According to the specialized press, the Royal Decree on tax measures announced on Thursday, December 1, 2016, which came into force on December 3, 2016, includes an update of the cadastral values for 2017 that will affect 2,452 Town Halls. This measure has a direct impact on the IBI (rates) since this tax is due on 1st January of each year. The IBI is a municipal tax whose amount depends on the cadastral value of the property. When raising the cadastral value, logically increases the IBI.
DIRECT AND INDIRECT TAXES
The IBI is a direct tax, such as Income Tax (IRPF), ISO (Corporate Income Tax) or Inheritance Tax. They are called direct because they are applied on a direct or immediate basis of the economic capacity as the possession of a patrimony or the obtention of an income. Indirect taxes, on the other hand, charge the consumption of goods and services and the transmission of goods and rights in general (not dependent on the characteristics or possessions of the taxpayer but the product itself) such as VAT or IGIC.
NATIONAL, REGIONAL AND LOCAL TAXES
In the Spanish tax system there are three types of taxes according to the different levels of Public Finance (national, regional and local). In the case of the IBI, this is a local tax that is applied by the Town Hall where the property is located and, as previously said, its value depends on the cadastral value.
WHAT IS CADASTER (CATASTRO)
It is a registry of real estate in which are described with plans and measures the real estate properties (farm land and urban land). It is a statistical record to determine the surface of the plots and the geographical extent of any specific municipal area and that serves to give it a value and thus determine the collection of the IBI. Hence, it is so important for each Town Hall to "cadaster" the properties of its municipality and maintain its value updated to be able to ask for payemnt of real estate owners. So that the municipalities can claim to the Government the updating of their cadastral value for 2017 they have to fulfill 3 requirements: 1) that have passed at least 5 years since the last cadastral update; 2) that they have communicated the request to the General Directorate of the Cadaster before 31st May and 3) that they have justified "substantial differences between market values and those that served as the basis for the determination of the current cadastral values.".
HOW TO CALCULATE THE IBI
We have then that the IBI is a direct local tax payable once a year by the owner of a property (apartment, garage, storage) and that its amount depends on the cadastral value (other than the market value) of the property. The problem for the taxpayer is to calculate the amount he must pay each year. It is known that each year is increasing, but no one knows in advance how or why. The cadastral value of the property is applied a coefficient that varies between 0.4% and 1.3% for urban real estate. There are important differences between municipalities depending on whether it is a provincial district capital or not, or the public services offered by such Town Hall. The cadastral value to which the City Hall applies the percentage chosen is calculated by the cadaster, through a series of criteria, such as the market value, the cost of execution of the constructions and the value of the materials or the age of the building. Normally it is a value lower than the market price, so every 10 years the Administration must check the cadastral values of each municipality. There have been some cases where it took so long to review the values that suddenly the receipt of IBI from one year to another was multiplied by ten.