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3. 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).