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DRIVING

How a new tax will affect people buying a car in Spain

A new tax on greenhouse gases coming into force in September 2022 will make buying vehicles in Spain more expensive. Here's what drivers need to know.

How a new tax will affect people buying a car in Spain

A new law in Spain in September will increase the price of buying new cars in Spain. 

The price hike in the car industry comes from a new tax coming into effect from September 1, 2022 on air conditioners, freezers and refrigeration equipment. Prices are, as a result, anticipated to be up to 10 percent more expensive as a result of Law 14/2022.

The bill is at its core a reform to taxes on fluorinated gas – a gas used in several components of car parts –  and is a tax that will inevitably be passed onto consumers.

Technically speaking, the tax did already exist: the Tax on Fluorinated Greenhouse Gases was regulated by Article 5 of Law 16/2013, but its scope has now been broadened as part of a raft of government measures to mitigate the impact of skyrocketing energy prices.

Whereas in the past only sellers of fluorinated gases paid taxes, according to the Association of Refrigeration Companies and their Technologies (AEFYT), the new reform applies tax to the manufacture and import of new refrigeration equipment and systems, air conditioning, heat pumps and other household appliances that use fluorinated gas.

This will have a knock-on effect on consumers, and it is anticipated the change will bring a price hike of 5-10 percent in a plethora of industries that rely on these types of appliances, including the food industry, hospitality, and supermarkets.

What is less known, however, is that the new tax will also have an effect on the car industry. 

The tax on fluorinated gases not only increases the cost of air conditioning, but also heat pumps – a key component of vehicles, in particular electric cars.

A 5-10 percent increase may not feel as stark as spiralling utilities bills, but it will be more pronounced in new car purchases. 

The unwelcome news comes at a time of crisis for the automobile industry in Spain, with a combination of supply and demand problems caused by the pandemic and a lack of microchips making (new, second-hand and even rental) cars much harder to come by in Spain.

While all of Spain is currently experiencing car rental shortages, the problem is particularly affecting areas of Spain with high numbers of tourists such as the Costa del Sol, the Balearic Islands and the Canaries.

READ MORE: Why you should think twice about buying a car in Spain, even if it’s second hand

According to the employers’ associations of the Balearic Islands, Aevab and Baleval, there are 50,000 fewer rental cars across the islands than before the pandemic.

The reforms have, unsurprisingly, not gone down well with businesses.

It is believed as many as 20 business associations have submitted their displeasure with the proposals, arguing that they “will have an impact on different sectors of the economy, but also on households or small businesses.”

And to further pour salt in the wound, the new law also obliges sellers to register in the Territorial Registry of the Tax on Fluorinated Greenhouse Gases, with fines as high as €1,500 for those who don’t.

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DRIVING

How to change the registered address for your car if you move in Spain

If you move within Spain and change address, you'll also need to change the registered address for your car in order to pay vehicle tax. Here's how to do it.

How to change the registered address for your car if you move in Spain

When you buy a car in Spain the driving authority, the Dirección General de Tráfico (DGT), asks you to register your car so that you (and they) can have a reference of where it is, who owns it and, crucially, where you’ll pay tax on it.

This information is necessary because paying vehicle tax in Spain (known as Impuesto sobre Vehículos de Tracción Mecánica or IVTM) depends on where in the country you live, and differs slightly depending on the municipality where you are registered.

You pay the tax in the municipality in which the vehicle is registered, and though the exact amount depends on your area and the type of car you have, generally speaking the annual tax is between €112 and €300 for the year.

READ ALSO: EXPLAINED: What you need to know about road tax in Spain

IVTM is a tax you pay at the municipal level, that is, to your local town hall. According to the DGT, “the Traffic Tax of a vehicle is a mandatory tax that is applied on all motor vehicles, allowing them to circulate on public roads throughout the country”.

But what happens if you move?

Well, it depends. If you’re moving but staying within the same municipality, not much, but if you’re moving across the country to a new part of Spain, you’ll need to change your car’s registered address with the DGT.

How can you request a change of tax address for your car in Spain?

Any change of tax address must be requested by the owner of the vehicle or a duly authorised person on their behalf. There are four ways to request it:

Online – this is done through the DGT’s website, which you can find here. If it’s a general application, you shouldn’t need to attach any documentation. You can simply change the address of all your vehicles or select only those you wish to modify, choosing between the registration address or the tax address of the owner.

For vehicles moving from the Canary Islands, Ceuta and Melilla to the Spanish mainland peninsula or the Balearic Islands, or agricultural vehicles or those with any type of legal limitations or restrictions, you must make the application through the special cases option (supuestos especiales on the DGT website).

In this case, you essentially need to get documentation proving that the car has been cleared through customs. If it is an agricultural vehicle, you will need to provide the document showing that you have reported the change in Spain’s Official Register of Agricultural Machinery (ROMA).

By phone –- call 060, which is the number in Spain to get through to the Servicio de Información de la Administración General del Estado, essentially the go-to contact number for all things public services and administration. You can contact the DGT through this number, where they will check that the address you indicate coincides with the one on the INE register and, if so, make the requested change for you.

READ ALSO: The tricks drivers use to pay less in car taxes in Spain

DGT App If you have the miDGT app, you can also change your address through the platform.

In person — you can also change your vehicle’s tax address at your town hall (ayuntamiento) where you are currently registered (pre-move) or at any DGT traffic office, though you will need to make an appointment online or by phone beforehand. You can do that here.

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