Installing solar panels can lower more than your electricity bill. In many Spanish municipalities it also reduces local taxes, namely IBI and ICIO. These rebates are not applied automatically: you need to know about them and apply in time.
What the law allows
Spain's Local Finances Act (Royal Legislative Decree 2/2004) lets each town hall approve these rebates in its tax ordinances:
| Tax | What it is | Maximum rebate allowed by law |
|---|---|---|
| IBI | Property tax, paid every year | Up to 50% of the tax, for properties with solar energy systems |
| ICIO | Tax on construction works, paid once when the work is done | Up to 95%, for works that include solar energy systems |
| IAE | Business activity tax (only for companies that pay it) | Up to 50%, for companies that use or produce renewable energy |
These are maximums. The law does not oblige town halls to apply them, so each municipality decides whether to offer them, at what rate and for how many years.
What it depends on in your municipality
Before counting on a rebate, check your town hall's tax ordinance (ordenanza fiscal). It usually sets:
- The rate of the rebate.
- How many years the IBI rebate lasts.
- Technical requirements, such as a minimum system size or a legalised, approved installation.
- Deadlines and how to apply: sometimes you must apply before work starts, or within a set time after it is finished.
- Caps, for example a rebate that cannot exceed a share of the installation cost.
In the Valencia region, some municipalities offer generous rebates and others offer none. That is why we do not give a general figure: the right answer depends on your municipality.
How to apply
The usual steps are:
- Read your town hall's ordinance, normally on its website or electronic office.
- Get the works permit or file the responsible declaration. ICIO is charged at this point, so the ICIO rebate is usually requested with this step.
- Legalise the installation once it is finished.
- Apply for the IBI rebate with the documents the town hall asks for: installation certificate, invoice or project, the property's cadastral reference, and so on.
- Check the next tax bill to make sure the rebate has been applied.
For businesses: IAE
If your company pays IAE, also check whether your town hall offers a rebate on it for using renewable energy. It is less well known, but it can add to the other rebates.
We check it for free
In every free study we prepare, we check which rebates your town hall offers and what paperwork you will need, so you do not miss a deadline. In the meantime, you can get an approximate savings estimate with our calculator.
This guide is for information only. It does not replace your municipality's ordinance or advice from your tax adviser.