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The Constitutional Court Declares the Unconstitutionality and Nullity of Several Articles of the Consolidated Text of the Local Tax Law (Capital Gains)

Today, Tuesday, October 26, the Constitutional Court has issued a ruling declaring the unconstitutionality and nullity of the Tax on the Increase in Value of Urban Land, and more specifically of articles 107.1, 107.2 a) and 107.4 of the Local Finance Law.

The articles affected by unconstitutionality are those related to the method of determining the taxable base of the tax, the cornerstone for its calculation, and this, as a consequence, leaves the possibility of taxation practically annulled.

However, the sentence - which has three individual votes - has not yet been published. Shortly and with a more in-depth analysis, it will be possible to obtain definitive and more certain conclusions regarding its scope.

The basis for the unconstitutionality of the affected articles lies in the objective method of calculating the tax base, which, according to the now invalidated regulation, determined that there was always an increase in the value of the land during the period of the imposition, regardless that this increase actually existed and the amount thereof.

The ruling declares the intangibility of the firm situations existing before the date of the approval of the sentence; for example, of those self-assessments presented if today it has been more than four years. Which a sensu contrary supposes the existence of innumerable cases in which if the temporality is less, the return of what was wrongly entered may be requested.

The office is at your disposal to solve any questions that may arise in this regard.

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Salvador Balcells i Iranzo's picture

One of the things Mr. Balcells like most about his job is when you get a safe, legal and fair tax situation for the sake of the taxpayer's tranquility and economy, both in previous structuring and planning, and when certain criteria have to be defended before Tax administration.

As a lawyer, he always try to put himself in the place of the one who asks for advice, so that all the options or alternatives that are considered as solutions, are those that would adopt at a personal level if the interested party is himself.