DANA Relief Measures
The National Association of Inspectors of Local Public Finance, ANIHPL, expressed this week its support for the government decision to exempt municipal tax payments for taxpayers in the 78 municipalities affected by the DANA disaster. It also urged the State to compensate these towns quickly and with agility for the revenue losses expected from November onward, when payments for the Real Estate Tax IBI and the Economic Activities Tax IAE would otherwise be collected, since these taxes fund the main resources of municipal treasuries.
According to this group of civil servants, without rapid compensation the municipalities will face a severe budget shortfall at a moment when liquidity is most needed to address the needs of residents who have lost everything. On the eve of the national congress that this professional association is convening in Granada, Local Tax Inspectors note that the towns hit by DANA must now undertake substantial investments to mitigate the flood damages. The fiscal relief cannot translate into pressure on municipal cash, something that would have a negative impact on the people, ANIHPL states in a formal release.
Exemption and Tax Relief
The emergency plan approved by the Council of Ministers this week includes the exemption of the installments of the Real Estate Tax for the 2024 fiscal year for properties located in the 78 affected municipalities, provided that both residents and the properties have had to relocate wholly or partly to other homes or business sites until repairs are completed, or losses in agricultural and livestock production that qualify as disasters not coverable by public or private insurance are documented.
No official figure has yet been published on how many properties will meet these conditions. For reference, the College of Registrars of Spain reports that DANA affected a total of 134,418 properties nationwide, about 33,000 of which are homes. The vast majority of these cases come from Valencia province.
Additionally, a reduction is established for the Economic Activities Tax in 2024 for industries of any nature, commercial establishments, maritime and fishing activities, tourism, and professional services whose business premises or assets lie within the damaged municipalities, provided they had to relocate or suffered damages that require a temporary shutdown. The IAE reduction will be proportional to the downtime from the moment the activity ceased to its restart under normal conditions, whether in the same premises or in other approved locations. If the damage leads to a permanent cessation of activity, the IAE relief comes into effect from December 31, 2023.
Tax Authority Compensation
The royal decree law published this week in the Official State Gazette states that taxpayers who are eligible for the benefits described above and who have already paid the receipts for that tax year may request a refund of the amounts they deposited. The decree further specifies that the fiscal shortfall in local revenues caused by the exemptions and reductions will be compensated through transfers from the General State Budget. ANIHPL emphasizes that this compensation should be delivered with speed and agility to protect municipal finances and public services during reconstruction efforts.