What does the Judgment of the Constitutional Court 59/2017, of May 11, 2017, refer to Municipal Capital Gain?
This High Court declares null several articles of Local Treasury Law in which the Municipal Goodwill is regulated at the national level. One of the items declared null is one that regulates the tax base of the aforementioned tax which is the one saying how to calculate it. When a law, or part of it (let´s say punctual articles of a law), is declared null according to the Spanish legal system it means that it never existed and was therefore never applied.
Is the Capital Gain Tax or the Local Treasury Law null?
No, the Constitutional Court only declares the tax calculation method null but not "per se" the tax, but when declaring the tax calculation null, it is impossible to calculate it and that makes us question the aforementioned Judgment.
When can I claim the Municipal Capital Gain?
According to the High Court only when the aforementioned Goodwill has been paid in the event of not having found a benefit in the transfer of the real property and provided that the right to claim it has not been prescribed (FOUR YEARS since the end of the voluntary payment period).
Can I claim the Municipal Capital Gain if I have received benefits in the sale of the property or if I inherited it?
In Pagrean we think that yes, we can. We must bear in mind that the Constitutional Court has been clear at the time of noting that only the capital gains paid without benefits in the transfer are declared null. However, we also consider that when the article that calculates the taxable base of the capital gain is declared null and void this makes this calculation impossible and, therefore, it becomes unenforceable, since being null never existed and, as a consecuence, we would be exposed. Only to the prescription of the possible claim(FOUR YEARS) of all those capital gains paid, considering that as long as that "article", which actually does not exist, is not reformed the aforementioned tax is unenforceable and reimbursable until the possibility of claiming it has been prescribed.
What problems can happen over time?
We know that the Supreme Court is still pending to resolve several Municipal Capital Gains claims for the aforementioned. In a certain way we depend on it to know if we are right or not when we claim a Municipal Capital Gain with benefits in the transmission. However, not claiming and being exposed to the aforementioned prescription and if the Supreme Court opposes the return of “capital gains with benefits” would causes us to lose our right to claim and therefore added value would be reimbursable.
What do we expose ourselves to if we claim the Municipal Capital Gain?
At Pagrean we encourage the possibility that everyone can claim the municipal capital gain regardless of the purchasing power that is available. For this reason and to achieve greater reciprocity in favor of law and mutual benefit, we limit ourselves only to claim on behalf of our customers the aforementioned payment.
What would happen if in the end it turns out that the Supreme Court opposes the return of "capital gains with benefits"?
If we have paid to the corresponding City Council on time, absolutely nothing.
What do we recommend from Pagrean?
To claim all the capital gains paid in the last four years and avoid the risk of prescribing our right to claim them, regardless of what the Supreme Court decides.
The Municipal Capital Gain, that tax which supposedly taxed the increase in assets in the handing over of an urban property no longer does so according to the Constitutional Court.
It is not that the tax itself has no meaning or legality, is that the Constitutional Court has ruled on the unconstitutionality of a series of articles that regulate the aforementioned tax and consequently have made it incalculable (until they are reformed articles).
In short, if you have paid the municipal capital gain in a period of less than 4 years and one month (purchase-sales) or 4 years and six months (inheritance), you can recover the amount paid in full.