The Real Estate Tax (IBI), commonly known as “contribution”, is a tax that requires owners of real estate in Spain to pay an annual amount to the City Council where the property is located.

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Specifically, it is a tax that taxes the ownership of real estate, whether rustic or urban.

Its character is municipal and accrues annually.

Characteristics

• Direct: as it is directly associated with the value of a real estate property.
• Periodic: the tribute is paid annually.
• Real: since the ownership of the real estate property is taxed.
• Municipal ownership: management is shared between the State Administration and the City Councils.
• Mandatory: its payment is required by Law.

Legal regulation

The IBI is regulated in the following regulations:

• Royal Legislative Decree 2/2004 of March 5, which approves the consolidated text of the Law Regulating Local Treasury.
• Royal Legislative Decree 1/2004 of March 5, which approves the consolidated text of the Real Estate Cadastre Law.

Regarding the regulations that regulate cadastral management:

• Royal Decree 1020/1993, of June 25, on valuation techniques and framework table of land and construction values to determine the cadastral value of goods of an urban nature.
• Royal Decree 417/2006, of April 7, which develops the Consolidated Text of the Real Estate Cadastre Law, approved by Royal Legislative Decree 1/2004, of March 5.

Non-subject or exempt real estate

The main cases of non-subjection are:

• Roads, paths, other terrestrial routes, and goods of the maritime-terrestrial and hydraulic public domain, provided that their use is public and free.
• Real estate property of municipalities of public domain assigned to public use, assigned to a public service directly managed by the city council, and patrimonial goods, unless they have been transferred to third parties through consideration.

And the main cases of exemption:

• Real estate property of the State, Autonomous Communities or Local Entities directly assigned to national defense, citizen security and educational and penitentiary services.
• Municipal communal goods and neighborhood forests in common hands.
• Those of legally recognized confessional associations.
• Real estate of the Spanish Red Cross.
• Real estate of foreign governments intended for their diplomatic, consular representation, or their official organizations, on condition of reciprocity.
• (…).

Taxpayer

Taxpayer of the IBI can be any natural or legal person, as well as entities, communities of goods and civil societies that hold the ownership of the right that, in each case, constitutes the taxable event.

Taxable event and base

The taxable event is constituted by the ownership of a surface right, usufruct, property or administrative concession over a real estate property.

The taxable base is constituted by the cadastral value of real estate properties that is determined, notified and is subject to challenge according to the regulations governing the Real Estate Cadastre.

We hope this information is very useful to you.