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B Law & Tax
20 October 2023

Tax advisor: Key updates on Property Tax (IBI): exemptions, valuations, and compatibility

In three binding consultations in July, the General Tax Directorate (DGT) addresses various issues related to the Property Tax (IBI). The most notable novelty is the IBI exemption for properties owned by agricultural or livestock operators that are linked to such activities and have experienced a decrease in net income of at least 20% in 2023 compared to the average of the last three years established in Royal Decree-Law 4/2023 (Urgent Measures in Agricultural and Water Matters in Response to Drought and Worsening Conditions in the Primary Sector Due to the Conflict in Ukraine and Weather Conditions).


First Consultation: July 20th, 2023

The DGT outlines the requirements that owners of rustic properties must meet to apply for this exemption. Rustic properties must be related to agricultural or livestock operations, and the cadastral owners of these properties must also be the owners of the agricultural or livestock operations. Additionally, they must have experienced a reduction in net income from agricultural activities in 2023, with minimum thresholds of 20% compared to the average of the last three years in areas with natural or specific limitations, as defined in Article 31 of Regulation (EU) No. 1305/2013 of the European Parliament and the Council, or 30% in other areas. These requirements must be supported by appropriate evidence, and the DGT provides guidance on these criteria.

Second Consultation: July 21st, 2023

The DGT analyzes the consequences of the simplified collective valuation procedure following the modification of the General Urban Plan approved in December 2021. This modification reduces the cadastral value due to the change in the nature of real estate properties, transitioning from urban to rustic nature. The DGT establishes that this cadastral act will take effect from January 1 of the year following the modification of the General Urban Plan, which is January 1, 2022. On that date, it also becomes effective in the IBI. The tax administration will refund overpayments made by taxpayers, along with the corresponding late payment interest, without the need for the taxpayer to request it. Late payment interest accrues from the date of the overpayment until the date the refund is ordered.


Last Consultation: July 19th, 2023

The compatibility of the IBI payment encumbrance with the implied legal mortgage is once again addressed, as discussed in a previous consultation in October 2022. Under the implied legal mortgage, the guarantee is limited to the IBI debt for the year in which payment is demanded and the immediately preceding year. In the case of a change in ownership of the rights constituting the taxable event, the guarantee of real encumbrance on the transferred property applies. For the tax authority to demand the IBI debt from the new property owner, there is no need to previously declare the debtor in default or establish their liability. For outstanding payments from 2012 to 2020, not covered by the implied legal mortgage, the encumbrance applies to all IBI debts pending collection from non-prescribed years.


B Law & Tax International Tax & Legal Advisors.


“In B LAW&TAX we specialize in international tax advisory services for both companies and individuals. If you would like to obtain further information, we would be delighted to assist you at 917817194 or at  info@blaw.es