The capital gain (Tax on the Increase in the Value of Urban Land) is a tax levied on the alleged increase in the value of the land derived from any legal transaction (whether the sale or donation or the acquisition by inheritance of a property). For a long time, there have been serious doubts about its constitutionality, as it was sometimes forced to pay taxes for situations that did not have a proportional effect with an effective increase in assets. This was stated by the TC in its judgments of 11 May 2017 and 31 March 2019.

Following this line, the recent ruling goes a step further by declaring unconstitutional the perceptions that served as the basis for calculating the tax. Obviously, like any Constitutional ruling, it does not allow for a review of already established legal situations, but here, the TC, no doubt fearful of the great economic impact of its resolution, has also tried to restrict the possibilities of appeal still in force.

Thus, the TC declares, in the first place, in accordance with the provisions of the legal system, that:

"Situations that can be reviewed on the basis of this judgment cannot be considered those tax obligations reported by this tax that, pending its issuance, have been definitively decided by a judgment with force of res judicata or by administrative resolution firm. "

The problem lies in what he says in the following paragraph when he adds:

"For these exclusive purposes, the provisional or definitive settlements that have not been challenged at the date of issuing this sentence and (II) the self-assessments whose rectification has not been requested will also be considered consolidated situations. pursuant to section 120.3 LGT on that date. "

We understand that this reasoning is inconsistent with current tax regulations. The current legislation, not annulled by the TC, establishes that the settlements carried out by the administration can be challenged within a period of one month and, in the case of self-assessments, four years are granted to taxpayers to request the rectification of these.

In this way, the TC is commenting on the same mistake that the Supreme Court (TS) made a few years ago with the ruling on the ground clauses. At that time the TS, with an alleged goal of economic stability, limited the retroactivity of its own resolution. Fortunately, many ordinary courts understood that the TS had exceeded its limits and did not respect the limitations against legem. Finally, the Court of Justice of the European Union corrected the error and ruled that it was contrary to EU law to limit the restitution of an abuse.

In short, we are in the following situation: although the TC has ruled that it is not possible to claim in the aforementioned situations, these are fully enforceable in conjunction with both Spanish domestic law and EU law and we hope that many courts will continue to respect the law without regard to illegal limitations, and that, sooner rather than later, the Spanish or European courts will correct the situation by declaring the full right to claim.

Therefore, all citizens who are within one month to challenge the administrative settlements or four years to request rectification in case of self-assessment, and want to assert their interests, should initiate the actions relevant laws in order not to allow the rights that assist them to be prescribed.



Taxes on the transfer of real estate "according to the value estimated by the administration"

The transfer of real estate can be taxed by different taxes (the Tax on Property Transfers or ITP in the case of sales, the Tax on Inheritance and Donations or by the Tax on Documented Legal Acts or AJD in those cases in what the transmission is taxed by VAT). We explain.

If your mortgage has IRPH, you could recover between 18,000 and 21,000 euros

The Court of Justice of the European Union(CJEU) (Grand Chamber, Case C-125/18)has issued a ruling on March 3 which could have a major economic impact on many consumers.