The town hall of each municipality sets how much real estate tax (IBI) is to be paid for the properties that are located in its territory. The tax is calculated over the catastral value of a property.
From the Catastro website:
What is the rateable value and how is it determined?
The rateable value is an administrative objectively fixed value for each property and resulting from the application of the assessment criteria set out in the ‘Ponencia de valores’ (documents describing criteria of valuation) of the corresponding municipality.
Determining the assessed value of a property the following components are considered essentially:
The location of the property, the urban circumstances affecting the soil and its suitability for production.
Material cost of buildings, the benefits of the contract, professional fees and taxes levied on construction, use, quality and antiquity of a property and historical-artistic nature or conditions of buildings.
Production costs and benefits of the ‘promotor’/developer of the construction, or factors that apply in cases of absence of a promotor.
The circumstances and market values of land value, value of construction and production costs and benefits of business activities of the promotor.
In general, the rateable value of the property may not exceed the market value. To this end, by order a reference coefficient of 0.5 has been set with regards to market value at the time of approval and entry into force of the ‘Ponencia de valores’. In real estate with limited sale price set by the administration/government, the cadastral value will in no case exceed that price.
Cadastral values can be updated annually by applying the coefficients as approved in the corresponding laws re the General State Budget.