The municipal Capital Gain Tax (plusvalia Municipal), towards a little more clarity?

26 Jul The municipal Capital Gain Tax (plusvalia Municipal), towards a little more clarity?

The Supreme Court (judgment 09/07/2018, n ° 1163/2018) ruled in fixing the criteria of interpretation of articles 107, 1 and 2 a) and 110,4º of the consolidated local finance law in the light of the judgment of the Constitutional Court (59/2017), which declared some of its articles void and contrary to the Constitution, and thus corrects the doctrine that was maintained by the Administrative Courts of Appeal declaring the absolute nullity of all the provisions of said law.

But what are the effects on the taxpayer?

• The refund of the municipal capital gain tax can only be claimed in cases where the taxpayer can prove that the transmission caused him a loss of profit on the property or that there was no increase in the value of his land whereas until now this tax was obligatorily payable even if no increase in value existed.

• In the event of an increase in the value of the land at the time of the transfer of the property, articles 107.1 and 2 are applicable and, consequently, the tax will be liquidated and payable to the Town Hall.

• The taxpayer is the one who must prove that there has been no increase or that his land has not increased in value. There is therefore a kind of presumption in favour of the Administration.

• To prove that no value discrepancy exists, any type of evidence is valid, such as acts of acquisition and transmission (Title Deeds), expert evidence or any other valid law, then incumbent upon the administration the responsibility of the contrary evidence, namely that the proof of the increase. But it should be borne in mind that in the case of a lawsuit, it will be up to the judges to weigh the evidence provided in the proceedings, so that it is unclear whether the evidence will be sufficient.

• The judgment of the Supreme Court does not rule on the method of calculating this tax, which is pending resolution in future judgments (end of July).

• If, despite the absence of any increase in value, the municipal administration demands the payment of the tax, it is recommended to pay and at the same time to appeal it, in order to avoid paying possible sanctions.