Tax on Constructions, Installations, and Works (ICIO)
What is the ICIO?
The ICIO is a local discretionary tax managed by municipal authorities that taxes any construction, installation, or renovation work on a building requiring a building permit or urban planning license, the submission of a responsible declaration, or prior communication.
It is a discretionary tax, meaning not all municipalities require it, only those that have approved the corresponding tax ordinance, as well as its imposition.
How is the ICIO calculare?
This tax is determined by the actual and effective cost of the construction or work, and it is due at the beginning of the construction, installation, or work. The competent municipality issues a provisional settlement calculated based on the modules established in the fiscal ordinance, or the taxpayer must submit the self-assessment based on the material execution budget of the project.
Once the construction, installation, or work is completed, the municipality can initiate a verification or inspection procedure to carry out the final settlement, and if necessary, adjust the taxable base taking into account the previously issued provisional settlement.
In calculating the ICIO, the taxable base referring to the actual and effective cost of the construction, installation, or work is applied, and the tax rate determined by the municipality is applied. Discounts and exemptions established in the municipal ordinances may also apply to the tax due.
How can we help reduce it?
- Performing a detailed check of all items that make up the material execution budget to discount those parameters that, according to applicable regulations and case law, do not affect the determination of the taxable base of the tax.
- Verifying that all provisional or final settlements have been correctly calculated in accordance with the fiscal ordinance.
- Analyzing possible exemptions and deductions that may apply.
- Handling inspection procedures and/or any appeals filed against them.