With several co-owners of a holiday property in Spain, it is not rare to observe that the municipality issues the assessment of the property tax (Impuesto sobre Bienes Inmuebles or briefly recibo del IBI) only to one of the co-owners and collects with this. What is it all about?
Who has to pay the property tax?
Every property in Spain is subject to property tax (IBI) by the municipality. Tax debtors are the co-owners of the holiday property who are jointly and severally liable. This means that each co-owner is obliged to pay the entire tax, but the municipality is only entitled to claim it once.
Or to put it another way: the municipality can split the direct debit or only issue it to one of the co-owners. The latter is a good thing for them, as it is easier for them to do so.
Remember that in the case of real estate located abroad you must fill out Form 720.
Does then only this co-owner have to pay the property tax?
No. It only means that the co-owner has to present the entire property tax to the municipality. Internally, he can demand reimbursement from the other co-owners in proportion to their share.
Can the municipality be asked to collect the property tax separately?
Yes, this is possible. The co-owners can apply to the municipality to divide the property tax among the co-owners according to their shares and collect it separately from each co-owner. For this purpose, the municipality must be informed of the data and shareholdings of the remaining co-owners.
Are the co-owners then only liable for their share?
No. The allocation of the direct debit of the property tax to the various co-owners does not alter their joint and several liabilities to the municipality. If one of the co-owners does not pay his share of the property tax, the municipality can claim the full amount from the other co-owners.
What then is the advantage of the division?
The advantage is that the municipality first arranges payment to each of the co-owners themselves. This means that no co-owner first has to make a submission and take care of the reimbursement by the other co-owners.
What does this mean in practice?
As a rule, it is advisable to apply to the municipality for the direct debit to be distributed among the co-owners as soon as the property is purchased. This means that there is no need for a co-owner to present the property tax and take care of the reimbursement.
In addition, this has the advantage that each of the co-owners can apply for a double the direct debit of the property tax, if necessary if this should be lost once. This should not be underestimated, as this document is required on numerous other occasions, e.g. when paying the non-resident tax on the owner’s own use of the property or when selling the property.
If you have any questions regarding this topic, please contact our tax advisors in Barcelona.