Tax on the increase in land value

Tax on the Increase in the Value of the Land of Urban Nature


The Tax Advisory Department of KOPERUS reports that on July 9, 2018, the Constitutional Court has ratified that the tax on the increase in land value (Municipal Capital Gain) will not be required, when this has not really occurred, while before it was enforceable by the mere fact of transmission.

The Constitutional Court establishes constitutional doctrine clarifying the doubts that had appeared during the last months about the constitutionality of the Municipal Capital Gains Tax in cases where there was no increase in the value of the land.

This is known as the Tax on the Increase in the Value of the Land of Urban Nature and is a direct and optional municipal tax and is taxed by the value of the land, not the construction and generally coincides with the cadastral value. This obligation arises in the case of free transmissions (for example, donations or inheritances) and the obligor is the one who acquires, also in the case of transmissions for a sale, being the obligor who transmits the property or the one that constitutes or transmits a real right.

This Court considers the interpretative criteria on articles 107.1, 107.2 a) and 110.4 of the TRLHL. They conclude that the first two articles suffer from a partial unconstitutionality, this means that they are applicable as long as the taxpayer has not been able to prove that the transfer of ownership of the land by any title without an increase in its value or, an economic capacity susceptible to be taxed. Regarding article 110.4 of the TRLHL, it is unconstitutional and void in any case, because it prevents passive subjects who can prove the existence of a situation in which there has been no economic increase.

To prove that there has been no increase, any title on the ground, such as the constitution, acquisition and transmission of any real right of enjoyment or limitation of the domain will serve.

In the KOPERUS office we process purchases, inheritances, donations and other property transfer operations. Advising our clients at all times and ensuring their interests, with the preparation of all kinds of documents and paperwork that are necessary for the defense of their rights. We liquidate the taxes, we present the requests for tax exemption, we carry out the registration process in the Land Registry and any other procedure that is required.

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