The Constitutional Tribunal has ruled that the Plusvalia Tax, payable by those who sell properties, gift them or inherit them is unconstitutional.
The Tribunal has ruled that the method for calculating the tax payable is “unconstitutional” and has quashed it from the date of the judgement this week.
Legal experts are waiting to read the “small print” of the judgement in order to see whether the quashing of the tax is retrospective (in which case those who have paid the tax can reclaim the monies from the local authority).
Plusvalia tax is levied on the increase in value of urban land
(IIVTNU) and is collected by the local authority.
It is payable by anyone who sells, donates or inherits a property and taxes the revaluation of urban lands for the period between a property being built to the moment ownership is transferred by sale, donation or inheritance.
When a property is sold the seller had to pay the tax. When the property is transferred by donation or inheritance the receiver was liable for the tax, which usually varies, on average, between 3,000 and 6,000 euros.
The tax was calculated by taking the “catastral” value of the property plus the time which has passed between acquiring the property and the subsequent transfer and then revaluing the current value of the property.
This tax of revaluation is normally between 3% (for periods of up to 20 years) to 3.7% for periods of between one to five years. The maximum amount taxable, which is calculated by the local authority, is 30% and the resulting amount calculated is payable, either by the buyer or recipient, (depending on the circumstances given above), as “plusvalia.”
For example, if you buy a flat in 2010 with a “catastral” value of 150,000 euros and sell it a year later, and supposing that the local authority has fixed the maximum revaluation for a period of up to 15 years at 3.2% the calculation would be 35.2% on a base amount of 52,800 euros. If the local authority maximum was set at 30% the amount payable in “plusvalia” would be 15,840 euros.
Basically, the Tribunal Constitutional has annulled the tax because the calaculation always assumes the property has increased in value whether this is the case or not.
The immediate consequences of the judgement are firstly, the tax is no longer payable, which good news for anyone who is selling, receiving donated property or inheriting property.
Secondly, it is bad news for local authorities as they will receive a massive dent in the finances they use to fund the services etc. they provide.
We await the verdict of the experts to see if anyone who has paid the tax can reclaim it and, if so, during over what period the refund will be introspective.
Nexonr will keep you informed.
