New Municipal Plusvalía Tax Could Be Declared Unconstitutional

The “new” municipal plusvalia tax approved by Royal Decree Law could be declared unconstitutional.

In fact, the Constitutional Court has admitted the appeals of the PP and Vox for considering, among other things, that the use of the decree law formula is illegal because the reasons of “extraordinary and urgent necessity” established by the Constitution are not present. It is therefore advisable to consider appealing all settlements issued under the new regulations and to request the rectification of all self-assessments submitted.

The appeals of unconstitutionality by the PP and Vox also argue that the decree-laws “cannot affect the rights and duties of citizens” and consider that the payment of taxes implies the duty to contribute to the support of public spending. Another kick and carry on from this government, which, when it leaves, will leave a series of unfinished business that will be a burden for the government in power.

It is also possible to question the possible violation of the principle of economic capacity. Because currently no deduction is allowed for any expenditure or investment made in the property, even though the new regulations allow the tax base to be calculated according to the so-called “real” method. “This is despite the fact that these expenses and investments have meant that the transfer value reflected in the deed (land and construction) has been much higher than the acquisition value. This may end up meaning that the taxable base taxed does not reflect the economic capacity actually obtained, and even the possibility that the tax may end up being confiscatory and there may be operations in which there has not been a gain, but which, as the taxable base is not allowed to be reduced by the amount of the expenses and investments made in the property, end up being subject to the tax.

For the time being, the royal decree has been transformed into a bill in Congress, which will open up the possibility of introducing changes via amendments.  Royal Decree-Law 26/2021, of 8 November, was validated by Congress on 2 December 2021 and was approved as a bill. What would happen if it were declared unconstitutional? There could be a legal vacuum between the date on which the new capital gains tax came into force (10 November 2021) and the date on which the new law currently being processed in Congress takes effect.

The possibility that the Constitutional Court will declare the new municipal capital gains tax regulations unconstitutional and that this declaration will be accompanied by a limitation of effects that will prevent all taxpayers who have not done so prior to the date of publication in the Official State Gazette of the ruling declaring said unconstitutionality, or even before, from making a claim.

This limitation of effects will almost certainly affect settlements issued in this period that are final, as they have not been appealed within the month. But it could also affect self-assessments whose rectification has not been requested before the hypothetical declaration of unconstitutionality referred to above. And even tax assessments that are not yet final, but which have not yet been appealed when the tax is declared unconstitutional.

There is no shortage of precedents. The last declaration of unconstitutionality does not allow taxpayers who, being within the deadline to do so, did not do so before the date on which the ruling was handed down (26 October 2021).

Therefore, it is recommended that taxpayers maintain a preventive attitude and advise taxpayers to appeal all tax assessments regulated under the new municipal capital gains tax regulations. In other words, those referring to transfers carried out after 10 November 2021. And also, that they request the rectification of all self-assessments that have been presented in relation to these transfers, also under the protection of the aforementioned regulation threatened with being declared unconstitutional.

In the event that this new municipal capital gains tax is not declared unconstitutional, the taxpayer could easily withdraw the claim filed or could not appeal against the rejection decision notified to him. The decision to claim the return of all these capital gains “seems prudent, and does not cause any harm to taxpayers.

SOURCE: IDEALISTA