Spain | In which city do you pay the most local taxes? From 1,001 euros per inhabitant in Madrid to 435 euros in Pamplona

Spain has more than 8,000 municipalities, according to the National Institute of Statistics (INE). An extensive municipal network that turns the area of ​​local taxes into a complex matter, to say the least. The tangle of information about city ​​council collection It is of such caliber that preparing a detailed x-ray of local taxation is a difficult task to tackle. That is why the work carried out by the Registry of Tax Advisory Economists (REAF) – the body specialized in taxation of the General Council of Economists – is especially valuable.

The detailed analysis of the provincial capitals, which bring together the majority of the population in Spain, yields a striking conclusion: the difference in the payment of local taxes reaches 566 euros per inhabitant depending on the city in which they live. Specifically, in Madrid, which is the municipality in which the most taxes are paid, satisfied 1,001 euros per inhabitant; while, in Pamplonawhich is the city with the lowest tax pressure, are paid only 435 euros per inhabitant.

He ranking municipal tax would look like this: Barcelonathe second most expensive provincial capital, you pay 978 euros. They follow him Tarragonawith 917 euros, and Gironawith 901 euros. Behind them are Toledo (874 euros per inhabitant) and Soria (864 euros). At the bottom of the table, the second cheapest municipality in terms of taxes is Jaenwith 492 euros per inhabitant. Below appear Badajoz (508 euros) and Caceres (522 euros), followed by Alicantewith 531 euros.

On average, in 2023 a citizen paid 705 euros for local taxes. This includes the Real Estate Tax (IBI)which is the one through which municipalities collect the most, since they obtain 66% of their income through this means; he Tax on Economic Activities (IAE)which only companies pay and represents barely 8% of the total municipal collection, since it is burdened by the exemptions for all natural persons and legal entities with a turnover of less than one million euros; and the Tax on Mechanical Traction Vehicles (IVTM)which is paid by the holder of the driving license – which is why some municipalities have attracted fleets of vehicles by establishing very low rates – and which contributes 11% of local income.

Also taken into account is the Tax on Constructions, Installations and Works (ICIO)which is optional and which has considerably reduced its contribution to the public coffers compared to the years of the boom real estate, contributing only 7% of local income. and he Tax on the Increase in Value of Urban Land (IIVTNU)commonly known as “municipal capital gains”, which has been recently modified due to the declaration of unconstitutionality of some provisions and which contributes 8% of municipal revenue.

As for the municipal taxeswith which local treasuries collect 28.6% of all tax revenues, REAF experts have detected that “many tax the same services or the same use of the domain, although the way of doing so is very different in each a”. Likewise, fiscal experts point out the problem that “only some town councils have economic-administrative bodies” and warn that “taxpayers in municipalities without these bodies must resort directly to the contentious-administrative route if they do not agree with a local tax settlement, since they cannot first access the free economic-administrative route, which often leads to not litigating due to the costs involved in the judicial process.

“Excessive” taxes on real estate

In view of the balance, the REAF proposes a series of proposals for a comprehensive reform of municipal taxation. On the one hand, they consider that taxes fall excessively on real estateso they are committed to reviewing wealth taxation. Furthermore, they point out that the IAE taxes some companies much more than others for just “a few euros difference” in terms of turnover, due to that level of one million euros set for exemptions. Regarding the IVTM, they recommend establishing a connection point between the municipality in which the vehicle is taxed and the actual place of residence of the owner to avoid tax competition for vehicle domiciliations.

Regarding the ICIO, they advise modifying the calculation of the fee because there is a big difference between the provisional and the final and this results in high litigation. They also consider that the IIVTNU is an “overtax” that must be reviewed after the modifications that now tax the transfers of land generated in less than a year. And they insist on the need to harmonize local rates and create provincial Economic-Administrative Courts to address the claims of residents of all the municipalities of the province. “The reform of the local financing system is urgent and mandatory simultaneously with the reform of the regional financing system, since both are in great need of a joint and comprehensive analysis in the current situation,” they conclude.

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