The envelope looked very formal. The cover stated that it was from the Department of Employment. Ah, a refund, perhaps I’ve paid too much tax? Ever the optimist, the letter was a bit of a bombshell. I owed quite a few euros in contributions and had better pay by the end of the month, so immediately raised a transfer. The money was earmarked elsewhere so this bunny was not too happy
In the same post was a letter from my bank; containing an “oh by the way” letter advising that “Your account has been embargoed”. I shot down to the bank; yes, the two items were linked. For whatever reason my contributions were not paid 9 months ago, hence the letter to pay up now, meanwhile the Employment Department had had the embargo put into place; as I had paid, the bank manager made a call for me and got it lifted
Why it took so long for the notification to be made and why the Department just didn’t take the money earlier I’ll never know, but it wasn’t a lot of fun to deal with; meanwhile October is the month for my quarterly tax returns, the council tax is due and then my broker makes a casual call to let me know that the car insurance is due for renewal; it never rains etc etc………..Being self employed in Spain is not cheap and I can understand why the black economy is rife; still I do sleep well
Funny thing is whilst all of this is going on, I receive a few enquiries to re-register peoples cars and mention import tax, whereupon the reply from the customer is that they won’t need to pay the tax as the car either is too old, they have owned it 10 years and they paid taxes when they bought it etc.. Why is it that questions are always about the same subject? Next week it will be cars being impounded or driving licences, but I cannot fathom why they come in droves; is there some mysterious force at hand? Are they all seeking advice form the same bar room lawyer? Dunno, but strange isn’t it?
One of the few certainties in life is paying taxes and whilst we understand the need, they are still a pain, so let’s go through the taxes that have to be paid when owning or importing a vehicle in Spain
Import or Registration tax
This is levied on all cars purchased in Spain when bought brand new. As foreign cars were not bought in Spain, you may be clobbered for the tax when you do register it here. A similar system existed in the UK until a few years ago when it was scrapped, no doubt re-appearing elsewhere. This tax is universally referred to as “import tax” as it is paid by anyone importing a vehicle into Spain.
However, we expats are favoured in that if we re-register our vehicle within a limited period of arrival in Spain, we do not pay this tax. This is a major benefit to us foreigners and is not available to native Spaniards. See my website or call to find out how the tax is legally avoided. Incidentally if you buy a car, in the UK for instance, that was previously registered in Spain, you may avoid paying the registration/import tax as it has already been paid, but big BUT, many bits of paper are required and these are frequently not all available
There are more questions and misleading information regarding this subject that any other that I daily come across. Unless you qualify to avoid the tax, it will be charged, irrespective of the age of the vehicle, how long you have owned it or how long the vehicle has been in Spain. The tax is based upon the Tax office value and generally the emissions
Customs Duty
If your vehicle is coming from outside the European Union, then you will also be liable for Customs duty and possibly IVA (VAT). Last week, by pure coincidence, I re-registered a minibus and a Harley-Davidson from Jersey on the same day. We who lived in Great Britain have always thought that Jersey is in the UK so may question why Customs Duty is payable; it is because the Channel Islands whilst in the UK are not in the European Union (Remember this one for the next pub quiz!)
For those of you who are into politico-geographic niceties, there is a similar relationship between the Canary Islands and Spain
Road tax
The amounts paid for road tax in Spain is laughable when compared to the UK and Ireland. This tax is levied from January to December each year throughout Spain, but did you know that it is set by your local council, not Madrid? Therefore, it varies from town to town and is assessed on the power of the vehicle.
A customer who owned a bar had bought a Spanish registered car and I was explaining about the road tax that had been paid by the previous owner. It was then that I wished that we had met at his home, because the resident expert was on hand to advise anyone who cared to listen that I was talking out of my rear end as the tax was much lower than I had said, so I either didn’t know what I was talking about or was scamming the customer. I’m sure that this knowledgeable individual still doesn’t believe the wide differences in the tax from town to town
Purchase tax
New vehicles are assessed for registration tax, secondhand ones are too. It is collected as IVA at 21% if you buy from a dealer and transfer tax at 4% if you buy privately. This is one of the prime reasons that buyers do not register the vehicles in their name, so if selling, beware
“Tax needn’t be taxing” I’m sure we’ve heard somewhere, but so that you don’t pay too much, as always, seek specialist advise