The Tax on the Increase in Value of Urban Land, better known as “municipal capital gains tax”, is a conflictive tax that is levied on the increase in value of urban land -whether or not there is construction- as well as real estate with special characteristics -BICE- that is a consequence of the transfer of ownership of the land as well as the constitution or transfer of any real right, of enjoyment or limiting the ownership, over the aforementioned land.
Following the questioned ruling of the Constitutional Court of 2021 in this regard, Royal Decree-Law 26/2021, of 8 November, was passed, which reformed the calculation of the tax in such a way that a new method of calculating the tax base was introduced; Following this reform, there is no longer an objective system (which was the cadastral value of the land by coefficient) and taxpayers are allowed the option of paying tax on the real capital gain of the land, considering as such the difference between the sale price and the purchase price, for which purpose the local councils are given certain powers to verify these values.
Capital gains tax is a tax exclusively levied by municipalities. Together with the ICIO and the Tax on Sumptuary Expenses on the use of private hunting and hunting and fishing grounds, it belongs to the group of so-called “taxes of a facultative or voluntary nature”. In other words, local councils are free to choose whether or not to levy it, a decision which they formalise by means of their regulatory powers applied through their corresponding tax byelaws.
In addition to a numerous casuistry of cases of non-taxation extended after the latest legislative developments in 2021, the coefficients applicable according to the generation period (years of ownership) have also been updated by the General Budget Law of 2023. The tax, which is already controversial, also has various cases of both objective and subjective exemptions and different taxpayers (in the case of individuals not resident in Spain, or depending on the lucrative or onerous title of the transfer, the taxpayer will be the acquirer or the transferor).
The tax becomes chargeable on the date of transfer, on the date of incorporation or transfer. In these two cases the deadline for filing the tax return or self-assessment (depending on what the tax ordinance determines) will be 30 working days; however, in mortis causa transfers the deadline will be 6 months, extendable up to one year (at the request of the interested party) from the time of the death of the deceased (not the time of acceptance of the inheritance).
Capital gains tax is a tax exclusively levied by municipalities. Together with the ICIO and the Tax on Sumptuary Expenses on the use of private hunting and hunting and fishing grounds, it belongs to the group of so-called “taxes of a facultative or voluntary nature”. In other words, local councils are free to choose whether or not to levy it, a decision which they formalise by means of their regulatory powers applied through their corresponding tax byelaws.
In addition to a numerous casuistry of cases of non-taxation extended after the latest legislative developments in 2021, the coefficients applicable according to the generation period (years of ownership) have also been updated by the General Budget Law of 2023. The tax, which is already controversial, also has various cases of both objective and subjective exemptions and different taxpayers (in the case of individuals not resident in Spain, or depending on the lucrative or onerous title of the transfer, the taxpayer will be the acquirer or the transferor).
The tax becomes chargeable on the date of transfer, on the date of incorporation or transfer. In these two cases the deadline for filing the tax return or self-assessment (depending on what the tax ordinance determines) will be 30 working days; however, in mortis causa transfers the deadline will be 6 months, extendable up to one year (at the request of the interested party) from the time of the death of the deceased (not the time of acceptance of the inheritance).
Following the questioned Constitutional Court Ruling of 2021 in this regard, Royal Decree-Law 26/2021, of 8 November, was passed, reforming the calculation of the tax in such a way that a new method of calculating the tax base was introduced; following this much commented reform, there is no longer an objective system (which was the cadastral value of the land by coefficient) and taxpayers are allowed the option of paying tax on the actual capital gain.
Case a) Objective method.
The first method, the objective method, is calculated on the cadastral value of the land, so it is essential to have a specialised company such as E-F to check that the tax is correctly settled.
Successful case of the objective method:
Cadastral value before Euro-Funding | 5.628.197,12 € |
Cadastral value after Euro-Funding | 717.799,21 € |
Reduction % | 87,25% |
Repayment of undue income (principal only) | 990.564,41 € |
Case b) Real capital gains, capital losses, other cases of non-taxation.
At Euro-Funding we carry out a comprehensive study of the possibilities of optimising the tax either by detecting cases of capital losses, or by auditing the possibility of taxing the real capital gain.
Successful case of capital loss:
Quote IIVTNU before Euro-Funding | 954.220,12 € |
Quote IIVTNU after Euro-Funding | 0,00 € |
Reduction % | 100,00% |
Repayment of undue income (principal only) | 954.220,12 € |
Following the modification of the tax in 2021, there are two calculation formulas for the levy of the tax: on the one hand, the existing one, which was previously compulsory and unique and which consisted of multiplying the cadastral value of the land by a coefficient depending on the number of years of ownership of the property and by the tax rate in force at the time of accrual; on the other hand, the innovation introduced by the legislative reform consisting of the possibility that is open to the taxpayer to – on a voluntary basis – take as taxable base the difference between the acquisition value and the transfer value as long as this value is lower than the base shown by the objective system.
At Euro-Funding we have a multidisciplinary team of technicians competent in cadastral and market valuations, lawyers and tax experts who study the tax from the most appropriate perspective in order to obtain the best savings in your profit and loss account.
Although in theory, capital gains tax is levied on the increase in value of urban land when it becomes apparent as a result of the transfer of ownership or the constitution or transfer of any real right, sometimes situations arise in which not only has this increase not taken place, but there are losses.
However, under the previous legislation, it was obligatory to pay tax on a non-existent capital gain, which led to the absurdity of subjecting to taxation situations that did not express economic capacity. It is precisely this injustice that the recent regulatory change has tried to correct, by allowing taxpayers to prove such a capital loss and not be subject to tax. The burden of proof of the disability, the declaration of the transfer and the provision of the necessary documentation will be borne by the taxpayers. It should be noted that the local councils may carry out the corresponding verifications.
At Euro-Funding we have a multidisciplinary team of technicians competent in cadastral and market valuations, lawyers and tax experts who study the tax from the most appropriate perspective in order to obtain the best savings in your profit and loss account.
We carry out a review of the tax from a 360° perspective:
– Optimisation of the tax base in the objective method.
– Adequacy of the valuation in the subjective method.
– Application for exemption in cases of handicap and application of the different rulings.
At Euro-Funding we have a multidisciplinary team of competent technicians in cadastral and market valuations, lawyers and tax experts who study the tax from the most appropriate perspective in order to obtain the best savings in your profit and loss account.
Our specialisation in the sector, the continuous monitoring of legislative changes, the exclusive digitalisation of all processes for which we have been obtaining recognition since 2019 with the INNOVATIVE SME seal and the up-to-date training of our consultants allows the optimisation of taxation from all available perspectives, achieving numerous cases of success in the reduction of the tax burden of real estate.
Our work is 100% guaranteed to be successful, fees are only charged if a saving is achieved for the client. We have achieved numerous cases of success in the different tax scenarios, either before the transfer, optimising the bases and carefully studying the operation, or requesting – once the transfer has taken place – the refund of undue income, plus the corresponding interest for late payment, of those capital gains that have not expired.
At Euro-Funding we have developed our own Integrated Management System consisting of: ISO 9.001 Quality, ISO 14.001 Environmental, ISO 50.001 Energy Management and Information Security Management 27.001.
We have subscribed to the United Nations Global Compact in the areas of human rights, labour, environmental protection and anti-corruption, complying with the ten principles of the Compact, as set out in its Code of Ethical Conduct.
We have been calculating and registering our Carbon Footprint in the Registry of the current Ministry for Ecological Transition and Demographic Challenge since 2014, maintaining a constant reduction of emissions.
The tax benefits applicable to ICIO may be established: In regulations with the status of law, such as, for example, those that may provide for tax benefits in the General State Budget Laws. In international treaties In tax byelaws. Ampliar información IBI IAE ICIO Plusvalía IBI IAE ICIO Plusvalía What
Review of the tax from the point of view of cadastral and tax management, previously quantifying by providing a valuation report to our clients, the estimated savings that they will obtain in the next IBI bill as well as the Refund of Undue Income of all years not prescribed, if
Checking and updating the parameters that make up the tax for its correct determination. At Euro-Funding we carry out the calculation of the IAE through a tax audit to find out the real situation of the tax, determining the correct amount to be paid. Filtrar IBI IAE ICIO Plusvalía IBI