What is I.B.I?
IBI or “Impuesto sobre Bienes Inmuebles” is a municipal property tax in Spain that is paid each year to your local council. I.B.I is the equivalent of the council tax in the U.K.
I.B.I tax is calculated as a percentage (which is set by each Ayuntamiento, or town hall every year) of the Valor Catastral value of the property. This amount is registered at the land registry and can be around 70% lower than the properties true market value. This is usually required within two months of completion.
How is I.B.I Calculated?
The percentage that is charged can vary according to the level of service provided by the specific town hall and can range from 0.5% to 1.2% of the Valor Catastral value. It is also based on the amount of land and buildings that you have. If you live in a larger town or city, this will most likely mean that your I.B.I charges will be greater than those of say someone who lives in a more rural location which has fewer services provided by the local council.
TIP: If you are buying a resale property, it is important to make sure that the previous owners are able to provide you with copies of the I.B.I receipts in order to verify that existing payments have been made. If not, you may be liable to pay these as the new owner as I.B.I is attached to the property.
If you are the new owner of a property you will need to inform the town hall so that your details can be registered at the “Catastro” land registry.
When is I.B.I Paid?
I.B.I is generally paid between September and December each year, but may vary slightly depending on your municipality.
What is I.B.I Used For?
Spanish I.B.I taxes are used to provide services and the infrastructure to the local area for example roads, rubbish collection, street lighting and general maintenance.
Who Has to Pay I.B.I?
Home owners both resident and non-resident have to pay their I.B.I each year as to do owners of garages, urban premises, agricultural land or buildings.
How do you Pay I.B.I in Spain?
It may be that you are sent a reminder each year, but do not depend on this as it may not happen. If you do receive the reminder, you can simply take this to the bank and make the payment. You also have the option to pay via direct debit each year and in some cases a small discount can be awarded.
If you are in any doubt, make a visit to your local town hall (Ayuntamiento) and ask them for the bill. You will most likely need to produce a copy of your title deeds (Escritura) and your last I.B.I receipt. You may also need your NIE documentation or passport, so go prepared.
Note that in some parts of Spain, I.B.I is collected by tax collection agency S.U.M.A. You can find out more about paying your I.B.I via their website at www.suma.es. The website is also in English with Frequently Asked Questions available.
How do I Register to Pay I.B.I?
If you are the new owner of a property and need to register to pay IBI you will need to provide a photocopy of the title deeds (Escritura) and a copy of the last I.B.I receipt for your property. New owners are obliged to do this within two months of purchasing a Spanish property so it is best do this as soon as possible.
What Happens if I Do Not Pay my I.B.I on Time?
You may be liable to a penalty or surcharge of around 5-20% of the total I.B.I bill. The amount of penalty depends on how long it takes you to pay the bill. For example, if you pay the bill prior to the final demand you may get fined a penalty of 5%. If you pay after the final notice, you may get fined 10%.
Penalties of up to 20% can be levied and ultimately failure to pay I.B.I on a property can eventually result in the loss of the property.
Can I Pay my I.B.I Tax Via the Internet?
If your IBI is collected by S.U.M.A you have the option of paying online via their website. Visit www.suma.es for information.
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Image courtesy of ReservasdeCoches.com on Flickr.
February 16, 2012