkeep of your local area. This may for example include local services and infrastructures such as roads, street lighting and schools.
IBI tax is particularly important as is what is used to calculate all other taxes related to your property in Spain.
IBI tax in Spain is payable by whoever owns the property on 1st January that year. If for example, you purchase a property on 2nd January, the previous owner will pay the IBI tax for the year and you will start paying it the following year. IBI tax MUST be paid by all property owners in Spain whether they are classed as a resident or a non-resident.
IBI tax often, but not always covers rubbish collection so this is something else you will need to check when buying property in Spain. To read more about waste disposal please see our guide to utilities in Spain.
How is IBI Tax Calculated?
IBI tax in Spain is calculated using the cadastral value of your property. This is the value given to each property by local tax authorities and can be found on your IBI tax documents. The cadastral value is usually much less than the market value of property. IBI tax is usually somewhere between 0.4% and 1.1% of the cadastral value.
When is IBI Tax Due?
As well as the amount, the date IBI tax is due is also set by the local town hall and therefore varies. It is therefore important when purchasing a new Spanish property to check this with your local town hall.
What if I Don’t Pay my IBI Tax?
Failure to pay IBI tax in Spain can have very serious consequences. In serious cases it may result in your property being seized. Town halls are becoming more and more aggressive in pursuing such cases so it is now more important than ever that you ensure your IBI tax is paid in full and on time.
Failure to pay can also have other consequences. If you do not pay your IBI tax you will also be unable to pay your non resident tax. This is because to complete your non resident tax return you need the statement you will receive after payment of your IBI tax. It is also worth noting that you cannot buy or sell a property which has any IBI tax debt attached to it.
You will not be given a reminder in any form that your IBI tax is due. It is your responsibility to find out when it is due, how much it is and so on. It is therefore advisable to hire a Lawyer or other financial specialist to ensure this is paid correctly and on time.
We hope you have found the above information on IBI Council Tax in Spain informative. If you have any additional questions about this or anything else then please contact us at Movehappy. We are always here to help.