Guide to business in Spain Guía de negocios en España


4. Local taxes


The Revised Local Finances Law approved by Legislative Royal Decree 2/2004, of March 5, establishes a scheme aimed at rationalizing the local taxation system and facilitating the activity of local entities. Under this legislation, local authorities are empowered to modify some aspects of this type of taxes. This Law establishes two different types of municipal taxes, which can be classified as follows:

  • Periodic taxes, among them:
  • Tax on real estate (impuesto sobre bienes inmuebles).
  • Tax on business activity (impuesto sobre actividades económicas).
  • Other taxes:
  • Tax on erection and installation projects and construction works (impuesto sobre construcciones, instalaciones y obras).
  • Tax on increase in urban land value (impuesto sobre el incremento del valor de los terrenos de naturaleza urbana).

4.1. Periodic taxes

  1. Tax on real estate
  2. This tax is levied annually on owners of real estate or on holders of rights "in rem" over real estate based on the cadastral value determined pursuant to the Property Cadastre regulations, at different rates up to a maximum of 1.30% for urban property and 1.22% for rural property.

    Nonetheless, the tax rates applicable to urban real estate have been raised (for fiscal years 2014 and 2015).

  3. Tax on business activity
  4. This tax is levied annually on any business activity conducted within the territory of the municipality.

    However, the following taxpayers are exempted from this tax:

    • Individuals.
    • Taxpayers who start a business activity within Spanish territory, during the two first tax periods in which they carry on the activity.
    • Taxpayers subject to corporate income tax and entities without legal personality whose net sales (at group level according to article 42 of the Commercial Code) in the previous year were under €1 million.

Guide to business in Spain

Tax system


ICEX - Gobierno de España - Ministerio de Economía y competitividad
Elaborado por Garrigues - Abogados y Asesores Tributarios
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