Rule out of the Plusvalía Tax for housing sales with no profit
On February 2017 the Supreme Court has agreed in a verdict to rule out the Plusvalia Tax for a certain scenarios. We at Marbella 360 consider this are important news and therefore we would like to share it in our blog, Therefore we are posting the news appeared at the economy section of www.eldiario.es issued on the past February the 17th 2017.
The Spanish Constitutional Court (TC) has agreed to declare as Unconstitutional the current regulation regarding the Urban Land Value Increase Tax, commonly known as "Plusvalía", after considering that it does not express the economic capacity of the tax payer, as expressed in the Spanish Constitution.
The TC decision, forwarded by "El Español" newspaper, implies that anyone selling their housing without gaining any profit will not be subject to the Plusvalía Tax, as it was regulatory so far. The specific regulation now ruled out is the Guipúzcoa Plusvalía related local law, which is itself a copy of the 104 and 107 articles of the Spanish Local Tax Office Law, therefore the TC verdict will force the update of both the Estate and Basque regulations.
The Plusvalía is a municipal direct tax that constitute a significant income for the Spanish Councils. These receive about 2.000 Euro millions yearly due to this tax. It is remarkable to estate that the amount has increased during the Real Estate crisis ocurred in Spain in the past years.
Even though theoretically the Levy is intended for the housing value increase, the way it is calculated causes payment due even if the seller loses money on the sale. The fee is automatically calculated in the event of the trasnfer of the property depending on the value assigned by the IBI (property tax) and it is a percentaje which depends on the time passed since the adquisition.
As "Cinco Días" the economic newspaper reminds, the Tribunales Superiores de Justicia (higher level courts) have been issuing sentences oposing tax settlements for the cases where no profit happens in the sale for the tax payer.
The TC considers that in the cases where the tax payer can credit that either there has been no estate value increase or even it has undergo a value reduction, taxing the owner with the Plusvalia tax has no reasonable cause whatsoever and implies a levy over transactions that express no economic capacity, hence breaking the Spanish Constitution 31.1 article.
This precept estates: "everyone will contribute to the sustain of the public expenses agreeing its economic capacity through a fair tax system".
Since our beginning in 2002 we set a benchmark for the company that was no other than define our area of expertise and the product existing in it, so as to offer a specific advise of the existing estates. East Marbella, Bahía de Marbella.