The Constitutional Court (TC) has closed the door on massive appeals for the payment of the Tax on the Increase in the Value of Urban Land (IIVITNU), popularly known as municipal capital gains tax. , the Court of Guarantees introduces a clause in the legal foundations in this sense, after declaring unconstitutional the articles of the Consolidated Text of the Local Treasury Law (TRLHL), which regulated the way in which the taxable base of this tax was established until now .
Who can request the refund of the tax?
People who have opted, before the issuance of the judgment of the TC for a self-assessment can request the money as long as they have formalized the process in the last four years. It is the period of time that the LGT determines so that the Administration can review the submitted self-assessment.
If it was the City Council that has directly settled the tax, and the officials have not yet finalized their valuation, it is also possible to claim, but if they have already finalized it, the taxpayer only has one month of margin to file your claim.
Can you appeal without there being a disability?
You can appeal if the sentence is not final or the Administration has not declared it so, even if there is no loss in the operation that motivates the taxation when the tax rate exceeds the capital gain actually obtained.
Thus, the Constitutional Court establishes it in its judgment 26/2019, of October 31, in which it rules, that although in the case examined a situation of disability or lack of real increase was not subject to taxation, the application of the type of The tax provided for in article 108.1 of the TRLHL to the calculated tax base entailed demanding an “excessive” or “excessive” charge from the taxpayer, citing for this purpose the doctrine of the European Court of Human Rights (ECHR) of July 3, 2003 – matter of Buffalo Sri v. Italy-, among others.
In this sense, it is concluded that “when the application of the calculation rule provided for in article 107.4 of the TRLHL results in an increase in value greater than that actually obtained by the taxpayer, the resulting tax liability, in the part that exceeds the The benefit actually obtained corresponds to the illegal encumbrance of a non-existent income against the principle of economic capacity and the prohibition of confiscation that must operate, in any case, respectively, as an instrument legitimizing the encumbrance and as its limit”.
Who can not appeal?
The Constitutional Court expressly determines that not only situations that have already been judged or resolved firmly by the Administration cannot be claimed, as announced in the note issued after the agreement of the Plenary of the TC, but also those who have provisional or final settlements, but which have not been challenged as of the date of the judgment (October 26, 2021), as well as self-assessments whose rectification has not been requested before the ruling of the TC.
What is a rectification?
Article 120.3 of the General Tax Law establishes that when a taxpayer considers that a self-assessment has harmed his legitimate interests in any way, he can request the rectification of said self-assessment, for which a specific procedure has been regulated.
When the rectification of the self-assessment originates a refund derived from the tax regulations and six months have elapsed without ordering the payment for reasons attributable to the Tax Administration, the latter must pay late-payment interest on the amount of the applicable refund. , without the obligor requesting it. The six-month period begins to run from the end of the period for submitting the self-assessment or, if it has ended, from the submission of the request for rectification.
How can you claim?
Until now it was possible to claim when the sale price is lower than the purchase price. In these cases, the loss of value of the property can be proven through a deed of purchase and sale of the property. Also, administrative managers and tax advisers recommend that an expert report issued by an appraisal company be provided, in which it is evident that this drop in value has occurred.
paralyzed income
The declaration of unconstitutionality and nullity of the articles of the TRLHL supposes its expulsion from the legal system, leaving a regulatory vacuum on the determination of the tax base that prevents the liquidation, verification, collection and revision of this local tax and, therefore, has left to be required. The municipalities governed by PP and Cs have already claimed compensation for the losses they may suffer and hope to find out the solution from the Treasury to be able to finalize their annual budgets. The Ministry of Finance has announced a legal text that will guarantee the constitutionality of the tax.
Clearance in large populations
In the case of self-assessments, if it is a Town Hall with a large population, which has a Municipal Economic-Administrative Court, the appeal for reinstatement is optional, so the taxpayer can present an economic-administrative claim against the assessment. In these cases, it is not necessary to file an appeal for reversal. If this claim is dismissed, a contentious-administrative appeal must be filed in the judicial field, within a maximum period of two months.
Settlement in small towns
In the case of small towns, the appeal for replacement is the only way and must be filed within one month from the end of the voluntary payment period. If it is dismissed, he can file the contentious-administrative appeal before the competent Court, within a maximum period of two months.
the special review
In the event that the taxpayer has not filed any of the previously described appeals, within a period of one month, a special review procedure can only be requested based on any of the grounds for nullity provided for in article 217 of the General Tax Law. Thus, the Supreme Court recognizes it in various judgments, such as, for example, that of September 29, 2021.
self-assessments
The term to be able to appeal it is 4 years, counted from the date on which the term to present said declaration ended. And it is appealed by means of a request for rectification and return of undue income, presented before the city council itself where said tax was paid. If the latter rejects it, an appeal for reversal must be made before the same entity or a competent municipal economic-administrative claim.
If it is rejected again, the administrative route is exhausted, so the contentious-administrative claim can be filed directly within two months.
Why has the text not been modified between 2017 and 2021?
In March 2018, the PP presented a legal proposal before the annulments of the TC ruling of 2017. In it, it proposed to replace the applicable annual percentages on the value of the land to determine the tax base by maximum coefficients established based on the number of years elapsed since the acquisition of the land, and which would be updated annually, with a maximum range of between 0.09 in the first and 0.60 after 20 years. On the other hand, the coefficient on the value of the land would be approved by each City Council, as in the case of the IBI. The proposal decayed at the end of the legislature, after the motion of censure against Rajoy. Since the arrival of Sánchez, no legislative text has been presented to modify the situation.
And now that?
It must now be the legislator (and not the courts of justice) who, in the exercise of their normative capacity, carry out the pertinent modifications or adaptations in the legal regime of the tax to adapt it to the requirements of article 31.1 of the Spanish Constitution ( CE) revealed in all the pronouncements of the TC.
What should the legislator take into account from now on?
The jurisprudence of the TC establishes that the waiver of taxing according to the (real) economic capacity manifested in the taxable event, establishing objective or estimative bases, cannot be arbitrary, but rather requires objective and reasonable justification; justification that must be more solid the more the objective method chosen by law is far from reality.
In short, the lack of connection between the taxable event and the taxable base would not be unconstitutional per se, unless it lacks objective and reasonable justification.
In order for an estimation method of the taxable base to be established and for this to be constitutionally legitimate for reasons of administrative simplification, it must not become the sole method of determining the taxable base, legally allowing direct estimates of the increase in value.
Also, it can tax average or presumed (potential) increases, which would mean including those that foreseeably or “presumably occur over time in all land of an urban nature. This is how the TC has ruled in the sentences: 6/2017 ; 37/2017; 59/2017; 72/2017, and 126/2019.
Is the key in the principle of economic capacity?
The rapporteur, Judge Narváez Rodríguez, concludes that “the maintenance of the current objective and obligatory system for determining the tax base, because it is alien to the reality of the real estate market and the economic crisis and, therefore, regardless of the capacity The economic burden imposed by the tax and demonstrated by the taxpayer violates the principle of economic capacity as a tax criterion.In addition, the simplification in the application of the IIVTNU disappears in the annulled configuration, since for its management the effective increase and its amount.
Thus, Narváez explains, that the existence of the increased value of the transmitted urban land is a sine qua non condition for the birth of the tax obligation after the judgment of TC 59/2017 and its real amount is decisive for the unenforceability of the tax in the cases in which the tax quota exhausts or exceeds the aforementioned effective increase after the ruling of TC 126/2019.
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