Apr 13



This tax levies on the increase in the value of the land that occurs with the transfer or change of the owner of the property, whether built up land or plots of land, and that is transmitted to a third party by sale, donation, inheritance, etc. The regulations establish that it is the transferor who has to pay this tribute. This increase or capital gain comes from that transfer, and from the years that the property has been in the hands of that owner. However, since recent judgments of the Spanish Superior Courts of Justice, the fact itself has been questioned on whether this increase comes simply from the own transmission, or if on the contrary we have to take into account if there has been an increase in the taxable base, or in the patrimony of the owner.

Well, the Constitutional Court has settled the issue in its ruling STC 59/2017 of May 11. As of this resolution, it is necessary to modify the laws of the Local Tax Authorities that regulate the City Councils, in order not to undermine the principle of economic capacity of the taxpayer and set out in Art. 31.1 of the Spanish Constitution.

The basis of these new judgments, in a quick and simple way to explain, is that the transferors do not have to pay this tax or capital gain if they transfer the property for less value than that of the acquisition, and neither if they transmit it for the same value as the one at the time of the purchase.

In this way the Constitutional Court, in 2017, resolved it quickly and has determined that in cases where there is no increase, or even if there is a decrease, it lacks any foundation that the owner has to face and support this tax (capital gains tax) because it is contrary to the Spanish Constitution and because it is taxing a fictitious, a priori, income that has not been obtained through the transfer.

Therefore, it is very positive that following this Judgment of the Constitutional Court, the laws regulating Local Tax Authorities and other tax regulations affecting this local tax will be modified, in order to harmonize with the positive sense of this new sentence . The City Councils have a period of four months to carry out these modifications and establish this assumption of “not applicable”.

Therefore, we must be vigilant, because it will be necessary firstly, to prove the inexistence of an increase in value based on acquisition prices, and to make calculations between the difference in value for which I acquired the property and the value for which I transfer the property, to be able to create the assumption of “not applicable” that establishes the new regulation, that is to say, not to pay anything in concept of capital gains to the City Council.

All in all, I consider necessary to pay the tax (capital gains) for the time being, so that once the City Council modifies the regulations in the next four months, we can proceed to submit refund requests for undue income, and remember it is provided there is no increase in the value of the land in the transmission.

Ask for an quote without commitment if you wish to request a refund to the City Council.

Alicia Hernández – Lawyer