Written by Ricky Bean,
Last Modified: 17th November 2016

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The Spanish tax authority’s use of drones and satellites has netted an extra 1.25 billion euros. Now it is extending the programme throughout the whole country and the Balearics. Don’t be caught out, make that declaration!

The Spanish tax authority, called the Hacienda, is resorting to hi-tech methods to discover buildings which have not been declared for tax purposes. Since the end of 2014 they have found 1.69 million undeclared or illegal properties and they’re looking for more.

Satellite and drones

Using sophisticated technology the Spanish Land Registry has found extensions, swimming pools and garages which were not registered and on which the owners have not been paying the correct level of property tax. They also found some houses that they didn’t know existed and were not on any council list.

By law, you must inform your local tax authority of any alterations or improvements you make to your property

By law, you must inform your local tax authority of any alterations or improvements you make to your property, which will usually mean paying more tax. For decades homeowners were able to get away with not declaring changes to a property, but improved satellite and drone technology has allowed the authorities to spot anything that does not conform to the land registry’s records.

Spanish taxman’s eye in the sky

Spanish taxman’s eye in the sky

Fraud is fraud

Omitting to declare additions to a property amounts to fraud and is being taken very seriously by the authorities. The tax concerned, Impuesto sobre Bienes Inmuebles (IBI), provides around half of each council’s income and so far the programme has netted an extra €1.25 billion, far ahead of expectations when it began.

Some areas have under-declared more than others. Andalusia had the largest number of breaches detected so far, with 373,000 undeclared alterations. In Galicia, next on the list, inspectors found more than 200,000 undeclared swimming pools and extensions. In the province of Lugo, over a quarter of properties were in breach.

Increase in tax

IBI is calculated on the rateable value of a property, which has been historically lower in the countryside and smaller towns. As an example of how much a council can lose from non-declaration, Hacienda tells of a farm which was ostensibly laid to crops and the owner paid just €132 a year property tax on the valuation. The satellite showed that in fact a house had been built on the land and the rateable value quadrupled. The farmer now must pay €528 a year in tax, plus a fine for not having permission to build the house.

Many expats may be unaware that they must apply for permission to build small constructions such as car ports, covered terraces, pools or another bathroom. Any addition to an existing property must be declared to the local council and permission granted. In some cases this is almost an automatic process but it will lead to a higher value being placed on your property and a higher value means higher tax.

With cash-strapped councils needing to pay for street lighting, schools, police and local roads, it is surely better to inform your local town hall of anything you have not already declared and pay a €60 fine rather than face higher penalties if a spy in the sky catches you out.

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