2.1 million are long term unemployed and 1,425,000 families are without a 'breadwinner.'
Employment in public sector increasing
In spite of the urgent need to reduce the deficit in the public sector, the number of employees in the various parts of public administration had increased by 44,700 by the end of the third quarter, compared with last year.
The increase in number of new jobs is greatest in the regional administrations. In Andalusia, the number of bureaucrats went up by 575,100, in the Madrid Region 534,900, Catalonia 407,000 and the Valencia Region 238,300.
Victims of ETA terrorism demonstrate
Thousands of ETA terrorist victims have been demonstrating in the streets of Madrid against suspected offers of immunity to the murderers and secret negotiations between the Government and ETA for political reasons. Supporters of ETA represent an important block of potential votes in the upcoming national elections….
Banco de Valencia downgraded again
Rating agency Moody’s has downgraded the debts of Banco de Valencia from Ba1 to Ba2 and warns that new downgrades may follow. The principal shareholder of the bank, Banco Financiero y de Ahorro, has been rated at the same level, not far above ‘rubbish.’
‘Rescue package’ for Spain: Foreign tourists
The best rescue package for the Spanish economy is foreign tourists. Between July and September foreign tourists injected 19,701 million euro in this country, 8% more than the corresponding period last year. Spending per tourist during the first nine months of the year increased to 925.5 euros.
You may wonder: Does the average tourist, not staying for more than one week in Spain, really spend 925.5 euros? The secret lies in the foreign property owners, included in the statistic on tourism, coming to Spain more times during the year who, in addition to eating and drinking, are also paying taxes and other charges.
Less rubbish collected
443.9 kilos of mixed rubbish are collected in Spain per person per year. This is 5.8% less than a year ago. Most rubbish per head is collected in Cantabria and Navarra, respectively 528.4 and 523.2 kilos; the least in the Valencia Region, with 396.8 kilos.
Shops selling less
The turnover of shops fell 5.5% in September compared with the same month of last year and 1.7% in comparison with August this year. This is the 15th consecutive month of falling sales.
Foods sales were down 1.5%, non food goods 8.2. Greatest falls were in Andalusia 8.5% and Murcia 7.4.
More mayors in prison
A court in Murcia has ordered the provisionally imprisonment of Simon Alcaraz, the mayor of Aledo, who as usual, is suspected of implication in urban planning corruption. Simon Alcaraz, who has been the PP mayor for 20 years, has been suspended from the party due to the impending national elections. The Guardia Civil also arrested 7 others.
200.000 euro payment to meet Minister
According to a declaration made by a constructor who wanted ‘favours’ for cash, a cousin of Pepe Blanco (the Government Minister touring Northern Europe trying to sell property to unwary buyers, assuring them Spain has all laws in place…..), received 200,000 euros to set up a meeting with Blanco. In addition to his job as minister of development, Pepe Blanco is organisation secretary in the government party PSOE. According to a poll by leading newspaper El Mundo 91% of Spaniards think Blanco should retire as Minister.
Less credits from banks
Banks are agreeing fewer loans, and the customers are avoiding requesting them. Since March less loans have been granted each month. In August 1.1% fewer mortgages on dwellings were advanced and 5.5% less consumer loans. The banks have less money to offer, even with increasingly higher interests on deposits, and their customers have learned a lesson during the crisis.
‘Catastrazo’ increasing local taxes
The Madrid College of Property Administrators is calling owners to the barricades, by sending all members of the Communities of Owners which they administer, a letter suggesting they protest against the new ‘Catastrazo’ (meaning the substantial increase in the cadastral values supported by town halls) as it leads to higher IBI (local rates). The Madrid municipality has decided to increase IBI (local rates) by 5.7% annually from 2012 to 2021, a total increase of 74% over the decade.
The administrators argue that the (real) value of properties in the city has been falling since 2008 (Read article at end of this report)
The crisis of the week:
Whilst the world is waiting for the detailed plans for putting into effect the decisions taken by European leaders last week, several stumbling blocks have appeared
The biggest block is the decision by the Greek Government to submit the demand for new social cuts to a referendum, assuring that the government will step down if it looses. A poll shows that 60% of Greeks consider the European plan as negative or probably negative. The referendum is to take place in the second week of January
I n a poll taken by newspaper El Mundo, 87% were of the opinion that Greece should be expelled from the Euro
Political and financial commentators in Spain agree that a referendum in Greece may provoke a new crisis, even more serious than the one that followed the collapse of Lehman Brothers. Spain and Italy especially will have severe problems, with a strong recession and an increase in unemployment resulting in the need for direct rescue from the EU. The economic locomotives like Germany and France will also be affected, especially banks with significant exposure to Greek debts
The markets and the stock exchanges responded euphorically to the plans approved by last week's summits and especially to the reports about Chinese support for the bail-out fund. The IBEX rose 4% to close to 9,400 points, but fell like a stone this week, to 8.618 points on Wednesday morning
The country risk for Spanish bonds shot up, reaching 384 points on Tuesday, making the debt burden of the country even more expensive.
After a visit by the director of the new ESFS bail-out fund to China, the official Chinese news agency published a terse communication to the effect that China cannot be the saviour in the European debt crisis.
The financial guru George Zoros, the man that cornered the British Pound, has stated that the Euro zone deal will last only a short time, from one day to three months. He has already been proved right.
Banco de España have announced that the probability of a recession has increased, and there was no growth in the Spanish economy in the third quarter (as we predicted at the end of the summer).
Watch out for higher IBI
By Per Svensson
When you own a property in Spain, you must pay local property taxes, called IBI. We tell you how to register for IBI and how to pay and also how to defend yourself against spiralling local rates:
IBI (local rates) is a municipal tax, which has to be paid every year by owners of homes, business premises, garages, or plots, i.e. all urban property or buildings and also by owners of agricultural land or buildings.
The amount of the yearly payment is determined by the value assigned to your property by the Administration - known as Valor Catastral (rateable value). The rateable value of your property is calculated on the value of both the land on which your property is built and the building itself.
The tax rate which has been approved by each Town Council - and which is the same for all properties within the municipality - will be applied to this rateable value. For example:
Rateable value Local tax rate Yearly payment
30,000 euros x 0.8% = 240 euros
How to read your IBI bill
Organismo = Part of administration
Ident. Valor = Identification of value
Ref. lista = Reference on listing
Concepto tributario = Concept of taxation
Zona = Area
Num. Recibo = Receipt number
D.N.I. o C.I.F. = Identification number of taxpayer
Objeto Tributario = Tax object
Periodo = Interval of taxation
Año = Tax year
F. Alta = Year of fiscal registration
Referencia catastral = Catastral reference number
Nat. Bien = Class of property
V. Catastral = Catastral value
B. Imponible = Rateable value
Tipo = Tax rate
Cuota = Gross taxes
Bonificación = Deductions
Deuda = Net taxes
Rev. Valores = Year of last revision of value
Sujeto Pasivo = Taxpayer
Domiciliación Bancaria = Direct debit
Sello y Fecha = Stamp and date
Total a Pagar = Total amount to be paid
Periodo de Cobro = Payment period
Referencia = Reference
How does your property become liable for tax?
Since 1st January 1995, whenever you purchase a home, you are obliged to apply for the property to be registered. The official application form is known as Modelo 902 and can obtained from your local tax office. The buyer of a property is the person obliged to declare the property for registration. However, in the majority of cases it will be the promotor of a block of apartments or a group of houses who submits this application.
When you pay the IBI on your property for the first time, you will be billed by mail . It should then be possible to pay by direct debit through your bank.
How to register your property
(Be aware that in the Province of Alicante SUMA is the provincial agency for collecting municipal taxes.
For all foreign owners outside the province of Alicante, there may be two alternatives: that similar provincial agencies exist under other names, or that the municipality collect the taxes).
When a property changes hands in Spain, there is an obligation to register it for tax purposes. (Please do not confuse this with the registration for legal purposes in the Property Register). This obligation became effective 1 January 1995. The registration can be done in the town hall or in the tax collecting offices. The application for registration will be sent to the Catastro Office (to be found in each of the provincial capitals) since they are the ones responsible for making the registration and the assessment on the value of the property, which will later appear in your bill for local rates (IBI).
First of all, find out if the promoter you bought from has already made the registration. If he has, you need not do anything; just wait for a letter from the 'Catastro' giving the tax value, if this value has not already been given by the promoter. Be aware, it can take years before the "Catastro" makes the assessment.
If the property you have bought has not been registered for tax purposes, or if you have built a house on a registered plot, or if you have made additions/extensions to a registered building, the documents that should be submitted when applying for a property to be registered are the following:
* A 20 x 15 cm photograph of the front of the building.
* A plan showing the situation of the property (you can get such a plan in the town hall).
* Plan of the building plot.
* Plans of each floor of the house.
* 'Certificado de fin de obra (Certificate of termination of the work) from the architect and the "Cedula de Habitabilidad" (Habitation Certificate).
On the application form will be some space for technical information on the dwelling.
If property is already registered
If you buy a re-sale property and the previous owner can give you receipts for the local rates (IBI), you know that the property has already been registered. Your obligation then is to declare yourself as the new owner. This is done in the town halls or the SUMA offices, which will then send the application on to the "Catastro" for registration.
You will be asked to produce:
* Photocopies of your title deed (escrituras).
* The last receipt for local rates (IBI) for the property.
You will be given a copy of the application that you fill in and sign. The change in name will not appear on the tax bill before the next tax period.
Do remember that the law establishes certain time limits for this registration. For changes of ownership of a property, the time limit is two (2) months after signing the escritura. For registration of new buildings or renovations, it is also two (2) months from signing the "escritura de obra nueva" (deed for the building).
There are now fines for not complying with the obligations mentioned above, ranging from 6 to 900 euros.
Voluntary payment period
The voluntary period for payment of IBI and other local taxes can vary in each municipality. You find out the dates in your local tax collection office.
If you have arranged for your bank to direct debit these payments, you just wait for the receipt from the bank. If you have not made such an arrangement, you will get a bill for the taxes to be paid and must then go to one of the banks mentioned on the reverse side of the bill to pay. Or you can pay by way of one of the Cajeros Automaticos if you have such a card, just entering the reference number in the upper part of the bill with 13 digits. Or you can pay directly in your local tax collection office with certain credit cards.
Payments made after the voluntary period will be surcharged at the rate of 20%, plus interest on the delay.
Common problems and their solutions:
On purchasing a new property, what should you do when....
1. You have applied for the property to be registered at the "catastro" and have not received any notification.
Call on your tax office. They will invite you to identify your property on the plan. If your property is not shown, they will help you to fill in a "Comparencia" (Act of Appearance) that you sign and they send on to the "Catastro". If the plans for your municipality are not available, they will inform you where to go to check the location of your property.
2. All dwellings in your building are included in a single bill to the Community of Owners
The President of the Community should submit a list to the tax office, specifying:
- Names and fiscal number of the owners of each of the dwellings.
- Description of each of the dwellings, with number of entrance, floor, doors or premises.
- The share (cuota) that each dwelling has in the common elements of the building (entrance, stairs, corridors, terraces) as specified in the title deeds and the deed on horizontal division (Escritura de División Horizontal).
3. Your personal dates are incorrect on the bill
Whenever you observe any errors in the details shown on the receipt (name, surname, fiscal identification number, etc.), you should visit your local office and show them your Fiscal Identification Card. The correct details will be noted and put into the data base.
4. You purchased a property some years ago and the bills are still coming in the name of the previous owner
Take the title deeds and the last bill along to the tax office and register the change of ownership. If you applied for registration when you purchased the property and the receipt is still being issued in the wrong name, it may be that in the documents you presented previously some essential information to identify your dwelling and make the change was missing.
5. You purchased a property and there are several unpaid bills in the name of the previous owner. Can you demand payment from him?
When you purchase a property, you should bear in mind that the property should not be encumbered by any outstanding debts of the previous owner, still valid. As from 1st of January 1990, when the new Law on Local Taxes came into force, all properties and dwellings are responsible for any outstanding taxes which have not lapsed.
In order to avoid any problems when buying a property, you should ask the vendor for the receipts for previous years. Remember that the bills should be issued in the name of the person who was the owner of the property on 1st of January that year.
6. You have sold your property and the bills continue to come in your name. What should you do?
By law, the buyer is obliged to notify the administration of any change in the ownership. However, if the buyer has not made such a notification, the vendor has the right to make it. You should then visit your local tax office with the documents proving the sale and they will arrange for your name to be removed from the bills and the name of the new owner registered.
7. How to apply for reimbursement of any payment made unduly and how to obtain prompt reimbursement
If you have a paper issued by the local tax office or the 'Catastro' that cancel your name from a bill, you can apply for reimbursement of the amount at your local office by presenting the following documents:
* Photocopy of the Fiscal Identification Card of the person appearing as owner in the bill.
* Original receipt issued by the tax collecting agency.
* The paper issued by the tax office or the "Catastro" cancelling your name as the owner of the property or a favourable decision by the authorities (granting a deduction, in recognition of a standing bank order or admitting an appeal lodged against a procedure of enforced collection).
8. How to apply for reimbursement from the tax office when the applicant is not the person mentioned on the bill?
If the person on the bill is not the person applying for the reimbursement, he/she should show proof that he has the right to apply:
* If he/she is the representative of a foreign citizens: A letter of authorisation from the person in whose name the bill was issued.
* If the owner has died: A letter of authorisation from the heirs.
* Manager of a company: Legalised photocopy of powers of attorney.
* If the owner is disabled: A medical certificate and proof of the relationship between the owner and the representative.
* If you have paid a bill issued in the name of the previous owner: Agreement on transfer of ownership.
* In general: Authorisation from the owner, together with a legalised photocopy of his/her identification document to verify the signature.
9. You have paid a bill twice. How to obtain prompt reimbursement?
When a bill has been paid twice or more, the tax office will send you a letter asking for full personal details, as well as the number of your bank account and the number of the branch where you wish to have the money credited.
Once these details have been completed, you only need to deliver a copy of the letter in your local office or send it to them by post. In approximately two months you will have the money returned.
10. How to pay by banker's order
When you are paying your annual bill during the voluntary payment period - normally in August or September - you can make out a banker's order for next years bill. If your bank is one of the banks collaborating with the tax collecting agency or town hall, you just fill in the banker's order and leave it in the bank.
If your bank is not one of the collaborators, you still fill in the banker's order, leave one copy in the bank, but must also bring one copy to the tax office.
If you want to make a banker's order outside the voluntary period, you must complete the corresponding form at the nearest tax office.
11. You have made a banker's order and still receive the bill by post
Any bill which is not paid by banker's order will be mailed to the taxpayers address.
When a banker's order exists, bills are not sent by mail to avoid double payments. If you have received a bill by post for this year, it means that the banker's order has not taken effect. In this case, you should follow normal payment procedure.
If you wish to make the payment by banker's order in future years, you should make a new banker's order.
Increasing values, rising taxes
The local property tax in Spain used to be very modest, due to low values on properties and the habit of declaring an even lower value in the title deeds. With the strong increase in property prices up to 2008, the cadastral values were also rising. In 2005 many municipalities fomented a general correction of property values for tax purposes, done by the “Catastro”, the provincial office in the Hacienda. The property values were increased by hundreds of percent.
From 2008 the values of properties have been falling, especially in the tourist regions. But since the cadastral values are not adjusted every year (except for the inflation), but normally for periods of 10 years, you may have a valuation that is way above the market value of the property today.
How to protest against a ‘catastrazo’
The recommendation of the college of administrators, and also our, is the following:
Control the cadastral value of your property (present or proposed) to see if it is higher than the market value.
If the cadastral value is higher than the market value, present what is called a ‘recurso de reposicion’ (an administrator or real estate agent may assist you).
Recommend other owners in your community to do the same.
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