THE CONSTITUTIONAL CANCELS THE MUNICIPAL GOODWILL
Yesterday, the Plenary of the Constitutional Court declared this tax void by classifying articles 107.1 second paragraph, 107.2 a) and 107.4 of the consolidated text of the Local Tax Law as unconstitutional and invalid. The town councils of Spain collect around 2,500 million euros per year with this tribute, being one of
the main sources of financing of several large municipalities
What is the municipal capital gain?
The term municipal capital gain is as it is known colloquially, but in reality it is called Tax
on the Increase in Value of Urban Lands.
“It is a tax that is levied on the increase in value experienced by urban land from the moment a natural or legal person acquires the property until it is transferred.
It comes into play when the sale, donation or
an inheritance of a property, mainly.
What will happen now?
The solution for what could happen from now on is not
clear since the exact content of the ruling is not known.
The Constitutional Court has communicated, yes, that it will not have retroactive effects for those situations that are already firm.
The most unanimous position among the sources consulted is that the municipalities, predictably, will paralyze the settlement of this tax until the Treasury enacts the new regulation of municipal capital gains.
