The Association of Real Estate Developers of Alicante (Provia) has raised concerns over the Orihuela City Council’s plan to update the Construction, Installations and Works Tax (ICIO), which would mean a 60% increase in the levy.
The current rate has been frozen since it was last increased in 2008.
Provia argues that the tax hike would be a serious mistake, as it would reduce investment and jobs in Orihuela and the surrounding region, raise housing prices, and make it harder for young people to access housing. The association also warns that such a measure would generate legal uncertainty and drive away investment, in a sector that already faces “very high tax and regulatory pressure.”
The developers’ group highlights that the new ordinance would place Orihuela at a disadvantage compared with other municipalities competing to attract investment.
Jesualdo Ros, Provia’s Secretary General, stated that the measure—scheduled for initial approval at the end of September—would damage both the economy and employment: “Higher taxes mean fewer projects, which leads to the loss of both direct and indirect jobs.”
Affordable Housing at Risk
The update would raise the reference rate from the current €500 per square meter to €797 per square meter across the municipality. Provia stresses that such an increase runs counter to the goal of affordable housing.
“If construction costs go up, they inevitably get passed on to the final price of housing—on top of VAT. That makes it even harder for young people and lower-income families to buy a home,” the association noted.
The group, which represents major developers across Alicante, including those heavily active in Orihuela Costa’s tourist housing market, warns that the change would create “legal uncertainty and discourage investment.” Developers, it argues, seek stable and predictable environments rather than sudden tax changes that could render projects unprofitable.
“The sector already bears heavy tax and regulatory burdens. Adding more could make some projects simply unviable,” Provia added.
Competitive Disadvantage
Ros also emphasized that Orihuela risks falling behind neighbouring towns: “While many places are working to attract investment and simplify procedures, this measure would push capital and opportunities toward municipalities with more favourable policies.”
City Council’s Position
Orihuela’s Councilor for Urban Planning, Matías Ruiz (PP), himself an engineer with a long career in the private housing sector, defended the measure earlier this year. He argued that the municipality has been losing about €4 million annually under the current tax calculation, collecting only around €3 million.
According to Ruiz, the cost of building new housing in Orihuela Costa is about €1,200 per square meter—far higher than the current reference of €500. He insisted this is not a tax increase but an “update to real market prices,” pointing out that, for many years, the existing system has allowed developers to save substantial sums.
Ruiz even suggested that developers have been benefiting too much from the outdated rates: “Promoters obtain considerable profits from their activity,” he said.
Next Steps
The proposed ordinance has been shared with opposition parties (PSOE, Ciudadanos, and Cambiemos). It is expected to come up for provisional approval at the City Council’s late September session, with final approval likely in October or November after the period for public comments and objections.
