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Spanish building tax

What part of your building quote is actually taxed, and what the tax comes to with your council’s own rate and reliefs.

The base is the material execution cost, not the total on the quote (art. 102.1)
To pay
€2,520.00
Gross tax
€7,200.00
Effective rate on the base
1.4%
The art. 103.2 reliefs applied in cascade
StepApplied toAmount
Gross taxthe tax base€7,200.00
a) Special municipal interest (95 %) · 50%€7,200.00− €3,600.00
e) Accessibility (90 %) · 30%€3,600.00− €1,080.00
To pay€2,520.00
What it would be if the reliefs added up€1,440.00
  • 4 % is the maximum art. 102.3 TRLRHL allows a council. Many charge less: check the rate in your own fiscal ordinance.
  • The reliefs do not add up: each letter of art. 103.2 applies «to the tax resulting from applying, where relevant, the reliefs referred to in the preceding paragraphs».
  • Whether two reliefs can be combined is decided by your ordinance, not by the statute: the closing paragraph of art. 103.2 hands it that job expressly.
  • The tax accrues when the works start «even where the corresponding licence has not been obtained» (art. 102.4). Starting without paperwork does not avoid it.
Refine: second relief and licence fee deduction

Art. 103.2 chains the reliefs in the order of their letters, and its closing paragraph leaves it to the ordinance to decide whether they can be combined at all. Art. 103.3 allows the licence fee to be deducted, but only where the ordinance provides for it.

The rate and the reliefs are set by each council in its own fiscal ordinance. This calculator defaults to the statutory 4 % ceiling because it is the only figure the law gives; yours may be lower.

Video: how to use the calculator

1

The builder’s quote is not the tax base

Article 102.1 says two things and the second is the one that changes the number. It first defines the base as «the real and actual cost of the construction, installation or works», and clarifies that for these purposes this means «the material execution cost». It then lists what does not form part of it: «Value Added Tax and other analogous taxes belonging to special regimes, the fees, public prices and other local public charges related, where applicable, to the construction, installation or works, nor the fees of professionals, the contractor’s business profit, nor any other item that does not strictly form part of the material execution cost». A Spanish building quote is built from the inside out: the material execution cost, then overheads and industrial profit on top of it, then VAT on top of that. The total in front of the reader carries three layers the statute strips off one by one.

2

The divisor is the product of the two layers, and almost a third disappears in it

With 19 % of overheads and industrial profit and VAT at 21 %, the factor separating the total from the base is not 1.40 but 1.4399, because VAT is charged on the margin rather than beside it. A quote of 100,000 euros therefore has a base of 69,449.27 euros, not 71,428.57. At the 4 % ceiling that is 2,777.97 euros of tax against the 4,000 that come out of multiplying the total: 1,222.03 euros of difference on a single job, which is exactly the rate applied to what the statute excludes. The architect’s and the technical architect’s fees are subtracted before the division, not after, because a professional does not invoice a contractor’s industrial profit and their fees cannot carry that margin inside them.

3

The six reliefs of article 103.2 chain

An ordinance may regulate up to six: up to 95 % for works declared of special municipal interest or utility, up to 95 % for incorporating thermal or electrical use of solar or ambient energy, up to 50 % for private infrastructure investment plans, up to 50 % for publicly protected housing, up to 90 % for improving access and habitability for people with disabilities, and up to 90 % for electric vehicle charging points. Each of the letters b) to f) closes with the same sentence: it applies «to the tax resulting from applying, where relevant, the reliefs referred to in the preceding paragraphs». That is a cascade, not a sum. A 50 % and a 30 % on 7,200 euros of gross tax leave 2,520 euros to pay, not the 1,440 that discounting 80 % would give. And two 95 % reliefs leave 0.25 % of the tax, because 0.05 times 0.05 is never zero.

4

Whether they combine at all is your council’s decision, not the statute’s

The order of the cascade is fixed by the State through the order of the letters, but the closing paragraph of paragraph 2 hands the other half of the decision to the municipality: «the regulation of the remaining substantive and formal aspects of the reliefs referred to in this paragraph shall be established in the fiscal ordinance. Among other matters, the fiscal ordinance shall determine whether all or some of the said reliefs are applicable simultaneously». So an ordinance may grant all six and forbid combining them, grant only one, or grant none: all six are optional and none exists until a council plenary approves it. The first additionally requires an express resolution of the plenary, on the taxpayer’s application and by simple majority. And paragraph 3 adds a different piece: the ordinance may allow the urban planning licence fee to be deducted from the tax, which is a separate charge.

5

It is assessed twice, and the second time can refund you

Article 103.1 requires a provisional assessment on account when the licence is granted, the responsible declaration is filed or the works begin, based on the quote submitted and professionally stamped, or on the indices or modules the ordinance establishes. It continues: «once the construction, installation or works are finished, and taking into account their real and actual cost, the council shall, through the appropriate administrative verification, modify, where applicable, the tax base referred to in the preceding paragraph, issuing the corresponding final assessment and demanding from the taxpayer or refunding to them, as the case may be, the amount due». That is where the unexpected second bill comes from. And that is the half almost nobody claims: works that end up costing less than budgeted generate a refund, but it has to be asked for, evidencing the real cost with invoices.

6

The taxpayer is the owner of the works, not the owner of the property

Article 101.1 says it twice so there is no room for doubt. Taxpayers are those who «are owners of the construction, installation or works, whether or not they own the property on which those works are carried out», and for these purposes «the owner of the construction, installation or works shall be deemed to be whoever bears the expenses or the cost that carrying them out entails». A tenant refurbishing the premises they rent is the taxpayer, and the owner of the building is not. Paragraph 2 adds the substitute taxpayer: where the works are not carried out by the taxpayer, whoever applies for the licence, files the responsible declaration or executes the works is liable, and «the substitute may demand from the taxpayer the amount of the tax paid». That is why the bill sometimes reaches the builder, and why the builder passes it on.

7

Starting without a licence does not avoid the tax

Article 100.1 charges any construction, installation or works «for which the corresponding building or planning licence is required, whether or not that licence has been obtained, or for which a responsible declaration or prior communication is required». Article 102.4 finishes the job: the tax accrues «at the moment the construction, installation or works begin, even where the corresponding licence has not been obtained». What decides it is that the works REQUIRE the procedure, not that it has been carried out. The only exemption in the tax is article 100.2 and it is a closed list: works owned by the State, the autonomous communities or local authorities and destined directly for roads, railways, ports, airports, hydraulic works and town and waste-water sanitation. Nothing else.

8

The building tax and the licence fee are two separate charges

A council bill for building works usually carries two items and they should not be confused, because they run on opposite rules. The building tax is a tax: it charges the works, its base is the material execution cost and its ceiling is 4 %. The urban planning licence fee arises from article 20.4.h) of the same consolidated act, which allows a council to charge for «the granting of the planning licences required by land and town planning legislation, or the carrying out of administrative control activities where the licence requirement has been replaced by a responsible declaration or prior communication». In other words: the fee pays for the administrative service and the tax charges the works. That they are distinct is what makes the bridge in article 103.3 possible, which lets the ordinance deduct the fee from the tax, and article 103.5, which lets the council administer both jointly.

Worked example

The calculator’s opening state is a refurbishment with 180,000 euros of material execution cost, at the 4 % ceiling, in a council whose ordinance grants 50 % for special municipal interest and 30 % for improving accessibility. The gross tax is 7,200 euros. Letter a) takes off 3,600 euros and leaves 3,600. Letter e) then acts on those 3,600, not on the 7,200, so it takes off 1,080 and leaves 2,520 euros to pay. If the two reliefs added up, as almost everybody assumes, 80 % would leave 1,440 euros: the difference, 1,080 euros, is exactly the slice the additive reading discounts twice. In the second mode, a quote of 100,000 euros with 21 % VAT and 19 % of overheads and industrial profit gives a base of 69,449.27 euros, so only 69.4 % of the quote is ever taxed and using the total would cost 1,222.03 euros more. In the third, that same 180,000-euro job ending up at 165,000 paid 2,520 euros of provisional assessment and owes 2,310 of final assessment: the council has to refund 210 euros.

Frequently asked questions

How much is the Spanish building tax on a 100,000-euro refurbishment?
It depends on your council, but it is not calculated on the 100,000. If that figure is the total quote with 21 % VAT and 19 % of overheads and industrial profit, the tax base is 69,449.27 euros, because article 102.1 leaves out VAT and the contractor’s profit. At the 4 % ceiling the tax is 2,777.97 euros; at 2.5 %, which many municipalities apply, it is 1,736.23. Check the rate in your council’s fiscal ordinance before accepting any figure.
Is the Spanish building tax charged on the quote including VAT?
No. Article 102.1 excludes VAT from the base by name, along with fees, public prices, professional fees and the contractor’s business profit. If the council has assessed you on the VAT-inclusive amount, the assessment is wrong and you can appeal it. It is worth submitting an itemised quote with the material execution cost shown separately, precisely so that the base comes out right first time.
Who pays the Spanish building tax, the owner or the builder?
The taxpayer is the owner of the works, who under article 101.1 is whoever bears their cost, «whether or not they own the property». A tenant refurbishing premises is the taxpayer. The builder, or whoever applies for the licence, may be a substitute taxpayer under article 101.2, meaning the party who pays the council, and in that case the statute itself allows them to claim the amount back from the owner of the works.
What is the maximum Spanish building tax rate?
4 %. Article 102.3 says the rate «shall be that fixed by each council, without that rate being able to exceed four per cent». It is the only figure in the tax the State fixes: below that ceiling each municipality sets its own in its fiscal ordinance, and rates between 2 % and 4 % are common. If your bill applies more than 4 %, it is unlawful.
Can two Spanish building tax reliefs be combined?
Only if your ordinance allows it: the closing paragraph of article 103.2 says «the fiscal ordinance shall determine whether all or some of the said reliefs are applicable simultaneously». And when they are combined they do not add up: each letter applies to the tax the previous one left, so a 95 % and another 95 % leave 0.25 % of the tax to pay rather than nothing.
Why have I received a second Spanish building tax bill?
Because the tax is assessed twice. Article 103.1 requires a provisional assessment on account against the quote and, once the works finish, a final one against the real and actual cost verified by the council. If the works cost more than budgeted, the municipality claims the difference. And if they cost less, the same article obliges it to refund: the refund exists, but it has to be claimed, evidencing the real cost.
Are the Spanish building tax and the building licence fee the same thing?
No. The building tax is a tax on the works, based on the material execution cost and capped at 4 %. The urban planning licence fee arises from article 20.4.h) and pays for the administrative service of granting the licence or controlling a responsible declaration. They are two separate charges that usually arrive together. Article 103.3 lets the ordinance deduct the fee from the tax and article 103.5 lets the council administer them jointly, but neither is automatic.
Is the tax payable if the works only need a responsible declaration?
Yes. Article 100.1 expressly charges works «for which a responsible declaration or prior communication is required», and it was amended in 2012 precisely to cover the replacement of licences by declarations. What decides it is that the works require the procedure and that the control belongs to the council levying the tax, not the form the paperwork takes.
What if I start the works without a licence?
The tax accrues anyway. Article 102.4 says it accrues «at the moment the construction, installation or works begin, even where the corresponding licence has not been obtained», and article 100.1 charges the works «whether or not that licence has been obtained». Starting without paperwork does not save the building tax: what it adds is a planning enforcement file, which is a different matter and considerably more expensive.
Which works are exempt from the Spanish building tax?
A very short list. Article 100.2 exempts works owned by the State, the autonomous communities or local authorities and destined directly for roads, railways, ports, airports, hydraulic works and town and waste-water sanitation, whether new investment or maintenance, even where an autonomous body manages them. There are no other exemptions in the statute. Everything else that reduces the bill is an optional relief under article 103.2, which exists only if your council has approved it.

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Author: Thorben Rasmus Idel · Reviewed by: Nahar Geva · Last reviewed: