Aeternus Power

Solar tax incentives in Spain for businesses: IBI, ICIO, IAE and corporate tax

Spanish businesses that install solar can get up to 50% off the property tax (IBI), up to 95% off the construction tax (ICIO) and up to 50% off the business activity tax (IAE), but only where the local council has written these reductions into its tax bylaw. In corporate tax, renewable self-consumption plants that start operating in 2026 can be depreciated freely, within limits.

Where do these incentives come from?

Spain’s local finance law (Royal Legislative Decree 2/2004) lets councils reduce the IBI and the ICIO when solar systems are installed, and the IAE when a business uses or produces renewable energy. It does not oblige them. Each council decides in its tax bylaw (ordenanza fiscal) whether to offer each reduction, the percentage, the years and the conditions. In the Basque Country and Navarre, local taxes and corporate tax follow their own foral rules.

  • IBI, the annual property tax (article 74.5): up to 50% of the tax for properties with solar thermal or electric systems. The bylaw sets the percentage, the years, caps and requirements, and the installation must be approved by the competent authority.
  • ICIO, the one-off tax on construction work (article 103.2.b): up to 95% for works that include those systems. The ICIO is charged on the cost of the works at a rate set by the council, which cannot exceed 4%.
  • IAE, the business activity tax (article 88.2.c): up to 50% for businesses that pay the municipal IAE and use or produce energy from renewable installations or cogeneration.

Since 22 March 2026, Royal Decree-law 7/2026 lets councils extend the IBI and ICIO reductions to ambient energy, such as heat pumps, and set different IBI percentages where space is made available to an energy community. Each council must still write these into its bylaw.

Does the IBI reduction apply to industrial and commercial buildings?

Often not. Many councils limit the IBI reduction to homes. In our check of 40 municipalities with industrial activity, 17 also apply it to warehouses, shops or offices, 16 limit it to homes or residential use, 5 offer none and in 2 the text does not make clear whether a business can claim it. The full list, in Spanish, links each bylaw.

Where it applies, there is almost always a cap. Madrid gives 50% for five years after the plant is registered, including industrial and commercial buildings, capped each year at 50% of the cost of the works; since 2026 the period is two years longer if batteries are installed. Barcelona gives 50% for residential and tertiary uses and 30% for industrial use, for up to three years, capped at €12,000 over the three years for non-residential buildings.

How much can the ICIO reduction save?

The ICIO is paid once, on the cost of the works, at a rate of up to 4%. On works costing €200,000 at the 4% maximum, the tax would be €8,000; with a 95% reduction it would fall to €400. In our list, 20 of the 40 councils offer 95%, sometimes with conditions, 12 offer between 5% and 90%, and 8 have no solar-specific reduction.

The reduction usually applies only to the part of the budget that is the solar installation, so ask your builder for an itemised budget. These are real savings, but small next to what the plant saves on the electricity bill.

What should you check in your council’s bylaw?

Because the law leaves almost everything to each council, the same building can qualify in one town and not in the next. Before counting on a reduction, check:

  • Whether your property qualifies: homes only, or also industrial and commercial buildings.
  • Percentage, years and caps: IBI reductions range from 10% to 50% for one to ten years, usually capped as a share of the cost or a set amount.
  • Technical conditions: some require a minimum size or that the plant covers a share of consumption or contracted power, and most require self-consumption.
  • That the installation is not mandatory: most exclude systems already required by the Building Code (CTE), which mainly affects new buildings and major refurbishments.
  • Deadlines: the ICIO reduction is usually requested with the licence or responsible declaration, sometimes before works start; IBI deadlines can be strict, and applying late can cost years of reduction.
  • Who the taxpayer is: the IBI is paid by the property’s holder and the ICIO by the owner of the works, who bears its cost. Some bylaws also require the installation invoice to be in the IBI payer’s name.

How does free depreciation work in corporate tax?

Additional provision 17 of the Corporate Tax Act (Law 27/2014) lets companies depreciate investments in renewable self-consumption plants freely, deducting them as quickly as they choose. Royal Decree-law 7/2026 extended it to plants that start operating in 2026, and to plants started in 2025 within a tax year still open on 22 March 2026, on these conditions:

  • The investment that qualifies is capped at €500,000.
  • The company must keep its average total headcount for the 24 months after the start of the tax period in which the plant starts operating.
  • Buildings are excluded, and plants required by the Building Code qualify only for the capacity above the legal minimum.
  • Small companies (entidades de reducida dimensión) can choose between this regime and their general free-depreciation regime.

Free depreciation brings the deduction forward rather than adding to it. Check the timing with your tax adviser, especially if your tax year does not match the calendar year.

How do the incentives work with a PPA or a lease?

In a PPA the financing partner owns the plant, so the depreciation is the owner’s; with a lease it depends on the type of lease. Who pays the ICIO and who receives the IBI reduction depends on the bylaw and the contract: the IBI follows the property, and the ICIO follows whoever pays for the works. Some bylaws require the invoice to be in the IBI payer’s name, while others expressly accept leasing. Ask that the contract states who claims each reduction and whether it is reflected in the price.

Are there grants or other support?

The EU recovery-fund self-consumption grants (Royal Decree 477/2021) stopped taking applications on 31 December 2023. Regional calls still open from time to time, each with its own rules: Andalusia, for example, opened a FEDER-funded call on 22 October 2026, mainly for homes and public buildings, and companies that apply must do so before taking on any spending. Spain’s energy savings certificates (CAE), in place since 2023, pay for certified cuts in final energy use under a catalogue of eligible measures; ask whether any part of your project qualifies before counting on them.

If you are weighing up a plant, our commercial solar guide covers sizing and permits, and our battery storage guide explains when storage pays. To have us look at your case, contact us: we reply within two working days.

Questions

Can an industrial building get the IBI solar reduction?

It depends on the council. The law allows up to 50%, but each council decides which properties qualify and many keep it for homes. In our list of 40 municipalities, 17 also apply it to warehouses, shops or offices, including Madrid and Barcelona, almost always with caps.

How much is the ICIO reduction worth?

Up to 95% of a tax charged at up to 4% of the cost of the works. On €200,000 of works at 4%, the tax would be €8,000, or €400 with a 95% reduction. It usually applies only to the solar part of the budget.

Are the reductions applied automatically?

No. You have to apply for each one, and deadlines can be strict: some councils require the ICIO request before works start, and some set a fixed date, or a few months after switch-on, for the IBI.

Does free depreciation apply if the plant is financed through a PPA?

Not to you. In a PPA the financing partner owns the plant, so the depreciation is the owner’s. If you buy the plant, check the €500,000 cap, the 24-month headcount condition and the start-of-operation date with your tax adviser.

Is the IAE reduction relevant to my company?

Only if you pay the IAE: companies with a net turnover under €1 million are exempt. Where a council offers it, the reduction can reach 50%, and some councils, such as Barcelona, do not let you combine it with the IBI reduction for the same installation.

Sources

  • Real Decreto Legislativo 2/2004, local finance law, articles 74, 82, 88 and 103 (BOE, consolidated text): https://www.boe.es/buscar/act.php?id=BOE-A-2004-4214
  • Real Decreto-ley 7/2026, de 20 de marzo, Plan Integral de Respuesta a la Crisis en Oriente Medio (BOE): https://www.boe.es/buscar/act.php?id=BOE-A-2026-6544
  • Resolution of the Congress of Deputies of 26 March 2026 validating Real Decreto-ley 7/2026 (BOE): https://www.boe.es/buscar/doc.php?id=BOE-A-2026-7125
  • Agencia Tributaria: main tax changes in Real Decreto-ley 7/2026, corporate tax (free depreciation for renewable self-consumption): https://sede.agenciatributaria.gob.es/Sede/impuesto-sobre-sociedades/novedades-impuesto-sobre-sociedades/novedades-normativa-2026/principales-novedades-tributarias-introducidas-real-febrero.html
  • Pérez-Llorca (23 March 2026): analysis of the main tax measures in Real Decreto-ley 7/2026: https://www.perezllorca.com/wp-content/uploads/2026/03/Nota-Juridica-Analisis-de-las-principales-medidas-tributarias-contenidas-en-el-RD72026.pdf
  • Agencia Tributaria Madrid: tax bylaws, IBI and ICIO (2024 book): https://agenciatributaria.madrid.es/FWProjects/contribuyente/contenidos/06InfoDocu/01Ordenanzas/Libros/2023.2024/Libro2024.pdf
  • Madrid City Council: Ordinance 9/2025 amending the IBI tax bylaw for 2026, including two extra years with storage (BOCM, 26 December 2025): https://www.bocm.es/boletin/CM_Orden_BOCM/2025/12/26/BOCM-20251226-63.PDF
  • Barcelona City Council: IBI tax bylaw, article on solar systems (in Catalan): https://ajuntament.barcelona.cat/hisenda/sites/default/files/normativa/2021-01/1.1-ordenanca-fiscal-reguladora-de-limpost-sobre-bens-immobles.pdf
  • Real Decreto 477/2021, self-consumption and storage incentive programmes, article 4: applications closed on 31 December 2023 (BOE): https://www.boe.es/buscar/act.php?id=BOE-A-2021-10824
  • Energías Renovables (22 October 2026): Andalusia opens applications for self-consumption and storage grants: https://www.energias-renovables.com/autoconsumo/andaluc-a-abre-las-solicitudes-de-ayudas-20261022
  • MITECO (24 January 2023): the government approves the energy savings certificates (CAE) system: https://www.miteco.gob.es/es/prensa/ultimas-noticias/2023/01/el_gobierno_apruebaelsistemadecertificadosdeahorroenergetico.html
  • MITECO (July 2024): catalogue of standardised energy efficiency measures for CAE extended: https://www.miteco.gob.es/es/prensa/ultimas-noticias/2024/julio/el-miteco-amplia-el-catalogo-de-medidas-de-eficiencia-energetica.html

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