Spanish Property - Local Rates
(IBI - Impuesto de Bienes Inmuebles)

When you own a property in Spain, you must pay local property taxes, called IBI. The Foundation Institute of Foreign Property Owners tells you how to register for IBI and how to pay.

  

What is I.B.I.?

IBI (local rates) is a municipal tax which has to be paid every year by owners of homes, premises, garages or plots, i.e, any urban property or buildings and also by owners of agricultural land or buildings.

How The Yearly Payment Is Determined

The amount of your yearly payment is determined by the value assigned to your property by the administration - known as Valor Catastral (rateable value). The rateable value of your property is calculated on the value of both the land on which your property is built and the building itself.

Tax Rate

The tax rate which has been approved by each Town Council - and which is the same for all properties within the municipality - will be applied to this rateable value.

Example

Rateable value x Local tax rate = Yearly payment
30.000 Euro x 0.8% = 240 Euro


How To Read Your IBI Bill

Organismo = Part of administration
Ident. Valor = Identification of value
Ref. lista = Reference on listing
Concepto tributario = Concept of taxation
Zona = Area
Num. Recibo = Receipt number
D.N.I. o C.I.F. = Identification number of taxpayer
Objeto Tributario = Tax object
Periodo = Interval of taxation
Año = Tax year
F. Alta = Year of fiscal registration
Referencia catastral = Catastral reference number
Nat. Bien = Class of property
V. Catastral = Catastral value
B. Imponible = Rateable value
Tipo = Tax rate
Cuota = Gross taxes
Bonificación = Deductions
Deuda = Net taxes
Rev. Valores = Year of last revision of value
Sujeto Pasivo = Taxpayer
Domiciliación Bancaria = Direct debit
Sello y Fecha = Stamp and date
Total a Pagar = Total amount to be paid
Periodo de Cobro = Payment period
Referencia = Reference





    How Does Your Property Become Liable For Tax?

Registering The Property

As from 1 January 1995, whenever you purchase a home, you are obliged to apply for the property to be registered. The official application form is known as Modelo 902 and you can obtain it from your local tax office. The buyer of a property is the person obliged to declare the property for registration. However, in the majority of cases it will be the promotor of a block of apartments or a group of houses who submit this application.

Payment

When you pay the IBI on your property for the first time, you will be billed by mail and the following years it shall be possible to have it done by direct debit through your bank.


    How To Register Your Property

Collection Agencies

For all foreign owners outside the province of Alicante: Be aware that SUMA is the provincial agency for collecting municipal taxes in that province. In other provinces, there may be two alternatives: that similar provincial agencies exist under other names, or that the municipalities themselves collect the taxes.

Registering The Property For Tax Purposes

When you buy a property in Spain, you have an obligation to register it for tax purposes. (Please do not confuse this with the registration for legal purposes in the Property Register). This obligation became effective 1 January 1995. The registration can be done in the town hall or in the tax collecting offices. The application for registration will be sent to the Cataster Office (meaning the "Catastro" office you will find in each of the provincial capitals), since they are the ones responsible for making the registration and the assessment on the value of the property, that will later appear in your bill for local rates (IBI).

Find Out If The Property Is Registered

First of all, find out if the promoter you bought from has already made the registration. If he has, you need not do anything; just wait for a letter from the 'Catastro' giving the tax value, if this value has not already been given by the promoter. Be aware that it can take years before the "Catastro" makes the assesment.

Documents To Be Submitted

If the property that you have bought has not been registered for tax purposes, or if you have built a house on a registered plot, or if you have made additions/extensions to a registered building, the documents that should be submitted when applying for a property to be registered are the following:

* A 20 x 15 cm photograph of the front of the building.
* A plan showing the situation of the property (you can get such a plan in the town hall).
* Plan of the building plot.
* Plans of each floor of the house.
* 'Certificado de fin de obra (Certificate of termination of the work) from the architect and the "Cedula de Habitabilidad" (Habitation Certificate).

On the application form will be some space for technical information on the dwelling.


    If The Property Is Already Registered

Previous Owner - Receipts

If you buy a second-hand property and the previous owner can give you receipts for the local rates (IBI), you know that the property has already been registered. Your obligation then is to declare yourself as the new owner. This is done in the town halls or the SUMA offices, which will then send the application on to the "Catastro" for registration.

Documents To Be Produced

You will be asked to produce:

* Photocopies of your title deed (escrituras).
* The last receipt for local rates (IBI) for the property.

Application Form

You will be given a copy of the application that you fill in and sign. The change in name will not appear on the tax bill before the next tax period.

Time Limits For Registration

Do remember that the law establishes certain time limits for this registration. For changes in ownership of a property, the time limit is two (2) months after signing the escritura. For registration of new buildings or renovations, it is also two (2) months from signing the "escritura de obra nueva" (deed for the building).

Fines For Non-Compliance With Obligations

There are now fines for not complying with the obligations mentioned above, ranging from 6 to 900 Euro.


    Voluntary Payment Period

Voluntary Periods For Payment Of Local Taxes Vary

The voluntary period for payment of IBI and other local taxes can vary in each municipality. You find out the dates in your local tax collection office.

Methods Of Payment

If you have arranged for your bank to direct debit these payments, you just wait for the receipt from the bank. If you have not made such an arrangement, you will get a bill for the taxes to be paid and must then go to one of the banks mentioned on the reverse side of the bill to pay. Or you can pay by way of one of the Cajeros Automaticos if you have such a card, just entering the reference number in the upper part of the bill with 13 digits. Or you can pay directly in your local tax collection office with certain credit cards.

Payments Made After The Voluntary Period

Payments made after the voluntary period will be surcharged at the rate of 20%, plus interest on the delay.


    Common problems and their solutions

On purchasing a new property, what should you do when....

1. You have applied for the property to be registered at the "catastro" and have not received any notification

Call on your tax office. They will invite you to identify your property on the plan. If your property is not shown, they will help you to fill in a "Comparencia" (Act of Appearance) that you sign and they send on to the "Catastro". If the plans for your municipality are not available, they will inform you where to go to check the location of your property.

2. All dwellings in your building are included in a single bill to the Community of Owners

The President of the Community should submit a list to the tax office, specifying: - Names and fiscal number of the owners of each of the dwellings. - Description of each of the dwellings, with number of entrance, floor, doors or premises. - The share (cuota) that each dwelling has in the common elements of the building (entrance, stairs, corridors, terraces) as specified in the title deeds and the deed on horizontal division (Escritura de División Horizontal).

3. Your personal dates are incorrect on the bill

Whenever you observe any errors in the details shown on the receipt (name, surname, fiscal identification number, etc.), you should visit your local office and show them your Fiscal Identification Card. The correct details will be noted and put into the data base.

4. You purchased a property some years ago and the bills are still coming in the name of the previous owner

Take the title deeds and the last bill along to the tax office and register the change of ownership. If you applied for registration when you purchased the property and the receipt is still being issued in the wrong name, it may be that in the documents you presented previously some essential information to identify your dwelling and make the change was missing.

5. You purchased a property and there are several unpaid bills in the name of the previous owner. Can you demand payment from him?

When you purchase a property, you should bear in mind that the property should not be encumbered by any outstanding debts of the previous owner, still valid. As from 1st of January 1990, when the new Law on Local Taxes came into force, all properties and dwellings are responsible for any outstanding taxes which have not lapsed.

In order to avoid any problems when buying a property, you should ask the vendor for the receipts for previous years. Remember that the bills should be issued in the name of the person who was the owner of the property on 1st of January that year.

6. You have sold your property and the bills continue to come in your name. What should you do?

By law, the buyer is obliged to notify the administration of any change in the ownership. However, if the buyer has not made such a notification, the vendor has the right to make it. You should then visit your local tax office with the documents proving the sale and they will arrange for your name to be removed from the bills and the name of the new owner registered.

7. How to apply for reimbursement of any payment made unduly and how to obtain prompt reimbursement

If you have a paper issued by the local tax office or the 'Catastro' that cancel your name from a bill, you can apply for reimbursement of the amount at your local office by presenting the following documents:

* Photocopy of the Fiscal Identification Card of the person appearing as owner in the bill.
* Original receipt issued by the tax collecting agency.
* The paper issued by the tax office or the "Catastro" cancelling your name as the owner of the property or a favourable decision by the authorities (granting a deduction, in recognition of a standing bank order or admitting an appeal lodged against a procedure of enforced collection).

8. How to apply for reimbursement from the tax office when the applicant is not the person mentioned on the bill?

If the person on the bill is not the person applying for the reimbursement, he/she should show proof that he has the right to apply:

* If he/she is the representative of a foreign citizens: A letter of authorisation from the person in whose name the bill was issued.
* If the owner has died: A letter of authorisation from the heirs.
* Manager of a company: Legalised photocopy of powers of attorney.
* If the owner is disabled: A medical certificate and proof of the relationship between the owner and the representative.
* If you have paid a bill issued in the name of the previous owner: Agreement on transfer of ownership.
* In general: Authorisation from the owner, together with a legalised photocopy of his/her identification document to verify the signature.

9. You have paid a bill twice. How to obtain prompt reimbursement?

When a bill has been paid twice or more, the tax office will send you a letter asking for full personal details, as well as the number of your bank account and the number of the branch where you wish to have the money credited.

Once these details have been completed, you only need to deliver a copy of the letter in your local office or send it to them by post. In approximately two months you will have the money returned.

10. How to pay by banker's order

When you are paying your annual bill during the voluntary payment period - normally in August or September - you can make out a banker's order for next years bill. If your bank is one of the banks collaborating with the tax collecting agency or town hall, you just fill in the banker's order and leave it in the bank.

If your bank is not one of the collaborators, you still fill in the banker's order, leave one copy in the bank, but must also bring one copy to the tax office.

If you want to make a banker's order outside the voluntary period, you must complete the corresponding form at the nearest tax office.

11. You have made a banker's order and still receive the bill by post

Any bill which is not paid by banker's order will be mailed to the taxpayers address. When a banker's order exists, bills are not sent by mail to avoid double payments. If you have received a bill by post for this year, it means that the banker's order has not taken effect. In this case, you should follow normal payment procedure.

If you wish to make the payment by banker's order in future years, you should make a new banker's order.

    Increasing values, rising taxes

The local property tax in Spain used to be very modest, due to low values on properties and the habit of declaring an even lower value in the title deeds. With the strong increase in property prices over the last years, the values are also rising.

In 2005 several municipalities made a general correction of property values for tax purposes, done by the "Catastro", the provincial office in the Hacienda. The property values were increased by hundreds of percent.

We expect that all new revisions of values will give similar results. And since the values given by the "Catastro" are the basis for the calculation of local property taxes, the IBI will increase strongly in the time to come.