Plusvalía tax: Improvements
The Constitutional Court has rules, unanimously, that this tax is not due when the capital Gain is lower than the amount that would be payable in respect of the local plusvalía tax.
The plusvalía tax is a local tax, payable to the Town Hall when a property changes ownership. This tax is based on the increase of the rateable value (Valor Catastral) of the land (not the building) between transmissions of ownership. Becuase the rateable value is basically fictitious; the tax is based on a fictitious increase in the value of the land. When there is a market slump and the sale of the property does not produce a gain, the plusvalía tax would still be charged.
The decision of the high Court was in relation to a property sale that had produced a gross Capital Gain of 4.3436´ 7 Euros, with a net Capital Gain of 3.4739´ 0 Euros. The Town hall was requesting a payment of 3.5600´2 Euros in respect of the plusvalía tax, which is higher than the Capital Gain made in the sale.
The law states that tax may not be confiscatory, this means that the government may not charge more in tax that what they are taxing. If you have a gain of 12 the tax may not be 15.
This may open the doors to an avalanche of claims against this tax, which in many cases, especially during the last period of crisis, vendors of property had to pay this tax even though the sale was at a low price with no capital gain.
The Town Halls receive substantial funding from this tax, but for those who have paid it less that 4 years ago, may have the possibility of claiming a refund proving proof of no Capital Gain in the sale of property. The 4-year period is the length of the statute of limitations.
This piece of legislation has yet to be published, and until this is done no refund applications can be submitted. When it is published, lawyers will be able to study in depth the wording of the sentence.
There is nothing mentioned in this sentence regarding the plusvalía tax on gifts or inheritances. The reason for this is because the Constitutional Court only examines queries presented to them on matters that are being ruled on by other Courts, to verify if their decisions are complying with the Constitution.
It is possible, that other
Courts may present queries regarding gifts and inheritances, since the ball has started rolling in this respect, and we will keep our readers informed if there are any changes.