New Tax Rules Increase IBI Charge In 11 Provincial Capitals From 2017

5 December 2016 – Expansión

Property owners in some of Spain’s largest cities will start the new year with a tax blow. The Royal Decree that was approved by the Council of Ministers on Friday and published in the BOE on Saturday contains…a measure that will significantly increase the Tax on Real Estate Assets (IBI) in hundreds of towns, including in eleven provincial capitals, specifically: Valencia, Alicante, Badajoz, Cádiz, Córdoba, Teruel, Granada, Jaén, Huelva, Tarragona and Huesca.

This tax will accrue from 1 January 2017 and will depend on the cadastral values, given that they form the taxable base for the IBI calculation. The Tax Authorities have approved updates to these values in 2,452 towns, i.e. in almost one third of the towns in Spain.

The Town Halls set the cadastral values on the basis of value proposals performed by the Catastro. However, all of the property values (homes, garages, premises, offices, hotels, etc) affected by proposals made prior to 2004 will be revised upwards, with coefficients ranging from 1.03 to 1.08, according to the Royal Decree from the Tax Authorities.

For example, in Córdoba, whose valuations were last reviewed in 1995, the update will be 1.06. Thus, if a home had a cadastral value of €100,000 in 2016, it will have a cadastral value of €106,000 in 2017. The IBI payments will increase without the need to raise the tax rate. In Valencia, whose valuations were last reviewed in 1998, the coefficient will be 1.04.

Most of the towns that requested the review, which seeks to reflect property values to 50% of their market price, did so to increase their coefficients and, ultimately, to increase the IBI raised without changing the tax rate . Many of the affected towns have not reviewed their values since the real estate boom, or even earlier. In fact, numerous town halls have not updated their valuations since the 1980s.

The valuations last performed between 2005 and 2011 will be updated with a coefficient of less than one, of between 0.87 and 0.92. They include four provincial capitals: Almería, Santander, Lleida and Ávila.

The reason for the measure

(…) For the avoidance of doubt, the Royal Decree explains that the measure “is necessary given that it contributes to strengthening municipal financing, tax consolidation and budgetary stability for local entities”. In other words, it is a necessary measure to balance the deficit. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

La Generalitat Legalises Room Rentals For Tourists

16 July 2015 – El País

The Catalan government has decided to legalise the supply of tourist accommodation that individuals offer in their homes through technology platforms such as Airbnb and Homeaway. Citizens will be able to rent out rooms in their places of residence, if they pay the tax that other establishments are subject to. Homes may accommodate tourists for stays lasting no longer than 31 days and they may only rent out rooms for four months in total, although not necessarily consecutively. The local councils will decide in which areas the activity will be authorised.

Cataluña will become the first autonomous community to legislate on the rental of rooms in private homes to tourists. The activity has been happening for some time now, but it was in a legal limbo, and so was under the hotel sector’s spotlight. Last year, hundreds of citizens who carried out the activity in Barcelona, held demonstrations on numerous occasions after La Generalitat levied a fine of €30,000 against eight platforms offering such rooms, including Airbnb. As such, the Catalan Government became the first Administration in the EU to penalise that kind of business.

Nevertheless, the Department for Work and Employment presented a draft bill yesterday aimed at regulating the supply, in the same way as cities such as Amsterdam (Holland) and San Francisco (USA) have done. In these cities, individuals may offer private rooms to tourists for a maximum number of days and in return the tourists are subject to a tourist tax. (…)

In Cataluña, citizens will be able to rent out a maximum of two rooms in their “usual and permanent place of residence” – in return, they must declare it as an economic activity and pay a tourist tax of €0.65 per night in Barcelona and €0.45 per night in the rest of Cataluña.

Property owners, who must be officially registered (’empadronados’) in their properties, will be subject to certain conditions: they may not accommodate more people than permitted by the residency certificate; they may only provide breakfast, no other services; and the owner must continue to live in the property for the duration of his/her client’s stay. (…)

A spokesman for the Government explained that the bill is currently in the planning stage and that a decree will materialise in between five and eight months. The platform Airbnb welcomes La Generalitat’s announcement and said: “We hope to work with La Generalitat over the next few days to understand more about the proposals that have been announced and to find out how residents can participate in the upcoming discussions”.

Original story: El País (by Lluís Pellicer)

Translation: Carmel Drake