New rules for calculating Spain's municipal capital gains tax after court rulings

Automatic summary, not yet reviewed

1. The Constitutional Court ruled the previous system for calculating the tax base of the municipal capital gains tax unconstitutional, because it also taxed situations with no real increase in value. This royal decree-lawroyal decree-law A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses. responds to those rulings and restores the tax's enforceability.
2. A new case where the tax does not apply is added: if the interested party proves, by providing the deeds of both the purchase and the sale, that the land gained no value between them, no tax is due.
3. The tax base is now calculated by multiplying the value of the land by maximum coefficients that depend on the number of years since acquisition, up to a maximum of twenty years. These coefficients will be updated yearly through a rule with the rank of law, for example in the state budget laws.
4. If the taxpayer proves that the real gain is lower than the tax base calculated under the objective system, that real gain is used as the tax base. The objective method is therefore no longer the only option.
5. Municipalities may apply a reduction coefficient of up to 15% on the cadastral value of the land depending on how up to date it is, and a reduction of up to 60% during the first five years after a general cadastral review. They may also run checks when the taxpayer claims there was no increase in value or that it was lower.
6. Municipalities that levy this tax must adapt their tax ordinances within six months. Until then, the maximum coefficients set by this rule apply directly.

Who it affects

• People who sell or inherit an urban apartment or plot of land: They can avoid the tax if they prove there was no capital gain, or pay based on the new coefficients or their real gain.
• Municipalities: They must adapt their ordinances within six months and may apply reductions and run checks.
• Taxpayers who already filed their self-assessment: The municipality can only check that the rules were correctly applied, without assigning different values.

Words worth knowing

Plusvalía municipal

Common name for the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana. It taxes the increase in value of urban land between purchase and sale.

Base imponible

Tax base: the amount on which the tax is applied to work out what is owed.

Valor catastral

Cadastral value: the value the administration assigns to a property for tax purposes.

Devengo

The moment the tax is deemed to arise, here when the land is transferred.

No sujeción

A situation where the tax does not apply at all, because there is no taxable event.

royal decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

decree-law

A rule with the force of law that the Government passes because it is urgent. It applies from its publication, but the Congreso must validate it within 30 days or it lapses.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries