Owning a car in Spain: 1,000 euros in hidden taxes you pay each year
The average driver in Spain shells out more than 1,000 euros annually in extra charges
Car rental prices have never been higher, and with the renewed demand creating a huge supply shortage of hire vehicles on the market, many visitors with a bolthole in Spain may be considering buying a run-around to use when they visit instead.
It might seem like an attractive option. No more waiting for a taxi from the airport, or haggling with rental companies over their extortionate insurance charges. However, the cost of buying a car in Spain goes far beyond the garage’s price tag, and the hidden charges can amount to as much as 1,000 euros each year.
Registration tax
This fee is only paid once, when a car is registered for the first time, and the amount due is based on the amount of CO2 emissions. Depending on the grams of CO2 emitted per kilometre, drivers of new vehicles will have to pay a certain percentage of the car’s value in registration tax.
The 2022 rates are as follows:
Up to 120g/km of CO2: 0% of the net value of the vehicle.
Between 121 and 159g/km of CO2: 4.75%.
Between 160 and 199g/km of CO2: 9.75%.
Above 200g/km of CO2: 14.75%.
People with reduced mobility are excluded from this tax once they don’t sell their car within four years, as are taxis and driving school vehicles, while large families are entitled to a discount of 50%.
Road tax
Also known as the Tax on Mechanical Traction Vehicles (IVTM), all cars in Spain must pay annual road tax. The rates are determined by which municipality the vehicle was registered in as of January 1 of that year.
The amount paid depends on the ‘taxable horsepower’ or CVF of each car, and the cost also varies widely across municipalities.
However, the Regulatory Law of Local Treasury has set the following minimums:
Less than eight taxable horsepower: €12.62.
From 8 to 11.99 taxable horsepower: €34.08.
From 12 to 15.99 taxable horsepower: €71.94.
From 16 to 19.99 taxable horsepower: €89.61.
From 20 taxable horsepower onwards: €112.00.
Certain vehicles are exempt from annual road tax, such as cars designed for people with reduced mobility, public transport vehicles and ambulances.
Tax on Insurance Premiums (IPS)
Just like road tax, car insurance has to be paid annually, but did you know that you’re also paying a mandatory 8% of the total cost on tax? This rate was established back in 1997 and is built into the price of your insurance premium.
The average price of comprehensive car insurance in Spain is around €470 per year, of which 37.60 euros corresponds to tax.
Hydrocarbon tax
Each time we put fuel in our car, we also pay tax, although luckily Spain has the eighth lowest tax on hydrocarbons in the EU. Here, the average is around 32% on the price of petrol and 28% on diesel. This translates into a cost of 0.473 euros on each litre of petrol and 0.379 euros for diesel.
This expense is mitigated somewhat by the government discount of 20 cents per litre per fuel, which is set to run until December 31 this year.
VAT
Value Added Tax (IVA in Spanish) is tacked on to virtually every aspect of car ownership, from paying 21% extra when you buy it to the same charges when fuelling it or putting it through the ITV.
People with reduced mobility only have to pay 4% of the purchase price, provided that the car is bought new, and if you buy privately rather than through a dealer you’ll need to pay the Patrimonial Transactions Tax (ITP) instead.
Self-employed business people can usually deduct the VAT based on the economic activity they carry out.
ITV
The Technical Inspection of the Vehicle (ITV) is a mandatory test that checks the safety and road-worthiness of the vehicle. If a car is more than 10 years old, the ITV has to be taken each year and there are big fines in Spain for driving without a valid certificate.
This is another cost which varies depending on the region and type of vehicle. For example, in Madrid, the average price of the test for a petrol passenger car is around 40 euros.
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