No more PlusValía tax in Spain, for the time being

PLUSVALÍA TAX: The court has ruled that it is unconstitutional.

PLUSVALÍA TAX: The court has ruled that it is unconstitutional.

THE PlusValía tax or capital gains tax was paid when you sell your property in Spain and is paid to your local town hall, even if it was your main residence. The tax is paid on a value that the town hall applies to the property at the time of the purchase and the time of the sale.

The court has said that the way in which the town hall calculates the increase in value is illegal. The value applied by the town hall doesn’t correspond for example to the price you paid, the catastro value or the escritura or indeed the selling price.

So for the time being no more PlusValía if you sell your property in Spain.

At Just Law Solicitors we fully expect that the town hall will come up with a much fairer equitable way to calculate the increase in value and that PlusValía will be paid in the future. Sadly, this judgement is not retrospective.

There is a summary of the judgement below:

The Constitutional Court of Spain temporarily annuls the PlusValía tax.

The judgement considers that the calculation of the tax is unconstitutional since it is understood that the objective calculation system does not correspond to the reality of the property and that it affects the proportionality of the economic capacity of the person who has to pay it.

The judgement considers that the articles referring to the calculation are unconstitutional and void because it establishes a method that determines that there has always been an increase in the value of the land during the period elapsed between the purchase and the sale, regardless of whether this increase was actually made and the actual amount of that increase.

The sentence in fact annuls the tax ‘in full’ by declaring its calculation unconstitutional, so it will be impossible for municipalities to collect the municipal capital gain from now on, unless a new law is approved that adjusts to what the sentence establishes.

Constitutional court.

The Court resolution will not have retrospective effects in its application so that all those who have paid their PlusValía will not be able to claim the refund.

You will of course have to pay capital gains tax to the Hacienda in Spain if applicable.

Marisa Moreno Castillo Lawyer and Consul for Denmark.

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Marisa Moreno