Every year you must pay a municipally imposed vehicle tax at your local town Hall. This tax "impuesto municipal sobre vehiculos de traccion mecanica" varies from municipality to municipality. As a general rule it is cheaper in rural areas. Small cars pay about 50 euros a year and larger ones 200 euros.
You should receive a postal notification but it is best to stop by your town hall in order to find out when the tax is due. Late payment will incur a fine of 5% in the first month and 20% thereafter.
There is no tax disc to display as in many other eurosspean Countries. Make sure when you sell or scrap a car that the transfer papers have been done correctly as the tax will continue to accrue for years to come.
It is common to pay this fee by standing order at the bank, but it is also possible to pay in cash.