The cadastral value in Spain
The cadastre in Spain is the institution which considers properties for maps, drawings, boundaries, plans and details of land and building, and personal details of the owners.
And it is the source of the “valor catastral”, the assessed value of property for tax purposes.
In the cadastre everyone can find physical information related to buildings, like the surface, the location, the purpose, the shape, the different boundaries, a representation, the construction type.
There is also legal information like name, ID, and address of the owner or owners. Economic information can be consulted at the cadastre too, like the value of a property and valuation criteria. The economic information of the cadastre is used to determine the quantity of the taxes that taxpayers owe to the State in each fiscal year. If you buy a property in Spain you must communicate the new ownership to the cadastre also.
Since 2015 there is a close collaboration between the cadastre and the property register. As a result of this collaboration citizens now can find a geo-referenced description of real estate. This description makes it easier to identify the situation, shape, and surface of a determined piece of real estate, and to carry out operations of segregation, agrupation, and replotting of that piece of real estate.
IBI or property tax
The IBI (Impuesto sobre Bienes Inmuebles) or property tax is the equivalent of the rates and is paid annually. The amount of this tax depends on each town, as the tax is managed by both the State and the particular municipalities. Its value is normally between 0.4% and 1.16% of the cadastral value, which can be consulted at the cadastre by anyone who wishes to do so.
Both residents and non-residents pay IBI or property tax. In the case of non-residents, there is also an imputed income tax if they don’t rent the property in Spain and a rental tax if they decide to do so. Most municipalities and councils send written requests for property tax payment. In those letters you can find more information about where and when to pay the IBI in order to avoid any additional charges or fines.
Less fiscal advantages in Spain in 2017
The updating of the cadastral values that the Government approved for 2,452 municipalities that requested it, has come into force. In the case of 1,985 localities, this will result in an increase in the Property Rate (IBI) in cities such as Valencia, Granada, Cordoba or Cadiz, while it will fall in Santander or Almeria, unless the corresponding consistories changes the types so that there is no differences with 2016.
In municipalities like Alcaucin, Frigiliana or Periana the IBI will increase, but in others, like Alfarnatejo, Almachar, Benamargosa, Canillas de Aceituno, Canillas de Albaida, Colmenar, Competa, and Macharaviaya the IBI will be reduced.
The Spanish Tax Authorities have suppressed multitude of deductions for the companies in order to enhance the tax collection in 4.6 billion. Although many of the deductions for the companies already disappeared in December of 2016, others entered have just entered into force. Now companies can not apply for the exemption for dividends of a foreign company that is in a tax haven, as long as it does not belong to the EU. Likewise, if the ownership of one company in another is significant, that is, it represents more than 5% of the capital or exceeds 20 million euros, and when selling it generates losses, these no longer deduction, since in case there were any profits,they wouldn’t be taxed either.
Another disadvantage is that negative income from permanent establishments abroad can no longer be integrated into the tax base. Likewise, the decreases in the value of the trading portfolios by their valuation at a reasonable price, which have an impact on the profit and loss account as established by the accounting standard, will not be deductible, except up to the amount of the previous value increase integrated in the tax base. If you find yourself in one if these situations and are looking for an accountant and solicitor, don’t hesitate to contact us. We will inform and help you with your tax and legal issues in the area of La Axarquia, so you don’t find yourself in future trouble and problems.