IBI tax in Spain: the year of sale and what follows the house

You complete a purchase in April. In the autumn the seller's lawyer sends a request: the seller paid the full year's IBI, the annual municipal property tax, and would like eight months of it back. Many buyers assume that is a try-on. Since a Supreme Court judgment of 2016 it is not, unless your contract says otherwise.

IBI is the one Spanish tax every owner pays every year, and it is also the one that most often goes unpaid by owners abroad, because often no bill is posted to you at all. Here is how it works, what happens in the year of a sale, and what follows the house when you buy.

What IBI is and who pays it

IBI is a municipal tax on the cadastral value of the property. It accrues on the first day of the tax period, and the tax period is the calendar year. Whoever holds the property on 1 January owes the whole year.

"Holds" follows a fixed order: a concession, then a surface right, then a usufruct, then ownership. If parents gave a Spanish home to their children and kept the usufruct, the parents pay the IBI, not the children. Changes recorded in the cadastre, such as a new owner or a new extension, only take effect from the following 1 January.

What it is charged on

The base is the cadastral value, which is set by the cadastre and by law may not exceed market value. In most places it is well below it. The rate is applied to the value after any phase-in reductions following a revaluation, and it is set by each town hall within limits:

• for urban property, between 0.4 and 1.10 per cent;
• with permitted increases that can take the ceiling to 1.30 per cent;
• and, for up to six years after a general revaluation, as low as 0.1 per cent.

So there is no Spanish IBI rate, only your town hall's rate, published in its tax ordinance. The same cadastral value is also used for the non-resident tax on a home that is not let, explained in non-resident property tax in Spain.

The year of the sale

The town hall bills whoever owned the property on 1 January, for the whole year. That does not change on a sale.

What the law does allow is for the taxpayer to pass the cost on under the ordinary civil rules. In judgment 409/2016 of 15 June 2016, the Supreme Court's civil chamber set the doctrine: the seller who pays the IBI may pass it on to the buyer in proportion to the time each of them owned the property in that year, unless they agreed otherwise.

Three practical consequences:

• It is the seller's option, not an automatic adjustment. The town hall still bills the seller.
• A purchase contract that says each party bears its own taxes, or that the seller bears the IBI for the year of sale, displaces the rule.
• If the contract is silent, the seller can claim the buyer's share afterwards. Better to settle it in the deed, in one line, than by letter months later.

What follows the house when you buy

Unpaid IBI is attached to the property. The statute says the property answers for the full tax amount, meaning the tax itself, not surcharges or interest. It does not appear in the land registry, which is why a clean nota simple says nothing about it; see what a nota simple shows and misses.

The buyer is only a fallback debtor. The town hall must first pursue the seller and declare them unable to pay, and then issue a formal decision declaring the buyer liable. How far back that can reach is often stated as "four years", but the counting depends on when each year's tax accrued and, against a fallback debtor, on the last collection step against the seller. Do not rely on a round number.

The notary asks about IBI debts and warns you at signing. The practical protection comes earlier: ask the seller for the last receipts, or a certificate from the town hall or its collection body that nothing is outstanding, and keep back any debt from the price.

The empty-homes surcharge is almost certainly not yours

Since the 2023 housing law, town halls can add a surcharge to the IBI on homes that are permanently empty: up to 50 per cent after two years, up to 100 per cent after three, and up to 50 percentage points more where the owner has two or more such homes empty in the same municipality. Many articles stop there and frighten holiday-home owners.

Read the definition. A home only counts as permanently empty if its owner holds four or more residential properties. On top of that, use as a second residence is a justified cause for up to four years of continuous vacancy. The surcharge also needs a municipal ordinance, a hearing of the owner with evidence of vacancy, and it is charged on the tax bill, not on the value, accruing on 31 December. A non-resident with one holiday home is outside it.

How the bill reaches you, or does not

Once your entry on the municipal tax roll has been notified, the town hall can notify each year's bill collectively, by public notice. You are not entitled to an individual bill every year. That is how owners abroad fall behind without knowing.

After the voluntary payment period a surcharge applies: 5 per cent if paid before the enforcement order is notified, 10 per cent if the debt and surcharge are paid within the deadline set in that order, and 20 per cent plus late interest otherwise. Where a notification cannot be delivered after two attempts, it is published in the Spanish Official Gazette and you have fifteen days to appear.

The answer is a direct debit.

Paying from a bank account outside Spain

Under the EU regulation on euro payments, a payee that collects by direct debit from a payer whose account is located within the EU may not specify the Member State in which that account must be, provided the account is reachable. Public bodies are not excluded, so a Spanish town hall or its collection body has no basis to insist on a Spanish account for an account held in Ireland or elsewhere in the EU.

An account in the United Kingdom is a different matter. The regulation only applies where both payment providers are in the EU, so it gives no protection to a UK account, whatever the UK's position in the SEPA payment scheme. Owners paying from the UK often end up with a Spanish account for this reason.

Do you need a tax representative?

Not for IBI. Nothing in the local tax law requires one. The rule people have in mind comes from the non-resident income tax law. Residents of other EU countries are never obliged under it. Residents of countries outside the EU, which now includes the UK, must appoint one if the tax agency requires it because they own property in Spain, and always if they live in a country with no effective exchange of tax information with Spain. The penalty for not doing so is €2,000, or €6,000 in the second case.

Questions we get

How much will my IBI be?
Take the cadastral value from your last receipt or from the seller, and your town hall's rate from its ordinance. The previous owner's receipt is the quickest guide.

I bought in March. Do I pay this year's IBI?
The town hall bills the seller for the whole year. Whether you reimburse part of it depends on your contract; if it says nothing, the seller may claim your share in proportion to the months.

Can the town hall come after me for the seller's old IBI?
Only for the tax itself, only after pursuing the seller, and only by a formal decision. The way to avoid it is to see the receipts before signing.

Do I need a NIE for IBI?
The tax roll, the direct debit and every dealing with the town hall use your Spanish tax number, and for a foreign owner that is almost always the NIE: see what is a NIE number in Spain.

Why Buenaley?

Buenaley is a Spanish law firm working with international clients. For property owners and buyers there are two things we take off your hands, in this order.

The first is the NIE. It is the number the town hall, the tax agency and the bank all use, and without it the property cannot be registered in your name. We handle it through our NIE service.

The second is the property side: checking what is owed before you buy, settling the IBI of the year of sale in the deed, and making sure the bills are paid when you are not there.

• NIE applications for every owner, started on day one
• IBI receipts or a certificate of no debt obtained before the deposit
• The year-of-sale IBI settled in the purchase or sale deed
• Direct debit set up, from an EU account where that is what you want
• Outstanding bills and surcharges traced and cleared for owners who fell behind

Behind on IBI, or buying and want to know what is owed? Send us the cadastral reference and you will hear where things stand. Or start with the NIE application, because every dealing with the town hall starts with that number.