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MONEY

Driving in Spain: What are the extra costs of owning a car?

Aside from a car’s own individual price, what other costs do people thinking of buying a car in Spain have to consider before deciding whether it’s worth the expense? 

car driving in triana neighbourhood of Seville
If you're thinking of buying a car in Spain, aside from the vehicle's price you should consider the costs of fuel, services, insurance and more. Photo: Marco Nürnberger/Flickr

For some people in Spain, having their own vehicle is a necessity, be it because they live in a rural part of the country, they regularly drive great distances or other reasons that require independence and easy travel.

For plenty of other people however, it’s not such an easy choice. 

Around 80 percent of Spain’s population live in urban areas, many of which are densely packed and easy to get around on foot or on efficient public transport networks. 

This means that having your own car isn’t generally a necessity, but rather a bonus for weekend getaways and more comfortable travelling. 

But in these cases, is it worth getting a car in Spain? One of the determining factors for people is the expense. 

Apart from the monthly payments (unless the car is bought cash), there are plenty of extra costs that add up. 

As a minimum, it’s fair to say that a driver in Spain has to pay a minimum of €1,500 a year to use their vehicle, in plenty of cases more than that. 

Here’s a breakdown of the main extra costs that come with owning a car in Spain.

Fuel 

Fuel prices have increased in 2021 in Spain, meaning that on average it’s €14 more expensive to fill up your talk than a year ago. 

Filling up from empty up to the brim with petrol costs an average of €77.80 for a 55-litre tank, according to data by the European Commission’s Oil Bulletin.

For diesel, the amount is €69.80.

That means that an infrequent driver with a petrol car (48 percent of the total share in Spain) who fills up once a month will pay around €933 a year in fuel.

Those considering buying an electric car, which although more environmentally friendly are still considerably more expensive than regular vehicles, have to factor in sky-high electricity prices in Spain currently.  

It’s a completely different ballgame, with the option of charging at home if there’s the right setup for it or at public and private charging stations. 

It can work out cheaper than fuel but electric car drivers have to abide by low-rate hours to avoid Spain’s most expensive electricity rates.

READ ALSO: Where to get the cheapest fuel in Spain

Insurance 

Any car which is primarily kept in Spain by law has to have insurance even if it’s not driven, with steep fines for uninsured drivers. 

How much you pay in insurance for your car can vary depending on the cost of the vehicle, the driver’s experience and the amount of cover you want.

The average price of fully comprehensive insurance without excess in Spain is €1,037 per year, while that of insurance with excess decreases to €454 per year, according to Spanish price comparison site acierto.com. 

It’s important to carefully study what your insurance provider offers with the deal and there’s an increasing amount of custom-made policies available online.

Depending on how often you use your car in Spain and how old it is, a yearly service may be necessary. Photo: Pascal POCHARD-CASABIANCA / AFP
 

Maintenance costs 

These costs aren’t so easily quantifiable but it’s safe to say that the older the vehicle, the higher the need for repairs and services.

Usually the first service of new vehicles is after 15,000km and costs on average €250. 

Servicing a vehicle every 5,000 kilometres is a recommendation but failure to do so over a long period of time could cause problems in the long run as some vehicle elements do wear and break down, it could jeopardise the safety of driver and passengers and a lack of services dissuades second hand buyers.

READ ALSO: Buying a second-hand car in Spain – 9 key questions you have to ask in Spanish

Roadworthiness test 

The ITV (pronounced I-TE-UVE in Spanish) is the test that vehicles must pass to show that they’re roadworthy. When your car passes its test, you will be given a small sticker to display in the window as proof.

Cars less than four years old don’t need an ITV test, vehicles between four and ten years old are tested every two years and those older than ten years old need to be tested every year.

Prices vary between regions, but can range anywhere from around €30 for a two-wheeled moped to €43 for large petrol cars and vans and €48 for a diesel car. 

READ MORE: ITV: How to pass Spain’s roadworthiness test (plus the changes and fines for 2021)

Taxes 

There’s the vehicle registration tax (impuesto de matriculación) you’ll have to pay once off when you buy the vehicle, a rate which varies depending on the vehicle’s emissions. 

But the tax you will probably have to pay on a yearly basis is the driving tax (impuesto de circulación) set by your town hall. 

Based on your vehicle’s emissions and the rates that say fit to charge, many municipalities charge drivers for using their roads. It varies considerably between cities and regions, from €34 a year in Santa Cruz de Tenerife to €86 in San Sebastián.   

Tolls 

Up until now, drivers in Spain have had to pay far fewer tolls than their European counterparts, with a number of motorways recently being made toll-free

However, the Spanish government has been put under pressure by the EU to introduce peajes (tolls in Spanish) in line with the European model, given the €140 billion the country is receiving as part of the EU recovery fund. 

In late October, the Spanish government confirmed that it will impose a tax for the use of its highways, although it rejected that they be called tolls.

Whatever they choose to call them, from 2023 it seems that drivers on Spanish motorways are likely to be charged extra for every kilometre driven; how many euro cents per km is yet to be decided.

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TAXES

What’s the inheritance tax in each region of Spain?

Inheritance tax varies greatly in Spain depending on what region you or your relations live in. Find out what the rates are in your area in 2022.

What's the inheritance tax in each region of Spain?

Spain’s inheritance or succession tax, known as ‘impuesto de sucesiones‘ is both complex and controversial, but it’s important to understand how it works in order to avoid any unfortunate financial surprises when a loved one with a connection to Spain passes away. 

Spanish inheritance tax is decided by the Spanish State but all of the country’s 17 regions have the right to change these rules to make them more beneficial or detrimental to heirs, luckily the general trend is towards the former. 

The succession tax rates will differ depending on how much is inherited, ranging from 7.65 percent on the first €7,933 up to 34 percent on €797,555+. 

There are many factors to consider, such as which category heirs and other beneficiaries fall into, or the fact that in Spain the spouse of the deceased is also subject to inheritance tax, which is not the case in the UK and many other countries.

What are the different groups of heirs in Spain?

As mentioned above, there are several categories or groups that heirs can fall into and this will depend on how much allowance they can benefit from. The groups are the following:

Group 1: Children under 21 years of age

Group 2: Children over 21 years of age, spouses and parents

Group 3: Siblings, nieces, nephews, as well as aunts and uncles

Group 4: Cousins or more distant relations

EXPLAINED: How choosing the right region in Spain can save you thousands in inheritance tax

What are the inheritance rates in my region?

Andalusia

In Andalusia, the inheritance tax rate varies between 7 percent and 36 percent, depending on the value of the inheritance. However, recently the Andalusian government approved, through a Royal Decree, a reduction of 99 percent, both for inheritance and gift tax for those who are included in groups 1 and 2.

Aragón

In Aragón there is 100 percent discount on the tax base, with a limit of €3,000,000 for descendants under the age of 21 or for those that have a disability. In addition, the spouse, parents or descendants of the deceased may also benefit from a reduction of 100 percent of the tax base.

Asturias

In Asturias there is an allowance of €300,000 for those groups 1 and 2. For all other groups, it establishes various reductions included in the state regulations. In addition, in case of inheriting a home, the bonus will be between 95 and 99 percent, depending on its value.

Balearic Islands

In the Balearic Islands, for those in groups 1 and 2, deductions of €25,000 are applied, plus €6,250 per year that the taxpayer is under the age of 21, up to a maximum of €50,000. For those in group 3, a deduction of €8,000 is applied and for those in group 4, it’s €1,000. An allowance of €48,000 will also be made for those with disabilities.

Basque Country

For those in groups 1 and 2 in the Basque Country, inheritances with an amount less than €400,000 are not required to pay taxes. When the amount is greater than €400,000, a tax rate of 1.5 percent will be applied.

READ ALSO: Why you should move to this region in Spain if you want to pay less tax

Canary Islands
Those in group 1 get an allowance of €47,859, while those in group 2 get an allowance of €15,957. Those in group 3 will get €7,993, while those in group 4 get no allowance at all. After the deduction, inheritance tax rates are calculated on the remaining balance which range between 7.65 percent and 34 percent on anything above €797,555.

Cantabria

For those in group 1, there is a reduction of €50,000 plus €5,000 for each year the taxpayer is under 21. For those in group 2, it’s also €50,000 and for those in group 3, it’s €25,000.

Castilla La-Mancha

In Castilla La-Mancha those in groups 1 and 2 will benefit from discounts ranging from 80 percent to 100 percent, depending on the amount of the payable base.

Castilla y León

Castilla y León allows reductions for children spouses and parents. Those in groups 1 and 2 will benefit from an allowance of €60,000. An additional reduction of €6,000 will be applied for each year the taxpayer is under the age of 21. A variable reduction will also be applied, which is calculated as the difference between €400,000, plus the sum of the previous amounts and the state deductions.

Catalonia

In Catalonia, spouses will receive a bonus of 99 percent and the rest of the heirs in groups 1 and 2 may apply a bonus that varies between 57 percent and 99 percent, depending on the tax base.

Extremadura

A bonus of 99 percent is applied for amounts of up to €300,000 euros between parents, children and spouses.  

Galicia

In Galicia, heirs in group 1 have an allowance on amounts up to €1,000,000, plus there is a reduction of €100,000 for each year the beneficiary is younger than 21, with a limit of €1,500,000. For those in group 2, the reduction varies between €900,000 and €400,000, depending on the taxpayer’s age. In the cases of groups 3 and 4, the bonus will be €16,000 or €8,000. The applicable rate in Galicia stands at between 5 and 18 percent, which is well below the rest of the regions. 

La Rioja

Those who inherit in La Rioja benefit from a deduction of 99 percent of the tax quota if the tax base is less than or equal to €500,000. The deduction will be 98 percent for amounts that exceed €500,000.

Madrid

Madrid applies a discount of 99 percent of the tax quota for taxpayers included in groups 1 and 2. In addition, for the heirs included in group 3, it establishes a discount of 15 percent or 10 percent, depending on what relation they are to the deceased.

Murcia

In the region of Murcia, the law includes a deduction of 99 percent for those in groups 1 and 2. Likewise, for the rest of the heirs, it also recognises different reductions depending when the money is inherited and the amount to be received.

Navarre

In Navarre no discounts are applied, but how much tax varies according to what group you fall under. Spouses for example have a rate of 0 percent up to €250,000, and 0.80 percent from there upwards. In the case of descents and parents, the applicable rate varies between 2 percent and 16 percent.

Valencia

In Valencia discounts of 75 percent are applied for those in group 1 or 50 percent for those in group 2. In case the of those with disabilities, the taxpayer will also receive a bonus of 75 percent.

Case study example

For example, in the case of a 30-year-old son who inherits assets worth €800,000 euros, the most amount of tax would be paid in Asturias, with at €103,135.48; followed by Castilla y León €81,018.76; Valencian €63,193.76; Aragon €55,466.81; La Rioja €32,342.86; Castilla-La Mancha €31,759.23 and the Canary Islands €31,748.63. 

These regions would be followed by Navarre €17,000; Catalonia €9,796.89; the Balearic Islands €5,950; the Basque Country €3,150; Murcia €1,640.49; Extremadura €1,587.96 and Madrid €1,586.04). Andalusia, Cantabria and Galicia have a net quota of 0.

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