- Order HFP/1193/2023, published in the Official State Gazette on 3 November, repeals the 2001 order that applied the Catholic Church’s exemption to the ICIO.
- It follows an agreement of March 2023 between the Government and the Episcopal Conference, in which the Church gave up that exemption.
- The change equalises treatment of these works with that of non-profit entities, subject to municipal rules and reliefs.
Order HFP/1193/2023 of 31 October, issued by the Ministry of Finance and Public Administration, was published in the Official State Gazette on 3 November 2023 and entered into force the next day. It repeals the ministerial order of 5 June 2001, which had clarified that the tax on construction, installations and works (ICIO) was included in the tax exemption that the 1979 agreement with the Holy See grants the Catholic Church.
The change follows a commitment reached at the end of March 2023 through an exchange of notes between the Government and the Spanish Episcopal Conference, in which the Church gave up the exemption from the ICIO and from special contributions. According to the order itself, the aim is to harmonise its regime with that of non-profit entities, applying the principle of non-privilege and non-discrimination. Although the issue has a political dimension, its content is tax-related and concerns a municipal tax that developers, companies and individuals pay every day.
What the ICIO is
The ICIO is a municipal tax levied on carrying out construction, installations or works for which a building licence or a responsible declaration or prior notice is required, even if it was ultimately not obtained or filed. It is paid by the owner of the works and is calculated on their real and effective cost, applying the rate set by each town council, with a legal maximum of 4%.
The law provides exemptions for certain public works of the State, the regions and local entities, and allows town councils to set reliefs, for example for works of special social interest or for solar-energy installations. It is therefore a tax in which each municipality’s ordinance carries considerable weight. In addition, the tax accrues when the work starts and is usually assessed provisionally when the licence is granted, with a later adjustment on the real cost once the work is finished.
What the order changes
Until now, works by the Catholic Church and its entities were exempt from the ICIO under the agreement with the Holy See. From 4 November that exemption no longer applies. This does not mean every ecclesiastical work is taxed in all circumstances in the same way: the applicable regime will be the general one for the tax and, where relevant, any reliefs provided by each municipal ordinance.
The same March agreement contemplated that the Church would also give up the exemption from special contributions, another local levy charged when a public work particularly benefits certain people. Town councils assess and collect the ICIO, so they will be the ones to apply the new criterion in practice.
What to review
For any company, homeowners’ association, foundation or individual carrying out works, the practical lesson is to check the municipality’s ICIO tax ordinance: applicable rate, available reliefs and the paperwork needed to claim them. In Catalonia each town council sets its own rate and benefits, so the cost of the same work can vary from one municipality to another.
Non-profit entities, including foundations and associations, should check which benefits apply to them and how to claim them, and reflect the tax in the works budget. This note is general information about a tax rule; for specific cases, consult your adviser.
A discreet local tax changes its treatment and reminds us that the budget for any work also includes what the town council assesses.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
