1. INTRODUCTION.
“I have a property and I have read in the newspapers that I can Claim the Plusvalia back. Is it possible?” There are many clients who have consulted us in this regard.
In this article we explain the key points to understand the current situation. Recently, the Spanish Constitutional Court (TC) has ruled on the unconstitutionality of some articles of Royal Legislative Decree 2/2004, that regulates the tax on the Increase in Value of Urban Land, better known as Plusvalia.
2. What is the TC? What is a question of unconstitutionality?
The TC is the supreme interpreter of the Constitution.
When the Judge or Court consider that a norm may be contrary to the Constitution, they will raise the matter with the Constitutional Court.
3. What is the local or municipal Plusvalia?
It is a local tax that levies the increase in value experienced by the land over a maximum period of 20 years.
It is quantified as follows:
– A coefficient is applied to the cadastral value of the land.
– This coefficient is determined by multiplying the number of full years of ownership, by an annual percentage determined by each town hall.
With this, the taxable base of the tax is obtained, which is subject to a tax rate set by the town hall, up to 30%.
4. The point of the debate.
What is being debated in the TC court, is not the constitutionality or not of the tax. What is in question is precisely the quantification of the taxable base of the tax. That is, the way in which the amount to be paid is calculated.
Well, the method does not calculate the increase in the value of the urban land based on the economic capacity or real gain.
5. What is financial ability and why is it so important?
According to art. 31 of the Spanish constitution, all will contribute to the support of public expenditures in accordance with their economic capacity. Through a fair tax system inspired by the principles of equality and progressivity.
In other words: those with greater economic capacity will have to bear a greater tax burden.
6. Judgement of the TC
The TC affirms that the way to calculate the taxable base of the Plusvalia tax is outside the economic capacity that the taxpayer may have.
Because the way of calculating the tax is not related to the real estate market and the economic crisis.
According to the TC, this form of calculation does not take into account the profit actually obtained with the transfer of the land, nor the true economic result.
7. And then, can I claim?
The TC has limited claims.
Therefore, no tax obligation may be claimed that has been decided by a judgement or administrative resolution, on the date of issuing the judgement of the TC.
Provisional or definitive settlements that have not been contested on the date of the judgement (October 26, 2021) and self-assessments whose rectification has not been requested before the ruling of the TC will not be subject to claim either.
If you are considering claiming for the Plusvalia or you want legal advice about expenses taxes related to buying, selling, etc. Contact Us
The information provided in this article is not intended to be legal advice, but merely conveys information relating to legal matters.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
E-mail: info@white-baos.com
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