The Constitutional Court ends the capital gains tax by reviewing the tax base it used

  • This is the third time that the high court has ruled on this tax, which is one of the main sources of financing for city councils

  • The sentence will have the dissenting votes of Conde-Pumpido and Balaguer, while that of the president of the court will be concurrent

The plenary session of the Constitutional Court has dealt the final blow to capital gains tax, when resolving the question of unconstitutionality presented by the Superior Court of Justice of Andalusia against three sections of article 107 of the revised text of the Law Regulating Local Finance, sources from the high court informed EL PERIÓDICO. This is the third ruling handed down by the high court in relation to this rate, which is one of the first ways to finance municipalities.

The court has stated unconstitutional and therefore void sections 1, 2 and 4 of article 107 of the law regulating local finances, because “it establishes an objective method of determining the tax base of the Tax on the Increase in the Value of Urban Land what determines what there has always been an increase in the value of the land during the tax period “, regardless of whether it has actually occurred and its actual amount.

To prevent the chaos that a sentence of such significance can entail, the ruling, the full text of which will be known in its entirety in the coming days, declares the “intangibility” of the firm situations existing before the date of approval of the resolution, which means that they cannot be touched.

The decision on the constitutional strike that this time focused on the tax base that must be set based on the profit obtained from the sale has been produced by eight votes compared to two, those of the magistrates Cándido Conde-Pumpido and María Luisa Balaguer, who have announced the drafting the drafting of individual votes. The president of the court, Juan Jose Gonzalez RivasIt will also cast a vote, but it will be concurrent, that is, it shares the decision agreed by the majority, but not the reasoning for reaching it.

The magistrate did not participate in the debate Juan Antonio Xiol, because he has abstained, nor Alfredo Montoya, who is still convalescing. To the presentation of Ricardo Enriquez the vice president of the court has joined, Encarnacion Roca, and the magistrates Andrés Ollero, Pedro González-Trevijano, Santiago Martínez-Vares and Antonio Narváez.

Every two years

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The first Constitutional ruling on capital gains tax is from February 2017 and in it established that “in no case may the legislator establish a tax taking into consideration acts or events that are not exponents of real or potential wealth”, which It implies that the tax does not have to be paid if no benefit was obtained from the sale of the home. In theory, this tax was levied on the real estate appreciation when they are sold, but in practice they always had to be paid, even if they have lost value. The failure occurred in response to a Regional regulation of Guipúzcoa.

The second, issued as a result of a matter of unconstitutionality, is two years later and declared unconstitutional the payment of the tax for an amount greater than the increase or capital gain that has actually occurred. On this occasion, the constitutional debate has focused on the tax base that must be set based on the profit obtained from the sale, which when annulled implies a definitive blow to this rate.

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