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New Supreme Court ruling paves the way for tenants to pay IBI and basura tax

Raymundo Larraín Nesbitt, September, 1. 2026

Marbella-based Larraín Nesbitt Abogados (LNA) has over 23 years of experience at your service. We offer a wide range of 60 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record of successfully assisting expats all over Spain.

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Article copyrighted © 2026. Plagiarism will be criminally prosecuted

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
1st of September 2026

 

Introduction

Spain’s Supreme Court delivered a ruling last November which marks an inflection point on who pays what taxes in a rental agreements. This is a new ruling which bolsters the position of landlords in detriment of tenants.

Going forward, landlords can agree with their tenants that the latter will pay for both IBI and basura tax. 

Unfortunately, the timing of the ruling is not the best, as the price of home rentals are already at an all-time high due to the government’s misguided housing and rental policies which cut back supply and drive prices relentlessly upwards. 

Meaning tenants, which were already under a huge financial pressure to meet the market price of eyewatering rentals will now have to come up with thousands of extra euros a year to pay for these two taxes.

STS 1637, of the de 17th of November 2025

The new ruling opens the door for these two taxes to be passed on to tenants, even if the rental contract does not specify the exact amounts to be paid.

Art 20.1 LAU

Spain’s Tenancy Act, which rules on long term rentals, already contemplated the possibility for landlords to pass onto their tenants these two taxes. However, consolidated case law demanded that the rental agreement had to specifically determine the amounts contractually for it to be upheld legally.

Town halls where a property is located are the ones empowered to calculate and levy these two local taxes.

Whilst in theory this sounded good, in practice it was not feasible as one could never know ahead of time the exact amounts charged by them. So, in truth, very few rental agreements were able to specify said amounts.

Property boom – updated cadastral valuations translate to higher IBI tax

As mentioned in the article’s introduction, the misguided housing and rental policies the government pursues stifle supply (whilst demand, both foreign and domestic remains strong). This translates into artificially, and dramatically, increase property (and rental) prices across the board in Spain.

Town halls in Spain have devolved competencies on taxation matters which include IBI and basura tax. Beset by falling revenue and increased expenses, they are capitalising big time on the government’s fostered property boom by way of updating cadastral values like there is no tomorrow. Cadastral valuations are taken as reference to determine all property-related taxes, including IBI tax.

As explained in previous articles, IBI tax has dramatically risen all over Spain in the past years to bring cadastral valuations more in line with current property market values. This translates into owners paying much higher property-related taxes, such as IBI and basura. With this new Supreme Court ruling, the door has been left ajar for them to pass on these increased costs to their struggling tenants.

Conclusion: Cui bono? 

This ruling, although welcome, could not come at a worst time for tenants.

Tenants – all over Spain – already face a Sisyphus struggle to secure a property that puts the Squid Game to shame. On average, for every property rented offered, there is 300 people interested in large cities. If on top of this, they are now expected to also pay for IBI and basura tax (which on average is a few thousand euros a year) it may be the straw that breaks the camel’s back.

Despite the government’s ongoing narrative that it loftily pursues housing (and rental) policies to assist and alleviate vulnerable collectives (such as elder people, low-income families, and single mothers), its actions are causing the opposite effect.

Whilst a young administration can - and should - be excused for a faux pas on the first couple of years of its ruling by following its elected political agenda, it cannot be excused in an administration that is on to its eighth year. These misguided housing and rental policies are plain to see - by everyone – and are a clear example of the emperor has no clothes.

Long story short, Spain’s government has adopted misguided housing and rental policies that target demand instead of supply. This translates into higher prices across the country (the current property boom is fostered by the government’s unwavering interventionism) in detriment of natives, and particularly of the very vulnerable collectives it vocally sought to protect.

But, hang on. Why would Spain’s government follow policies that overtly damage the very collectives it seeks to protect? This makes no sense. Or does it?

In Law we have a great saying: Cui bono? Who benefits from a given action.

Who stands to gain more from all the red tape chaos, increased property prices, increased rental prices and growing miscontent? Well, you’d be surprised to learn it’s actually the Spanish government. 

Now this is only my personal opinion, so take it with a grain of salt, but the incumbent administration benefits twofold:

  1. Higher property prices translate into higher taxes, which in turn increases the government’s tax coffers. Taxes make up for 35% of a property’s price. Spain’s Tax Office has broken again, for its seventh year in a row, its own record tax revenue this last year with over 325 billion euros. In addition, Spain is the only country in the OECD (38 countries) who does not bother to deflate tax rates in line with rampant inflation to, precisely, increase its tax revenue by the back door. In plain English, the higher the property prices, the more the Spanish government stands to gain by way of higher taxation. 
  2. The ongoing high property and rental prices create a huge social discontent. Moreover, Spain’s housing problem has become the number one problem for Spanish people following social polls, even ahead of high unemployment or unchecked migration It is no secret that a growing number of people are growing angry at the situation, especially by young people, which is getting out of hand whilst those in places of power duck their heads in the sand ignoring it or even going as far as to deny there is a problem (Bank of Spain Governor declares property prices are still 18% under their true value). Call me jaded, but all this growing discontent can be politically capitalised and reconducted to vote for the incumbent administration. Let us not forget that in 2027 we have a general election. In plain English, social discontent can be harnessed for political gain by the government. Ironically, the more social discontent, the more votes.

The Spanish housing problem is no longer a matter of political ideology (conservative vs. progressive) it’s a matter of good administration and economics, plain and simple.

Supply must be increased, there is no question about it; more houses need to be built (and I’ll plug in, as always, that taxes must be lowered). Spain has a huge housing deficit of 750,000 units not factoring the 3 million new migrants the government allowed in last month (1.3 million officially plus a further 2 million when the family regroupment policy entitlement kicks in) with its new regularisation policy. Honestly, you couldn’t make it up.

My grandmother had a great saying: "Don’t pay attention to what people say, pay attention to what they do."

Power and politics. And in this case, the government’s words don’t match its own actions.

Cui bono indeed?

 

LNA-related services:

 

At Larrain Nesbitt Abogados (LNA) we have over 23 years of experience specialising in property conveyance and taxation. We also assist clients with immigration & residency visas (digital nomad visa), and inheritance procedures (probate). You can contact us by e-mail at info@larrainnesbitt.com, by telephone on our UK line (+44) 0754 3838 218 or Spanish line (+34) 952 19 22 88, or by completing our contact form.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarising, whether in whole or in part, this article without crediting the author may result in criminal prosecution. Ní neart go cur le chéile. Voluntas omnia vincit.

Larraín Nesbitt Abogados, small on fees, BIG on service.
2026 © Raymundo Larraín Nesbitt. All Rights Reserved.

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San Sebastián: The Pearl of the Cantabrian Sea

Raymundo Larraín Nesbitt, September, 18. 2026

 

 

shutterstock 2757656907

By Raymundo Larraín

21st of September 2026

I continue today with my running series on top places to buy and live in Spain. You can find older entries in this series by scrolling down below. These impromptu, light-hearted guides are not meant to be exhaustive; they are simply a lighthouse to shed some light on an area’s main highlights, character and landmarks.

Introduction Basques and their origin story

Long before the shadow of Rome, their existed a misty green land inhabited by a seafaring race, comprised of tall piercing blue-eyed warriors. Even the power of Rome never managed to fully subdue and bring them under heel, forever remaining an elusive and independent collective that largely kept to themselves, even to this very day.

Successive Spanish and French governments pursued Basques throughout history, going to great lengths to stomp out their uniqueness and language and bring them into the fold. But like Rome, failed. The Basque people pre-date the formation of Spain (and Rome aeterna), and will remain long after Spain, or even Europe, are no more.

The origins of the Basques remain shrouded in mystery. It’s like going down a rabbit hole. Despite centuries of painstaking research, experts worldwide are still unable to pinpoint the exact origins of Basques. It’s a pre-Roman ethnic group which is unrelated with the Celts or any of the other proto-Iberian group. Inexplicably, they would seem to have arisen in complete isolation from other human groups – but that makes no sense.    

Moreover, their native language (Euskara) is not linguistically linked to any of the major (or minor) romance languages descended from Latin. It is an isolated language, meaning it has no known genetic relation to any other language family in the world. This is extremely rare, as all languages borrow from one another through shared trade, wars, conquest, etc. All do; well, all except the Basque. The preposition ‘except’ and Basques you will find remain inextricably linked. Despite all our modern knowledge, vast resources and best efforts, we are still unable to trace back its origins to any other known language. All we know for certain is that Euskara is widely considered the oldest living spoken language in Europe without any ties to any other known language – dead or alive. Truly, a language lost in time; some even dare to venture its pre-Younger Dryas, but that’s unfounded, and there is no hard evidence to sustain such a baseless claim.

And brace for it – it gets weirder.

Even their blood type raises eyebrows. RH-negative can only be found in under 6% of the world population, making it the second rarest blood type. However, Basques sport large concentrations of this blood type, with up to 40% of their population, and even higher concentrations in rural areas. This blood type is special, because they are universal donors but may only receive from their same blood type. It also brings issues related to childbirth (stillbirth) when parents have mixed blood types, in a way railroading RH-negatives to stick together to ensure there are no issues with descendants. It’s almost as if Mother Nature had hardwired them genetically to band together, as one.

In their oral traditions, passed down from one generation to the next, there are whispers that their origins can be traced back to a fertile land, that was once powerful but was lost under the waves and mud. The survivors of the cataclysm were forced to resettle the mainland but would remain accomplished seafarers. Whilst it is easy – and downright tempting – to dismiss these as fringe theories or delusions from romantic writers linked to the Atlantean myth, the fact is that Basques must have originated from someplace – alas Science just can’t pin where.

In conclusion, what little we do know is that their society is old – very old. And that their language predates all other European languages and dialects by thousands of years. It’s almost as if they had magically sprouted in isolation post-Ice Age in their green valleys and forests; but surely there is more to this.

In truth, after all this time, we hardly know anything about Basques and their true origins. Science is going to need a great deal of luck to find whence they came.

Sorioneku - good luck!

Geography & Major Basque cities

The Basque Country (Euskal Herria), which forms part of Spain, is a diverse geographic region straddling the border between northern Spain and southwestern France along the Bay of Biscay. The climate is Atlantic, with rainy winters and short summers that lead to lush vegetation. However, I must add that the climate change over the last two decades has created more temperate winters and longer spells of dry summers which now last for months.

It has three major cities:

  • Vitoria-Gasteiz: This is the administrative capital, on paper. This is the government seat where the regional parliament is located and is home to the sitting regional president.
  • Bilbao: is the seat of wealth and true power. It has been the main financial hub in the north for centuries, home to the sharpest financial and commercial minds of Spain. It is also the city with the largest population and is a cultural reference. I’ll be sure to cover it next fall in an article.
  • San Sebastián: Featured in today’s article, is a major cultural and tourist hub.

San Sebastián

There are Spanish cities you visit and then there are Spanish cities you fall in love with.

San Sebastián (Donostia in Basque) firmly belongs to the latter category.

Tucked into the northern coast of Spain, in the province of Gipuzkoa in the Basque Country, San Sebastián curves elegantly around the Bay of La Concha. Behind it rise rolling green hills; in front of it stretches the Cantabrian Sea. The city somehow manages to combine the sophistication of a grand European resort with the earthy character of the Basque Country.

San Sebastián has long attracted visitors because of its pristine white sandy beaches, architecture and gastronomy. Today, its reputation reaches far beyond Spain. The city's official tourism office describes it as “a destination where sea, culture, gastronomy and an active lifestyle converge, while its culinary reputation has become international.”  

For somebody considering buying a home in northern Spain, however, the attraction goes deeper than tourism. San Sebastián is a city designed for living.

You can walk almost everywhere. You can have breakfast beside the sea, wander through the Old Town for lunch, hike up a green mountain in the afternoon and finish the evening eating pintxos in a packed bar.

And then there is the rain – a lot of it.

But that rain is partly responsible for the extraordinary greenery surrounding the city. This is not Mediterranean Spain with exotic palm trees, it’s a completely different ball game. There are no endless arid landscapes or baking-hot summers. Instead, you get a lush Atlantic climate, dramatic skies, green hills and a coastline that can look almost cinematic when the weather turns.

Famous people born in San Sebastián

In no particular order:

Catalina de Erauso (known popularly as La Monja Alférez, a 16th century intrepid woman who adopted a masculine identity and sailed into the New World, where she would serve as soldier under the Spanish Empire fighting across multiple campaigns for king and country), Pío Baroja (renown writer belonging to the Generation of 1898), Paco Rabanne (international designer and parfume maker), Eduardo Chillida (acclaimed artist and sculptor), Alberto Iglesias (award-winning cinema score composer), Marta Etura (lauded actress), Luis Arconada (legendary football goalkeeper), Martín Zubimendi (football player), Ane Gabarain (actress).

Foreign writers who visited San Sebastián

Victor Hugo: The giant French laureate visited in 1843 and wrote about his experiences describing the coast and the city in his work Alpes et Pyrénées.

Ernest Hemingway: Well of course, he would make the list, wouldn’t he? He visited San Sebastián multiple times during his travels in northern Spain. He enjoyed swimming off La Concha beach, eating local pintxos, and staying at classic spots like the Hotel Maria Cristina. His time in the region heavily influenced his writing, including his classic novel The Sun Also Rises.

Hans Christian Andersen: The romantic Danish writer made a Spain tour in 1862 visiting several cities (including Malaga city). His travels were captured in his book A Visit to Spain.

John Banville: The lauded Irish writer stayed in the city and actually featured it as backdrop to his dark novel April in Spain.

León Trotski: The intellectual Marxist and writer spent some time living and writing in the city after being expelled from France in 1916. He would eventually be detained and expelled from Spain too. No rest for the wicked.

The Roots: War, Royalty and the Sea

San Sebastián's history is inseparable from its strategic position on the Bay of Biscay.

For centuries it was a fortified town, military stronghold and important port. Its key strategic location made it valuable – and therefore coveted.

The city suffered one of its darkest moments in 1813 when San Sebastián was attacked during the Peninsular War. The town was largely destroyed by fire following the assault.

Yet, as so often happens throughout the history of Spain, destruction gave way to a rebirth, which led to reinvention. San Sebastián was rebuilt from the ground up. The medieval and military character gradually gave way to a more elegant urban vision, particularly during the nineteenth century. The city subsequently became a fashionable destination for Spanish royalty and European aristocracy.

Walk through the city centre and you encounter a distinctly Belle Époque atmosphere: grand façades, elegant buildings, theatres, hotels and wide avenues. The City Hall, Victoria Eugenia Theatre and Hotel María Cristina are among the architectural reminders of this transformation.

It is difficult not to feel that San Sebastián was designed for people who enjoyed dressing up for dinner. Mercifully, today you can turn up in trainers. And that’s fine by me, otherwise I wouldn’t be allowed in anywhere!

La Concha: The Crown Jewel

If San Sebastián had a single defining image, it would be La Concha.

The sweeping crescent-shaped bay is the city's poster child, its symbol and arguably its greatest natural asset. La Concha beach stretches lazily for more than a kilometre and a half, with the island of Santa Clara sitting offshore and Mount Igueldo rising at one end of the bay.  There is a long promenade made for walking and taking in the gorgeous sea views.

Don’t be surprised by locals who walk past without so much as a side glance, seemingly oblivious to the extraordinary scenery and beauty around them because they are used to it and tragically don’t pay it a second thought.

The Old Town

Then there is the Parte Vieja (the Old Town).

If La Concha is San Sebastián's elegant and more mature face, the Parte Vieja – ironically– is its mischievous bon vivant younger sibling.

The streets are narrow, atmospheric and packed with bars, restaurants and pintxo counters. It is here that you discover one of the great San Sebastián traditions: eating your way through the neighbourhood one small plate at a time.

The official tourism office describes the Parte Vieja as “one of the city's most vibrant and authentic areas, with a concentration of pintxo bars, restaurants and traditional food.”  

Monte Igueldo

For the best views of San Sebastián, climb Mount Igueldo. Or, more accurately, take the funicular. At the top, the city opens below for you.

La Concha forms a perfect crescent below. Santa Clara sits in the middle of the bay. The buildings of the city stretch inland, surrounded by the green hills of Gipuzkoa.

It is one of those vistas that makes property prices suddenly seem reasonable.

Culture and festivals

San Sebastián is not simply a beach resort.

It has a substantial cultural life, with theatres, museums, exhibitions, festivals and international events forming part of the city's fabric.

Perhaps the most internationally famous is the San Sebastián International Film Festival (now on its 74th edition as I write these lines), which brings actors, directors and the international film industry to the city every year. For avid moviegoers, like me, it’s always a thrill to watch great actors walking up the red carpet.

There are also traditional Basque festivals, sporting events and the famous traineras – traditional rowing boats – which compete in races along the coast.

The result is a city which remains lively outside the main summer season, and throughout all the winter. This matters if you are thinking about living here rather than simply visiting. By experience, I can tell you that summer resorts in winter tend to be dull and boring once the tourists leave (yes, even my native Marbella). Albeit San Sebastián doesn't suffer from this acute problem, because it is a cultural hub first and foremost – tourist destination takes a back seat.

The Basque identity

As highlighted in the article’s introduction, the Basques are – truly – a peculiar lot in the sense that they come from a unique mould. Their people, their language, their traditions, their food, and even their blood type are unique! All these taken together coalesce, conferring them a genuinely distinctive identity that transcends time and space, offering no parallelisms with any other known culture, whether in Spain or abroad.  

Note to self: in my spare time, I have to dig deeper into the Atlantis myth origin story and the Richat Structure; history is holding back on us. There is more than meets the Eye.

Gastronomy

Basques take food seriously, and man do I mean SERIOUSLY.

So much so, that most of the best chefs in Spain originate from the Basque Country or study there. Food to Basques is akin to what football is to Argentinians.

The cuisine of San Sebastián is based upon excellent local produce: fresh fish from the Cantabrian coast, seafood, meat, vegetables, cheese and cider, alongside the famous pintxos.

The city also sits within a wider Basque gastronomic culture that includes several plates.

San Sebastián's gastronomic reputation is extraordinary. The city's tourism authority currently highlights 18 Michelin stars associated with the city, while its wider gastronomic culture encompasses traditional cooking, gastronomic societies, markets, cider houses and the Basque Culinary Center.

For Basques, fine dining is so much more than simply eating out, it is ingrained in their psyche, it is woven into their daily routine, to the point it defines them culturally, setting them apart – again!

I’ll make an effort to gloss over and highlight what I reckon are the main dishes, so please bear with me:

Signature dishes

Pintxos: small portions, big taste

Small, elaborate bites served on bread in bars, acting as the Basque version of tapas. A pintxo may be small, but the culinary ambition behind it is considerable. Traditional ingredients sit alongside modern techniques, and a casual bar can sometimes produce food that would not look out of place in a Michelin-starred restaurant.

Marmitako: A comforting stew made with fresh tuna, potatoes, peppers, and onions.

Bacalao al Pil-Pil: Salted cod gently pan-fried in olive oil with garlic and chili, creating a rich, emulsified sauce.

Kokotxas: Gelatinous hake or cod cheeks, usually served in a garlic and parsley green sauce (salsa verde).

Txuleton: A thick, massive, bone-in prime rib steak grilled over high heat. Hell yes, worth selling your soul for.

Txipirones en su tinta: Baby squid cooked in its own deep black ink sauce.

 

Iconic desserts

Basque Cheesecake: A famously burnt, crustless cheesecake with a rich, creamy center.

Pastel Vasco (Gâteau Basque): A traditional round shortcrust pastry filled with pastry cream or black cherry jam.

Traditional drinks

Txakoli: A refreshing, slightly sparkling, high-acidity dry white wine poured from a height.

Sagardoa: Natural, tart Basque cider served uncarbonated.

Property scene

As a shameful plug, I remind the gentle reader I happen to be a conveyance lawyer by trade (I know shocking, writing is the side hustle). So please feel free to contact me, or my law firm, if you fancy buying a property in the Basque Country (or anywhere else in Spain).

Ok, now we arrive at the elephant in the room. San Sebastián is expensive, very expensive by Spanish standards. According to Idealista's August 2026 data, the average asking price for property in Donostia-San Sebastián was approximately €6,680 per square metre, following a 2.6% annual increase. This made San Sebastián the most expensive provincial capital in Spain at the time. And that is just an average. Location impacts enormously. Like the old real estate adagio goes: location, location, location.

Premium locations command higher prices. San Sebastián's property market therefore presents a very different proposition from some of the other cities in this series. You are not necessarily buying here because it is cheap. You are buying because the combination of location, lifestyle, scarcity and quality of life is difficult to replicate elsewhere.

Supply is also constrained by geography. There is only so much coastline. Only so many apartments overlooking La Concha. Supply is also constrained by stringent planning laws that are (over) protective of its historic and cultural sites (Old Town). Only so much historic city centre I’m afraid.

All the above, taken together, translate into steep prices for discerning pockets. San Sebastian is not just a sun & sea hotspot; it is so much more. Intellectually-inclined minds will feel right at home with the city’s busy cultural life. Its close proximity to European influences and avant-garde trends, give it a lustre of a cosmopolitan city.   

What the future holds: sustainability vs innovation

The challenge for San Sebastián is familiar to other distinctive European cities.

How do you preserve what makes a place special while accommodating tourism, investment and rising housing costs?

The city has been developing sustainable tourism initiatives and promoting walking, cycling, neighbourhood tourism and responsible use of the city's resources. But success comes at a price. The more desirable the city becomes, the greater the pressure on housing. The more tourists discover it, the greater the pressure on the historic centre. And the more international attention the restaurants receive, the harder it becomes to keep everything feeling completely local.

San Sebastián's challenge is to remain San Sebastián. As always, virtue lies in striking the right balance.

In Conclusion

San Sebastián blends seamlessly a rich tapestry of cultural life with laid-back beachgoing. Romantic seaside promenades guarantee dramatic views at dusk. It offers a delicious gastronomy for those in the know, and for savvy investors on the prowl climate change is creating new unprecedented opportunities as summers increasingly become longer and hotter with each passing decade.  

San Sebastián is heaven in the north, a pearl of the Cantabrian Sea waiting to be explored and savoured by discerning minds.

San Sebastián, la perla del norte.

 

Other entries in this running series:

 

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. Ní neart go cur le chéile. Voluntas omnia vincit.

2.026 © Raymundo Larraín Nesbitt. All Rights Reserved.

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Last Press Entry:

The Truth About Spain's Property Market in 2026

Hi Homes, August, 21. 2026

Hi Homes is a Marbella real estate agency founded in 2013 with a strong technological know-how. It has helped hundreds of international buyers find their dream property on the Costa del Sol — whether for permanent residence, a holiday home, or a strategic investment. They started as a humble vision and have now grown into a leading, tech-enabled boutique real estate agency with a dynamic team of property experts.

 

Hi Homes kindly interviewed me on the 9th of July 2026:  The TRUTH About Spain Property Prices 2026

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