Cancellation of municipal capital gains tax
Cancellation of municipal capital gains tax
02/11/2021

The City Halls are no longer allowed to demand the Municipal Capital Gains Tax.

The plenary session of the Constitutional Court declares the unconstitutionality and nullity of articles 107.1.2a and 107.4 of the consolidated text of the Local Finance Law, as they are contrary to the Constitutional Principle of economic capacity contained in article 31 of the Spanish Constitution.

The Constitutional Court declares the Municipal Capital Gain Tax null because it establishes an objective method for determining the taxable base of the Tax on the Increase in the Value of Urban Land, which determines that there has always been an increase in the value of the land during the period of the tax, regardless of whether there has been such an increase and the actual amount of that increase.

The ruling of the Constitutional Court will apply to all operations signed as of October 26, 2021. It will remain in force for operations prior to this date. It will not be retroactive, so final settlements before said date may not be appealed.