Let’s review the concept: the municipal capital gains is a tax that must be paid by individuals to their corresponding municipality. It is calculated based on the price of an urban plot of land (obtained through inheritance, purchase-sale or donation).
Up to now, this tax was being paid by individuals who had sold their property “without making a profit from the transaction.”
For that reason, a Constitutional Court recently ruled on the subject backing the decision to exonerate any payment this tax, by declaring the decision of the municipal court as unconstitutional. Therefore, the payment of such wealth tax cannot be applied automatically in cases of lack of revaluation.
The Constitutional Court considers that the normative “infringes the principle of economic capacity.” Was this ratification truly necessary? The experts believe so, because despite previous rulings, the municipalities continued to charge for this tax even without a “taxable transaction.”
In theory, this tax imposes taxation on the revaluation of the property when it is sold, but in practice, it was always paid, even if the property had lost value. We commented about this in other article about capital gains or wealth tax where we offer details related with the tax’s payment.
Despite the economic crisis, many municipalities reviewed and revaluated the cadastral value of the properties, and only in 2015 collected close to 2,439 million Euro charging such tax.
How to request the reimbursement of the capital gains tax paid before the municipality:
The procedure to pay the municipal capital gains tax includes some steps which establish that the payment must be made within the following 30 business days after the transfer if the same is made in life, and when it comes to inheritances the period can be stretched out to six months that can extended for up to six additional months.
Upon expiration of said periods and after the tax payment has been made before the Municipality, the procedure to follow is the request of the taxpayer for the “return of unlawful income” you have 3 options:
- Those who paid these taxes will be able to file a claim only in the case the tax payers appealed this tax when the Town Hall issued it.
- In case that the taxpayers submitted the tax (this second case it is not very usual).
- If you are not in any of this 2 cases, you will have to start a procedure in front of the Court to appeal the tax and claim back the money already paid.
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A document justifying the payment of the Capital Gains tax.
- Documents confirming the right for reimbursement (purchase-sale agreement, appraisal, etc.), which demonstrate the economic loss experienced due to the transfer.
- The form chosen to make the reimbursement effective (for bank transfers indicate the checking account number) or crossed or nominative check.
- Inform if there are other pending debts with the same Administration.
REMEMBER: The right for reimbursement of unlawful income prescribes after 4 years. The days are counted as of the date when the unlawful income took place (when the same was deposited to the municipal Capital Gain).
If you live in Comarca de la Axarquía, in municipalities like Algarrobo, Benajarafe, Frigiliana, Competa, and Torre del Mar among others, you can contact us for accounting or solicitor services related with the pay of your taxes.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Accountant | Lawyers–Solicitors) Velez-Malaga and Torre del Mar (Málaga – Andalusia)
Author: Rosana Tejada
Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Tejada Solicitors, which comprises a group of English speaking solicitors, economists and architects.