Car Insurance tax increase Spain 2021 on top of new emissions calculations which will increase prices of new cars.

The tax on insurance policies will increase by 2% from 6% to 8% from 1st January 2021. Whilst this was announced at the end of October 2020, with January fast approaching it is worth remembering that any increase in your premium price in 2021 is not all down to the insurance company.

With nearly 80% of all Spanish households holding a car insurance policy this increase is going to affect most families. It is not just car insurance in Spain that will see this increase. Those with other general insurances including home and funeral plans will see the increase there too.

The Spanish government hopes to bring in an extra 455millon euros through this tax in the first year.

This is the first increase in the tax for 20 years they argue and the tax is lower than in countries like the UK (12.5%) Germany (19%) and Italy (12.5% to 21.25%).

WLTP will make your new car more expensive

This is not the only additional cost to the motorist in Spain. From January someone buying a new car will also see many new car prices rise with the introduction of the World-wide harmonized light-duty test procedure (WLTP).

The WLTP is a new European standard used to test fuel consumption, CO2 emissions, pollutant emissions and energy consumption (electric vehicles). It replaces the NEDC which was introduced back in the 1980s. The thinking behind the new measures is that it gives a more realistic measure as it has been based on real-driving data gathered from around the world.

This means that the emissions and CO2 levels shown more accurately reflect what your car is really producing. Some of the tests involve more realistic driving behaviour, a greater range of driving situations and longer distances. These more accurate tests have a drawback for buyers in Spain, however.

The downside for the buyer is that registration taxes in Spain are based on CO2 emissions. With more accurate recording of CO2 emissions many cars will move into a higher emission bracket and therefore incur a higher registration tax.

Emissions (g/km)Tax
0 to 1200%
121 to 1594.75%
160 to 1999.75%
200 or more14.75%

If the vehicle you want to buy was previously in the 0 to 120 g/km tax bracket but has now moved in the 121 to 159 bracket under the new more accurate test your car will be more expensive. For example, a 20,000 euro car will cost almost 1,000 euros more.

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