Buying and owning a car in Spain offers true freedom, but it also imposes a number of financial obligations on the owner. To avoid fines and unexpected expenses, it is important to understand what exactly taxes in Spain apply to vehicles, how they are calculated and how to pay them correctly.
The car taxation system includes both one-time payments upon purchase and registration, as well as annual mandatory fees.
One-time taxes: Upon purchase and registration
These payments occur only once – at the time of purchase, first registration, or transfer of ownership of the vehicle.
1. Registration tax (Special Tax on Certain Means of Transport, IEDMT)
This car tax paid once upon the first registration of a vehicle in Spain, regardless of whether it is new or used, but is being imported for the first time.
How is it calculated: The amount of the tax directly depends on the level of carbon dioxide (CO₂) emissions of the car. The more the car pollutes the air, the higher the rate:
| CO₂ emissions (g/km) | Tax rate |
| Less than or equal to 120 | 0% |
| From 121 to 159 | 4,75% |
| From 160 to 199 | 9,75% |
| From 200 and above | 14,75% |
Importantly: Electric vehicles and cars with zero CO₂ emissions are completely exempt from paying this tax.
For new cars, the tax base is determined in accordance with the VAT Law, and for used cars, it is calculated with a discount based on the market value and age of the car.
How to pay: The IEDMT payer submits a tax return in the form 576 to the Spanish Tax Agency (Agencia Tributaria).
2. Value Added Tax (Impuesto sobre el Valor Añadido, IVA)
Standard VAT paid when purchasing a new car or when purchasing both a new and used vehicle from a legal entity (dealer).
• Standard rate: 21% from the cost of the car.
• Discounted rate: 4% applies to vehicles registered in the name of a disabled person (provided the disability exceeds 33%).
• For business: Entrepreneurs and self-employed persons registered as VAT payers can deduct 100% of the VAT amount from the purchase if the car is used in business activities. If the use is partial, 50% can be deducted.
VAT also applies to the purchase of fuel, spare parts, and other related expenses.
3. Property Transfer Tax (Impuesto de Transmisiones Patrimoniales, ITP)
This tax replaces VAT when a used car is purchased by a private individual from another private individual.
Who pays: Buyer.
How is it calculated: Its size is set regionally, usually from 4% to 8% from the fiscal value of the vehicle. The fiscal value is calculated according to official tables published each year by Royal Decree.
4. Capital Gains Tax (IRPF)
The seller of a car is subject to this tax if he makes a profit on the transaction, i.e. the selling price is higher than the purchase price. However, since the value of a car usually depreciates, in most cases this tax is not paid.
Annual car tax (IVTM)
Annual car tax, known as Impuesto sobre Vehículos de Tracción Mecánica (IVTM) or Circulation Tax (road tax), is the most well-known mandatory payment.
Essence and calculation
It municipal tax, which is withheld from each car owner each year. It goes to the budget of the municipality where the vehicle is registered and is used to maintain roads and infrastructure.
• Local rates: The amount of the tax depends on the municipality, the type of vehicle and the engine power (CVF – fiscal horses). Each municipality sets its own rates, which on average in Spain can range from 40 to 200 euros per year.
• Owner: Car tax must be paid by the person who is the registered owner of the vehicle as of January 1 of the current year. The fiscal address of the vehicle must match the municipality where its owner is registered.
Exceptions and benefits
The following are exempt from paying IVTM:
- Vehicles considered collectibles (historic cars).
- Vehicles serving diplomatic missions and consular offices.
- National defense or public safety vehicles, ambulances, buses.
- Vehicles for transporting people with disabilities.
- Tractors and trailers for agricultural purposes.
In addition, many municipalities offer significant discounts (up to 75%) for owners of electric vehicles and some hybrid cars.
How to pay for IVTM
Since IVTM is a local tax, its payment is made through the city hall (Ayuntamiento) of the city where the vehicle is registered.
Payment terms: Each municipality sets its own deadlines. For example, in Valencia, the payment deadline may fall in the fall (for example, from September 1 to October 31).
Recommended payment method – domiciliation: To avoid delays and fines, It is recommended to set up automatic tax deduction (domiciliación) from your Spanish bank account.
Online payment (using the example of Valencia and general procedure):
- Go to the electronic website of your city hall (Sede Electrónica del Ayuntamiento).
- Authorize using a Spanish electronic signature (Certificado Digital / DNIe / Cl@ve).
- Select the “Municipal Taxes” section and find the Tax on Mechanically Powered Vehicles (IVTM).
- Enter the vehicle details (license plate and NIF/NIE of the owner).
- Choose a payment method (card, Bizum or bank account).
- Confirm payment and save the receipt (proof of payment).
Consequences of non-payment: Delays lead to fines and penalties, a ban on passing technical inspection (ITV), and in extreme cases, the seizure of accounts.
Other related costs and taxes
In addition to basic taxes, car owners in Spain should consider:
• Excise duty (Impuestos especiales): There is no direct excise tax on passenger cars, but there is a special tax on hydrocarbons paid when purchasing gasoline, to which the standard VAT 21% is added.
• Insurance Premium Tax (IPS): This payment is usually included in the cost of the insurance policy and amounts to 81% of the cost of insurance.
• Import duties (Aduanas): If a car is imported from a non-EU country, a duty is charged (usually 10% of customs value) and 21% of import VAT.
• Wealth tax (Impuesto sobre el Patrimonio): Only payable if the value of your car exceeds €700,000.
Key tips for saving and avoiding fines
Management taxes in Spain requires a systematic approach.
1. Purchase planning: Before buying, analyze the CO₂ emissions of the car to avoid high registration tax (IEDMT). Pay attention to electric cars that have a zero IEDMT rate and significant discounts on IVTM.
2. Use the benefits: Check your eligibility for tax breaks, especially if you fall into the categories of disabled people or large families who may qualify for reduced IVA rates or IVTM exemptions.
3. Payment automation: Set up a domiciliation for your annual IVTM. This is the easiest way to ensure you don't miss your payment deadline.
4. Timely change of address: If you have moved, request a change of the vehicle's fiscal address (at the DGT or in your new municipality) within 15 days to car tax was paid at your current place of residence.
5. Documentation: Keep all tax receipts and registration documents.
A competent approach to tax planning will make your car ownership in Spain much easier and more peaceful.