As you may recall we have in previous articles advised about the reviews being carried out by the Tax office in order to ask for complimentary 7% tax liquidation in those cases where they believe the declared value for your property on the Deed, to be below the market value as per the valuation made by the Tax office.
As you might also remember we have written about 2 of the ways that this Tax office decisions could be appealed: one by means of a Reinstatement appeal (Recurso de Reposición) or by means of a Economic- Administrative Claim (Reclamación Económico- Administrativa), both to be presented in front of the tax administration.
In general we can say that quite often in the past the decisions of the Tax Authorities were not properly justified by the Tax office due to lack of legal base and thus the chances of successfully contesting this kind of decisions were quite high.
In Fact the Central National Administrative Court (Audiencia Nacional) on its Order issued on 31-03-1998 states that when the Tax office is reviewing the value of an asset it is not enough to use a standard, general or stereotypical explanation but it must explain the specific criteria used by the Taxman in each specific cased to set the value and it must also specify the qualifications of the person that grants the report upon which the decision is based. It also states that every person has the right to know the criteria used by the taxman as if it is not known there is no way to contest, accept or even understand their decisions and this could be considered abusive.
It is also a fact that some Courts, such as the Highest Court of the Valencian Community (TSJ Comunidad Valenciana) in its Order granted on 16-03-1994 states that it is necessary to carry out a personal and direct survey and inspection of the property by the Taxman (or the surveyors appointed by them).
In the past most of the time the Taxman reviewed the value and issued the new value without a site visit to the property, using general rules or coefficients and just copy-pasting the precedent on which their decision was based therefore it was quite common for the tax authorities to review the value of an assets without complying with the above mentioned Courts criteria and in breach of the legal principles. This arguably left the citizens facing the proceedings unable to defend themselves in front of the taxman, opening the possibility of having the penalty declared void and giving the citizens many chances to fight with success.
However and possibly due to the actual economic difficulties these revisions have become increasingly common. Little by little the Tax office is becoming more efficient and making small changes in order to be able to justify their revisions and decisions, including more information, and explanation of the valuation system used by them.
Even so, we understand that these changes are not enough to justify their decisions as in the majority of cases the citizens are still unable to properly understand and thus considered defenceless. Also the Tax Office is not complying with the above mention Court Order of 16-03-1994 about having the surveyor personally inspecting the property which we believe is essential to determine the property’s true value.
We now have to wait and see what the Regional Economic Administrative Court (TEAR – Tribunal Economico Administrativo Regional) has to say as on one side it could understand that now the revisions are properly documented and the new changes on the reports from the Taxman are enough OR they could consider that the changes are not enough and maintain their previous criteria, declaring the penalties void.
Even if the TEAR decision it is not favourable, we would always be able ( depending on the amount of the claim) to appeal again in front of the Highest Court of the Valencian Community (TSJ Comunidad Valenciana)
Each case needs to be considered individually however we still believe it is always worth trying.
The information provided on this article is not intended to be legal advice, but merely conveys general information related to legal issues.
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