Maybe you have recently heard or read about recent court rulings handed down by various Spanish Courts, including the Constitutional Court, charged with ruling on constitutional issues in Spain.
Several of the regional high courts in Spain have ruled on appeals presented for consideration on the legality of the “plusvalia” tax payment on sale of property when such sale incurred losses. The Constitutional Court has also just ruled on the “plusvalia” tax.
As a result of these court rulings many owners who sold property at a loss may now be eligible to claim a refund of the payment made.
Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHAT IS THE PLUSVALIA TAX
When you sold your property you likely had various amounts held back by your buyer, deducted from the sales price to meet various payments. One of these amounts was likely to meet your tax obligation for “Plusvalia” tax.
This is one of the taxes created to finance the Town Halls and is officially termed “Tax on the Increase in Value of Urban Land”, but commonly known as “Plusvalia Tax”, and is a tax which is paid when urban property is sold.
As its name depicts, this is a tax which is levied on the alleged increase in value that the land a property is built upon has experienced between the purchase and the sale dates and is a factor of the number of years the property has been owned. However, it is to note that this tax does not take into consideration the real price paid for property, nor actual market value, and instead it is in general calculated by a mathematical formula applied to the value assigned to the land in the public record of the Cadaster.
The Cadaster is one of the various public property records, one which in this case contains basic information on title to property but moreover contains information on the location of property and its value. As such it assigns value to property and this value is used by Town Halls to calculate various taxes, such as the local rates (Impuesto sobre Bienes Inmuebles), and the Plusvalia Tax.
The Plusvalia Tax is not calculated based upon market value nor is it tax levied on actual profit obtained by the difference between sales price and purchase price of property, and is instead levied on the value of the land contained on the Cadaster record at the time of sale of property, with no consideration for the actual circumstances of the sale.
If you sold property, you should have settled a payment for Plusvalia Tax and may now be entitled to a refund. Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
I PAID CAPITAL GAINS TAX, IS THIS THE SAME THING?
When you sell property various tax obligations arise. Although the plusvalia tax is a tax on the increase in value of the property (the land) it is a separate tax from the Capital Gains Tax, and although you may have had amounts withheld by your buyer for both issues, they are different tax obligations. The latter tax is the actual tax on your profit from the sale and is paid to the Spanish State Treasury, whereas the former “Plusvalia” is a tax paid to the Town Hall.
If you sold property, you should have settled a payment for Plusvalia Tax and may now be entitled to a refund. Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHERE AND HOW IS THE “PLUSVALIA” REGULATED
The Plusvalia Tax is currently regulated by articles 104 to 110 of Royal Legislative Decree 2/2004 which passed the Regulation of Local Property (“Ley Reguladora de las Haciendas Locales”).
The tax plusvalia tax is levied on the value of property in the Cadaster, and section one of article 107 stipulates that the amount subject to taxation is the increase in value of the property expressed as a factor of the number of years the property has been owned, capped at a maximum of 20 (years), but taking into consideration the value of the property at the date the property is sold (second paragraph of the aforementioned article). Subsection a) of the second section to article 107 establishes that the value to be taken into consideration is the value considered to calculate the local rates (Impuesto sobre Bienes Inmuebles), which is the Cadastral value.
Section 3 of article 107 allows to apply a reduction to the property value when certain criteria are met, and section 4 of the same article, establishes that the resulting amount is subject to a percentage depending on the term owned, which is multiplied by the years that have transpired between purchase and sale. The resulting amount is finally taxed at the corresponding tax rate.
A more in depth analysis of the above brings to light that what is actually taxed is not any increase in value of the land between purchase and sale as at no point is the value of the land at purchase considered and the multipliers and ratios are all applied from the starting point of the value of the land at time of sale of the property only.
If you sold property, you should have settled a payment for Plusvalia Tax and may now be entitled to a refund. Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHAT IS THE SENTENCE HANDED DOWN BY THE CONSTITUTIONAL COURT AND WHAT DOES IT MEAN?
If you have read our other articles you now know that there have been Court Sentences handed down with tax implications, or you may have simply heard about the Spanish Constitutional Court handing down a ruling on the “plusvalia” tax, but may not know exactly what this means.
First of all the Constitutional Court is charged with the interpretation of the Spanish Constitution as highest ranking law in Spain, which all other laws and regulations must abide.
In this matter, Administrative Court number 3 in the northern city of San Sebastian in the Basque Country was hearing a case on a “plusvalia” tax payment and had concerns on the regulation of this tax. Consequently the Judge raised a formal query (“Cuestion de Inconstitucionalidad”) to the Constitutional Court to rule on certain articles of the regulation.
It should be noted that the above query was presented to the Constitutional Court on the tax regulation of the Basque Country which has its own special tax regime in certain matters, separate to the general regime of the rest of Spain. Although the Sentence is handed down considering this regional regulation, the articles on “plusvalia” tax are identical to the articles in the nationwide tax regulation.
In simple terms, the Constitutional Court ruled that the articles in the regional regulation of the “plusvalia” tax were unconstitutional only insofar as they regulated the tax as applied to an increase in property value but did not allow for situations where property may not have had any such increase in value or may have actually even lost value, with no option for taxpayers to prove such loss in value.
Although the Constitutional Court declined to issue ruling on the articles in the nationwide regulation of this tax, the wording of the articles in both laws is identical and the Court is expected to rule soon on the nationwide regulation.
In light of the above it can be argued to claim back amounts paid for this tax in consideration of the ruling from the Constitutional Court.
In addition to the above several of the Regional Supreme Courts, including those of Madrid, Catalonia, Valencia, and recently Andalucia, have ruled that lack of profit denotes lack of increase in property value and therefore as the tax is configured as levied on increase in property value the tax is not applicable when there is no profit.
If you sold property, you should have settled a payment for Plusvalia Tax and may now be entitled to a refund. Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHEN AND HOW CAN I CLAIM
If you sold property you will have settled payment for “Plusvalia” tax; statute of limitations of four (4) years is attached on any claim you may have, so you should seek advice on eligibility to prevent you losing out on your claim.
Some Town Halls are already holding Council meetings to discuss this matter but to date none are acknowledging validity to the refunds and it will be necessary to claim and appeal, even filing motion before the Courts of Justice to achieve recognition of the refund.
A refund is not automatic and must be claimed.
If you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
HOW MUCH CAN I CLAIM AND WHAT WILL IT COST ME?
You should claim your tax payment plus interest since payment was made.
We are undertaking these claims on a no-win / no-fee basis. You should only need to pay the cost of the power of attorney. If you do not have copy of the necessary documents, and we need to obtain duplicates from the relevant authorities (Notary Public’s), these may charge for issuing these duplicates.
If you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHAT DO I NEED TO CLAIM
In order to determine your eligibility for a refund and to file the same we would require the following documents:
- A copy of your purchase Deeds (“Escritura de Compraventa”)
- A copy of your sales Deeds (“Escritura de Compraventa”)
- A copy of your tax payment
- Copy of your passport/s.
- Power of attorney
If you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHAT HAPPENS IF I CAN’T FIND DOCUMENTS, CAN I STILL CLAIM?
In order to determine if you are eligible for a claim, and in due course to submit the claim/s we need certain documents.
a. What happens if I can’t find my purchase or sales deeds?
We suggest you review your files and email. You may have received a copy at some point. Otherwise, if you have a “nota simple” from the Land Registry we can obtain information on where the Deeds were signed and obtain a duplicate copy from the respective Notary Public’s.
b. What happens if I don’t have a copy of the tax payment.
It is quite probable that you never received a copy of the actual payment. Information on this payment should be reflected in the Sales Deeds and we can obtain a duplicate of the payment from the relevant tax authority or the Town Hall.
c. Why is power of attorney needed, what will it say and how can I get it?
In order to file the appeals and if needed, obtain the above documents (Deeds and proof of tax payment), we need power of attorney. This will be specific to submit appeals on this matter and represent you before the relevant authorities and the courts of justice.
We can help you grant power of attorney. If you are in Spain the cost would be around 60 Euros for the Notary Public. If you are abroad, we can prepare a document and talk you through organizing this in your home Country.
WHAT HAPPENS IF I SOLD OR PAID TAX OVER 4 YEARS AGO
If you sold over 4 years ago but the tax was paid within the last 4 years, you are still eligible to claim. If you paid over 4 years ago then unless there are other circumstances, statute of limitations may have run on your claim.
you have heard about a “Plusvalia” tax refund. What does it mean?
Maybe you have recently heard or read about recent court rulings handed down by various Spanish Courts, including the Constitutional Court, charged with ruling on constitutional issues in Spain.
Several of the regional high courts in Spain have ruled on appeals presented for consideration on the legality of the “plusvalia” tax payment on sale of property when such sale incurred losses. The Constitutional Court has also just ruled on the “plusvalia” tax.
As a result of these court rulings many owners who sold property at a loss may now be eligible to claim a refund of the payment made.
Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHAT IS THE PLUSVALIA TAX
When you sold your property you likely had various amounts held back by your buyer, deducted from the sales price to meet various payments. One of these amounts was likely to meet your tax obligation for “Plusvalia” tax.
This is one of the taxes created to finance the Town Halls and is officially termed “Tax on the Increase in Value of Urban Land”, but commonly known as “Plusvalia Tax”, and is a tax which is paid when urban property is sold.
As its name depicts, this is a tax which is levied on the alleged increase in value that the land a property is built upon has experienced between the purchase and the sale dates and is a factor of the number of years the property has been owned. However, it is to note that this tax does not take into consideration the real price paid for property, nor actual market value, and instead it is in general calculated by a mathematical formula applied to the value assigned to the land in the public record of the Cadaster.
The Cadaster is one of the various public property records, one which in this case contains basic information on title to property but moreover contains information on the location of property and its value. As such it assigns value to property and this value is used by Town Halls to calculate various taxes, such as the local rates (Impuesto sobre Bienes Inmuebles), and the Plusvalia Tax.
The Plusvalia Tax is not calculated based upon market value nor is it tax levied on actual profit obtained by the difference between sales price and purchase price of property, and is instead levied on the value of the land contained on the Cadaster record at the time of sale of property, with no consideration for the actual circumstances of the sale.
If you sold property, you should have settled a payment for Plusvalia Tax and may now be entitled to a refund. Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
I PAID CAPITAL GAINS TAX, IS THIS THE SAME THING?
When you sell property various tax obligations arise. Although the plusvalia tax is a tax on the increase in value of the property (the land) it is a separate tax from the Capital Gains Tax, and although you may have had amounts withheld by your buyer for both issues, they are different tax obligations. The latter tax is the actual tax on your profit from the sale and is paid to the Spanish State Treasury, whereas the former “Plusvalia” is a tax paid to the Town Hall.
If you sold property, you should have settled a payment for Plusvalia Tax and may now be entitled to a refund. Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHERE AND HOW IS THE “PLUSVALIA” REGULATED
The Plusvalia Tax is currently regulated by articles 104 to 110 of Royal Legislative Decree 2/2004 which passed the Regulation of Local Property (“Ley Reguladora de las Haciendas Locales”).
The tax plusvalia tax is levied on the value of property in the Cadaster, and section one of article 107 stipulates that the amount subject to taxation is the increase in value of the property expressed as a factor of the number of years the property has been owned, capped at a maximum of 20 (years), but taking into consideration the value of the property at the date the property is sold (second paragraph of the aforementioned article). Subsection a) of the second section to article 107 establishes that the value to be taken into consideration is the value considered to calculate the local rates (Impuesto sobre Bienes Inmuebles), which is the Cadastral value.
Section 3 of article 107 allows to apply a reduction to the property value when certain criteria are met, and section 4 of the same article, establishes that the resulting amount is subject to a percentage depending on the term owned, which is multiplied by the years that have transpired between purchase and sale. The resulting amount is finally taxed at the corresponding tax rate.
A more in depth analysis of the above brings to light that what is actually taxed is not any increase in value of the land between purchase and sale as at no point is the value of the land at purchase considered and the multipliers and ratios are all applied from the starting point of the value of the land at time of sale of the property only.
If you sold property, you should have settled a payment for Plusvalia Tax and may now be entitled to a refund. Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHAT IS THE SENTENCE HANDED DOWN BY THE CONSTITUTIONAL COURT AND WHAT DOES IT MEAN?
If you have read our other articles you now know that there have been Court Sentences handed down with tax implications, or you may have simply heard about the Spanish Constitutional Court handing down a ruling on the “plusvalia” tax, but may not know exactly what this means.
First of all the Constitutional Court is charged with the interpretation of the Spanish Constitution as highest ranking law in Spain, which all other laws and regulations must abide.
In this matter, Administrative Court number 3 in the northern city of San Sebastian in the Basque Country was hearing a case on a “plusvalia” tax payment and had concerns on the regulation of this tax. Consequently the Judge raised a formal query (“Cuestion de Inconstitucionalidad”) to the Constitutional Court to rule on certain articles of the regulation.
It should be noted that the above query was presented to the Constitutional Court on the tax regulation of the Basque Country which has its own special tax regime in certain matters, separate to the general regime of the rest of Spain. Although the Sentence is handed down considering this regional regulation, the articles on “plusvalia” tax are identical to the articles in the nationwide tax regulation.
In simple terms, the Constitutional Court ruled that the articles in the regional regulation of the “plusvalia” tax were unconstitutional only insofar as they regulated the tax as applied to an increase in property value but did not allow for situations where property may not have had any such increase in value or may have actually even lost value, with no option for taxpayers to prove such loss in value.
Although the Constitutional Court declined to issue ruling on the articles in the nationwide regulation of this tax, the wording of the articles in both laws is identical and the Court is expected to rule soon on the nationwide regulation.
In light of the above it can be argued to claim back amounts paid for this tax in consideration of the ruling from the Constitutional Court.
In addition to the above several of the Regional Supreme Courts, including those of Madrid, Catalonia, Valencia, and recently Andalucia, have ruled that lack of profit denotes lack of increase in property value and therefore as the tax is configured as levied on increase in property value the tax is not applicable when there is no profit.
If you sold property, you should have settled a payment for Plusvalia Tax and may now be entitled to a refund. Statute of limitations is attached and therefore if you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHEN AND HOW CAN I CLAIM
If you sold property you will have settled payment for “Plusvalia” tax; statute of limitations of four (4) years is attached on any claim you may have, so you should seek advice on eligibility to prevent you losing out on your claim.
Some Town Halls are already holding Council meetings to discuss this matter but to date none are acknowledging validity to the refunds and it will be necessary to claim and appeal, even filing motion before the Courts of Justice to achieve recognition of the refund.
A refund is not automatic and must be claimed.
If you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
HOW MUCH CAN I CLAIM AND WHAT WILL IT COST ME?
You should claim your tax payment plus interest since payment was made.
We are undertaking these claims on a no-win / no-fee basis. You should only need to pay the cost of the power of attorney. If you do not have copy of the necessary documents, and we need to obtain duplicates from the relevant authorities (Notary Public’s), these may charge for issuing these duplicates.
If you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHAT DO I NEED TO CLAIM
In order to determine your eligibility for a refund and to file the same we would require the following documents:
If you sold property within the last few years we urge you to seek advice on your eligibility for a claim.
WHAT HAPPENS IF I CAN’T FIND DOCUMENTS, CAN I STILL CLAIM?
In order to determine if you are eligible for a claim, and in due course to submit the claim/s we need certain documents.
a. What happens if I can’t find my purchase or sales deeds?
We suggest you review your files and email. You may have received a copy at some point. Otherwise, if you have a “nota simple” from the Land Registry we can obtain information on where the Deeds were signed and obtain a duplicate copy from the respective Notary Public’s.
b. What happens if I don’t have a copy of the tax payment.
It is quite probable that you never received a copy of the actual payment. Information on this payment should be reflected in the Sales Deeds and we can obtain a duplicate of the payment from the relevant tax authority or the Town Hall.
c. Why is power of attorney needed, what will it say and how can I get it?
In order to file the appeals and if needed, obtain the above documents (Deeds and proof of tax payment), we need power of attorney. This will be specific to submit appeals on this matter and represent you before the relevant authorities and the courts of justice.
We can help you grant power of attorney. If you are in Spain the cost would be around 60 Euros for the Notary Public. If you are abroad, we can prepare a document and talk you through organizing this in your home Country.
WHAT HAPPENS IF I SOLD OR PAID TAX OVER 4 YEARS AGO
If you sold over 4 years ago but the tax was paid within the last 4 years, you are still eligible to claim. If you paid over 4 years ago then unless there are other circumstances, statute of limitations may have run on your claim.