Cancellation of the liquidation issued by the capital gain

In a Judgment of the Superior Court of Justice of the Valencian Community, Contentious Chamber, Judgment 520/2016 of last September 14, the appellant company is agreed in the sense of the non-existence of the taxable event as the price is lower. of sale than that of acquisition, contrary to the City Council's thesis that affirmed the absence of any evidence that the value of the transferred property had decreased.

In the Judgment we are commenting on, the deeds provided by the appellant are valued, deducing from them, even if indirectly, the lower value of the property at the time of the transfer with respect to that of the acquisition, concluding that the price of the transfer is lower than that of the acquisition of the real estate, annulling the liquidation issued by the IIVTNU.

Other cases in first instance courts that opened the doors to annulment

Various Contentious-Administrative Courts of Justice in Zaragoza, Madrid, etc. that failed in the same sense had already established a legal precedent that had shaken the coffers not only of the affected municipalities but also of the rest of the Spanish town councils.

The Regulatory Law of Local Treasury includes in its article 104 what is the capital gain, also called Tax on the Increase in Value of Urban Land. It is “a direct tax that taxes the increase experienced by the land.” The reason for the tax, what is known as a taxable event, is therefore the increase in the value of a real estate property during the time that elapses between the purchase and the sale.

With this legal text in hand, those who have taken the step of claiming that the capital gain should not be paid because their property had not registered an increase in value, but rather had lost it, after denying the reason, as the City Councils have done systematically by administratively, they have seen how higher courts have agreed with them

The 'crisis' of municipal capital gains?

As the judges explain in their rulings, “given the traditional trajectory of the real estate market in Spain” in which prices followed an upward trajectory, when capital gains were established (under national regulation) “an objective taxation system was established.” which assumed that there was always an increase in value. “Currently, however, We find ourselves in an unusual situation, and that is that real property prices have been falling for several years.” so the starting point to establish the amount of the tax is not valid, in conclusion, that “if there is no taxable event, it cannot be taxed.”

The doctrine and jurisprudence have spoken, and given the situation of the Spanish real estate market since 2008, and that the upward trend of other times will hardly be resumed, Some authors have even gone so far as to speak of “the crisis of municipal capital gains.”.

These rulings are a national precedent, since although cancellations of capital gains had already been recorded previously, in these casesand other aspects are included taking into account fiscal criteria and not just cadastral criteria, and if jurisprudence is created, People who have paid capital gains in the last four years (counted since a hypothetical favorable ruling was given) for purchase and sale transactions in which the sale price was lower than the purchase price could claim the return of the amounts plus the interest generated, since four years is the period established by law to initiate what is called an improper payments file.

At Aseryde we advise you on any payment made to the public treasury or other public bodies if you consider that it may be the reason for an improper payment. Ask us.