Motor tax havens: municipalities the place the highway tax is as much as 350 euros cheaper | Economy | EUROtoday

In Spain there are municipalities the place the highway tax may be as much as 350 euros per 12 months cheaper than in others. This huge tax distinction has created a peculiar phenomenon, marked by small cities that focus tens of hundreds of registered automobiles, many greater than may flow into or park on their streets. They are the so-called motor tax havens, localities which have turned the Tax on Mechanical Traction Vehicles (IVTM) – popularly generally known as highway tax – into an surprising supply of revenue by attracting giant firms and automotive fleets that register their automobiles there to pay much less taxes.

The IVTM is a municipal tax that each one car homeowners pay merely for having them registered. According to the most recent information from the Associated European Automobile Association (AEA), printed this Wednesday, in Spain virtually 38 million drivers (of vehicles, bikes, vans or vehicles) pay it and it generates round 3,000 million euros a 12 months in revenue for metropolis councils. Some small cities, comparable to La Hiruela, Rozas de Puerto Real or Patones in Madrid, have change into paradigmatic examples of this sort of tax havens.

The tax, within the case of passenger vehicles, is paid primarily based on the fiscal energy of the car; On bikes, the quota is set by the displacement; and in vehicles and buses, the figuring out issue is the load and the variety of seats. There is a minimal charge established for all the nationwide territory, apart from the Basque Country and Navarra. That is, the legislation units minimal quotas, however permits every municipality to extend them by coefficients or apply sure bonuses. This margin of motion has created very notable variations between localities.

According to figures compiled by the AEA, the tax paid by the common automotive varies enormously between giant cities. A medium-power automotive, for instance, pays about 34 euros in Santa Cruz de Tenerife, round 59 euros in Madrid, about 68 euros in Barcelona and greater than 89 euros in San Sebastián. In the case of bikes, the variations are even better: one in all 600 cubic centimeters will pay simply over 15 euros in Melilla in comparison with greater than 86 euros in Vitoria. If automobiles with greater than 20 tax horsepower (because the tax measure known as) are analyzed, the variations are additionally evident: in Almería 194 euros are paid and within the three Basque capitals, greater than 360 euros.

However, the true fiscal hole seems when giant cities are in contrast with some small municipalities which have determined to set the tax on the authorized minimal. In these instances the value may be as much as 10 instances decrease, which explains why many rental firms, renting, leasing or buy and sale of automobiles register their fleets there. In a few of these cities, a car with greater than 20 tax horsepower pays solely 28 euros, about 350 euros lower than in San Sebastián.

These tax havens are, amongst others, La Hiruela, Rozas de Puerto Real and Patones, all three in Madrid. According to information from the affiliation, its inhabitants in 2025 ranged between 88 and 617 folks, however the passenger vehicles registered there have been within the hundreds. This implies that, for instance, in La Hiruela there are 69.6 vehicles per resident, a charge that, if it weren’t for the tax rationalization, can be meaningless.

These cities with low charges are joined by others comparable to La Serratella (Castellón), Aguilar de Segarra (Barcelona), Escorca (Balearic Islands) or Retascón (Zaragoza). In whole, there are 25 municipalities that observe a form of dumping prosecutor, in response to the AEA. “This discretionary power of the town councils has made it possible to distort the purpose of the local tax system and has given rise to the creation in Spain of true tax havens,” explains the report offered this Wednesday.

These marked variations have led to quite a few rental and transportation firms renting have concentrated the registration of their fleets in small municipalities the place they’ve opened branches resulting from their favorable tax therapy, the affiliation maintains. In trade, “each year these towns win the lottery for the income they receive from the tax on vehicles that do not even circulate and will never circulate in that town.”

The report presents a putting truth. In 10 of those municipalities —Moralzarzal, Venturada, Navacerrada, Las Rozas de Puerto Real, Robledo de Chavela, Brunete, Collado Mediano and Patones, in Madrid; Finestrat, in Alicante; and Tejeda, in Las Palmas—roughly 35% of all firm vehicles in all of Spain are registered resulting from “their privileged tax treatment.”

The affiliation explains that the origin of this phenomenon started with the elimination of the provincial code from Spanish license plates in September 2000, which allowed homeowners of huge fleets of automobiles meant for automotive rental to pay attention the registration of their automobiles in municipalities with low taxation.