The Constitutional Court declares the municipal capital gains tax null




The plenary session of the Constitutional Court has declared null the municipal capital gains tax to declare unconstitutional and null articles 107.1 second paragraph, 107.2 a) and 107.4 of the text recast of the Local Treasury Law. The municipalities of Spain collect about 4,000 million euros per year with this tax.

The sentence, of which the magistrate Ricardo Enríquez has been rapporteur, considers that they are unconstitutional and null because it establishes an objective method of determining the tax base of the tax on the Increase in the Value of Urban Land that determines that it has always existed increase in the value of the land during the period of the imposition, regardless of whether there has been such an increase and the actual amount of that increase.

The ruling declares the intangibility of the firm situations existing before the date of the approval of the sentence. The ruling has the concurring individual vote of President Juan José González Rivas and the dissenting votes of Judge Cándido Conde-Pumpido and Judge María Luisa Balaguer.

From the city council of the capital of Spain they affirm that they still do not have knowledge of the sentence and that “it seems prudent to wait to know the content to pronounce on the consequences that it will have in the chapter of income”.

Capital gains It is the second tax with the highest collection capacity of all those managed by the Madrid city council. For 2021, it is planned to collect a figure close to 500 million euros for this tribute in the city council’s income budget.

They explain that since 2017 the regulation of this tax (popularly known as capital gain), has been altered after being issued various judgments by both the Constitutional Court and the Supreme Court.

In March 2018, the popular parliamentary group presented a bill for the reform of the Local Tax Law in relation to the capital gains tax, which did not succeed and was not taken up by the Sánchez government upon arrival in La Moncloa. Since then, the lack of initiative of the Government of Spain Not only has it not resolved the situation, but it has allowed it to worsen, by issuing other sentences that incorporate new doubts regarding when the tax should be understood to be confiscatory.

And they add that “on repeated occasions the Government of the nation has been demanded not to prolong its legislative inactivity in matters of capital gains and to undertake a legal reform of this tax to provide it with greater legal certainty and at the same time compensate city councils for the loss of income from this tax “, since” the municipalities do not have the capacity to be able to solve the problem ourselves. The FEMP, the mayor and the delegate herself in an intervention in the Senate claimed that the Local Tax Law should be urgently reformed to give greater legal certainty to this tax. But once again, Sánchez has turned a deaf ear to our requests.

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