Podcast What is capital gains tax and how does it affect you?
Finance Policy had reports on the capital gains tax that asked to anticipate the veto of the TC
The
Constitutional Court
has annulled the
municipal capital gains tax
with which Spanish city councils collected around
2,500 million euros
each year
.
Faced with this situation, the mayors demand more money from the Government to be able to mitigate the losses and many doubts arise about what will happen from now on.
Q. What is the municipal capital gains tax and how does it affect us?
A.
Capital gains tax is a municipal ownership rate that is applied in all cases of transfer of a property to another person, whether it is a sale, an inheritance or a donation.
It must be paid in 30 days, except in inheritances that the payment term is six months and is set automatically by multiplying the cadastral value of the land of each house by some coefficients established by each municipality based on the years of ownership of the property. that property.
That is, the years that you have had it in your possession if you are the selling party, because in the case of a sale it is the selling party who pays it.
Q. What problems does the tax present?
R.
What records is the increase in the value of the property but it applies the same even if the property is now worth less than when you bought it.
Thus, it applies whether you have made money or if you have not done it with the sale.
This happens because it is calculated on something theoretical, on a revaluation based on the cadastre that may not be such.
It assumes a profit and does not enter other variables such as price or profit.
Q. The Constitutional Court has now knocked it down and it is illegal, but why is it unconstitutional?
R.
Because it is wrongly calculated.
It is the third blow that the Constitutional Court gives to the municipal capital gains tax and the final one.
The Court now considers that the calculation of the tax is unconstitutional because the objective calculation does not correspond to reality and affects the principle of economic capacity contained in article 31 of the Spanish Constitution.
Q. What will happen now? Those who have paid the tax that has now been declared illegal will be able to get their money back?
R.
In the ruling, the Court makes it clear that this resolution does not have retroactive effects and the legislator has to modify current regulations and adapt them to constitutional requirements if they want to continue collecting this tax from citizens.
Of course, the municipalities, with the current ruling of the TC, will not be able to continue collecting the tax unless there is a new regulation of the same.
Q. How do municipalities feel about this decision and what are they asking for?
R
.
The municipalities are afraid because the municipal capital gain is very important for the collection of the large councils and tourist municipalities.
For this reason, they ask for a compensatory fund so that while they are not collecting the tax, the Government contributes those funds to them and thus they can alleviate the hole that is going to be generated.
Q. Will there be a new regulation?
A.
Yes, the Ministry of Finance has already issued a statement in which it says that it already has a draft of the reform.
Q. Therefore ... Will this tax have to be paid again?
A.
Yes. The idea is to adapt and regulate it so that it is no longer unconstitutional.
In this way, the municipalities will be able to continue obtaining those funds that represent a good part of their income.
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