The plenum of the Constitutional Court has considered the unconstitutionality question promoted by the Contentious-Administrative Court number 1 of Jerez de la Frontera in relation to art. 107 and 110 of the Local Treasury Regulatory Law, declaring those precepts unconstitutional and null only to the extent that they subject to taxation situations of non-existence of value increase.
This ruling fully confirms the previous ruling on the provincial law of Guipuzkoa, which was also pronounced in identical terms of the state regulations now declared unconstitutional, and supports the already consolidated minor jurisprudence of the Superior Courts of Justice.
The capital gains tax is a direct tribute of municipal nature that constitutes an important source of income for municipalities.
It taxes the increase in the value of the land that is revealed in a transfer by any type of title, establishing its calculation objectively based on the cadastral value of the land. In any case the result is positive, regardless of whether or not the increase in value that constitutes the taxable event has actually occurred or not.
The TC considers that in these cases applying the capital gains tax to the owner is not subject to any reasonable justification and implies taxations in situations of fact that are not expressive of economic capacity, which implies a violation of article 31.1 of the Constitution, according to which “everyone will contribute to the maintenance of public expenditures according to their economic capacity through a fair tax system (…)”.
This ignores the assumptions in which, at the time of transmission, the taxpayer can prove that this increase in value has not occurred or that even the real estate has depreciated, as has occurred in many cases in practice as a result of the economic crisis and the explosion of the Real Estate bubble.
Some courts discuss the method of calculating the tax even in cases in which there is a benefit in the transfer, since the formula for the determination of the tax is improperly applied.
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