Spain's new rubbish tax is a mess, sparking public protests and town halls fearing lawsuits

A mayor being escorted in public under the protection of the Guardia Civil and dozens of local residents and shopkeepers throwing objects and binbags at town councillors. What happened just a few days ago in the Pontevedra town of Cangas de Morrazo has set a new high in the level of public indignation over the new mandatory rubbish tax in Spain, approved and regulated by central government in compliance with a European directive from 2022 within the Law on Waste and Contaminated Soil for a Circular Economy. Local councils were obliged to incorporate this directive into their tax by-laws before 10 April this year. The first bills for this revised tax have started being sent out in recent weeks, to the surprise and anger of recipients.

If you are a homeowner, then you have probably already received it, and if not, you most likely will receive it in the coming weeks. In most cases, the amount ranges between 50 and 150 euros and is paid based on factors as diverse as your home's water consumption, the property's cadastral value, its location and its use, as determined by the municipality where you live. However, it can be as much as 500 euros for individuals and as high as 30,000 euros for businesses.

The latest consumer price index (CPI) data published by Spain's INE national statistics institute for the month of September, which is when local councils began to charge the new rate across the board, revealed a 30% increase in the cost of waste collection services. All this for a service that municipalities had been providing without, in many cases, needing to charge the bill directly to local residents.

So why are they doing it now? The easy answer would be because Europe demands it. The reality is more nuanced. A European directive requires member countries to set up a specific instrument to finance their waste collection and treatment services under two conditions: that they do so under the 'polluter-pays' principle and that they pay the full cost of the service. It was the Spanish government that decided that this instrument should be a tax levied by the municipalities and that it should be regulated by 10 April 2025, so that it would come into effect this year. The local councils, which have questioned the figure from the outset, have been left to regulate the tax and establish the criteria for its payment.

The result has been a phenomenal mess. Without a clear reference on how to calculate the standard cost of waste collection and treatment services and without a uniform criterion for calculating the tax amount, each local council has set about regulating it as it sees fit, following different criteria and, in most cases, basing it on a property's cadastral value, a metric that does not necessarily have a direct relationship with waste generation.

"What the local neighbourhood associations are telling us is that there is a lot of anger, not because residents are against paying taxes, but because it's not clear what is being financed, it's still a service that was already being provided", explained Julio Molina, president of the national confederation of neighbourhood associations.

It has not helped that, as the Madrid association of property administrators points out, owners' associations have been charged bills for garages "despite the fact they don't generate waste independently" because they are classified as industrial-use parking lots.

The problem for individuals is compounded for businesses. The bills that businesses and industries are beginning to receive are running into thousands of euros and the impact has reached the education sector. Schools have been charged bills of more than 30,000 euros, in a situation that the Spanish confederation of education centres describes as "unsustainable".

It is precisely in these most affected sectors that the legal response to the municipal "tasazo" ('rip-off tax'), as the new mandatory tax on waste management has now been dubbed, has begun to take shape. Moreover, it has already begun to bear fruit. A recent ruling by the High Court of Castile y León has accepted an appeal against León's waste by-law and ordered its revocation, opening a door that other sectors have already decided to follow.

The Spanish federation of municipalities and provinces (FEMP) says it is aware of the risks. "From the very beginning, we have been very aware of the difficulties that this law approved by the [Spanish] government would create and we have repeatedly conveyed this to the Ministry for Ecological Transformation and the Demographic Challenge," stated Luis Martínez-Sicluna, secretary-general with FEMP.

"People can't understand why they pay different rates in similar situations in neighbouring municipalities and we already warned that this would happen," he said. "Of course, we share the [EU] directive's objectives, but the directive did not require it to be implemented through a tax, nor that it had to be done without respecting municipal autonomy. And what all this has resulted in is a great inequality among citizens and an increase in the tax burdens they bear."

Municipal officials consulted by ABC newspaper describe the rubbish tax as "complete nonsense" and recognise that local councils are preparing for an avalanche of appeals, due to the fragility of the legal basis for a property's cadastral value being the sole criterion for ensuring that taxpayers pay for the waste they generate. "It's being managed as though it were a kind of property tax-plus," they warn.

Manuel de Vicente-Tutor, managing partner at law firm Equipo Económico, the first to successfully have a court overturn a municipal bye-law on the new rubbish tax, observes "illegal flaws" in using the cadastral value as a reference for charging the rubbish tax due to the lack of correlation between the property's value and the actual waste it generates. "What is being done is a 'de facto' surcharge on the IBI [property tax] and the local councils have no legal authority to regulate IBI surcharges", he stated.

The group of local tax inspectors, which will address the rubbish tax controversy at its conference to be held in the coming days in Alicante, warned a few months ago that, as currently regulated, this tax runs the risk of becoming a case similar to that of municipal capital gains tax , a tax born of illegal flaws, upheld by successive governments and ultimately repealed by the Supreme Court, forcing municipal councils to refund it.

As in this case, warns Manuel De Vicente-Tutor, in order to obtain redress, it will not be enough for a court to annul the municipal ordinance (bye-law) in question: the taxpayer must have appealed the assessment issued by the local council in order to demand a refund. This can be done by filing an appeal for reconsideration with the council itself, with what is known as an 'economic-administrative claim', "but this must be done within the month following receipt of the assessment, because that is the deadline set by law", warned the legal and tax expert.