The Constitutional Court annuls the municipal surtax
In theory it taxes the revaluation of real estate when they are sold but in practice it is always paid, even if they have lost value.
The resolution, which the Vice-President of the Court has been rapporteur, Adela Asua, states that “in no case can the legislator establish a tax by taking into consideration acts or facts that are not exponents of actual or potential wealth.”
That is, for the Constitutional it is not legal to impose a tax when there has been no economic gain.
Thus, the ruling issued by the full TC will force to reform this local tax, technically called Tax on the Increase of Value of Urban Land, an important source of income for municipalities.
The TC considers unconstitutional taxes that affect “those cases in which the economic capacity taxed by the tribute is not already potential, but non-existent, virtual or fictitious.”
It is therefore up to the legislator, from the publication of the judgment, to carry out modifications or adaptations of the legal regime of the tax that allow not to subject to taxation situations where there is no increase in the value of urban land, TC.
In other words, these local taxes should be redesigned so that “situations” are not recorded in which there has been no economic gain or “taxpayers are prevented from proving that an increase in value has not actually occurred.”
The ruling of the Constitutional Court, unanimously adopted, has partially estimated the issue of unconstitutionality raised by the Administrative Court No. 3 of Donostia, in relation to several Articles of Regional Regulation 16/1989, of July 5, of the Tax On the Increase of Value of Urban Land of the Historical Territory of Gipuzkoa.
The Court considers that the said tax is contrary to the principle of economic capacity, provided for in the Constitution.
The disputed rule establishes a tax on the surplus value of urban land, a tax that is earned at the time of sale of the property and which is calculated objectively from its cadastral value and the years (between A minimum of one and a maximum of twenty) during which the owner has been the owner of the same.
That is, it is calculated so that it does not take into account whether the property has gained or not value and generates a fiction of economic increase that, in addition, prevents the individual any evidence to the contrary.
The ruling recalls that the principle of economic capacity is not only predicated of the tax system as a whole, but must be present in each tax. “It does not fit in our system,” affirmed the Tribunal, “taxes that do not fall on any source of economic capacity.”
“Imposing to taxpayers the obligation to bear the same tax burden that corresponds to the situations of increases arising from the passage of time (…) directly contradicts the principle of economic capacity guaranteed by the Constitution,” says TC