The Ministry of Finance and Public Function is considering bringing to the next Council of Ministers a royal decree-law to reform the articles that have been declared unconstitutional in the Tax on the Increase in the Value of Urban Land, known as municipal capital gain.
As a consequence of the public holiday on the 9th in Madrid, the appointment of the ministers will be on Monday. In the absence of knowing the details of the text, sources from the Ministry led by María Jesús Montero cited by Europa Press have indicated that the royal decree law will be adapted to the sentence issued this week by the Constitutional Court, so it is foreseeable that the Treasury will reform the Tax so that the capital gain can only be taxed when it actually occurs and not as up to now, when there were cases in which the gain was nil and the tax managed by the municipalities continued to be settled.
The same Minister of Finance assured on Wednesday during the defense of the draft Law of the General State Budgets (PGE) of 2022 in the debate of total amendments in Congress, that this reform will give “tranquility and security” to both taxpayers as well as the financing of local entities.
Precisely that same day the Constitutional Court released the ruling, which it already advanced on October 26, in which it declared unconstitutional certain articles of this tax that, in practice, implies the nullity of the same by rejecting the system of calculation of capital gains.
Through a royal decree-law to enter into force immediately
This means that since October 26, when the sentence was signed, the tax cannot be settled while the Government does not replace it with a new legal text, hence the haste of the Treasury to have it ready as soon as possible and also do it through a royal decree-law, which allows it to enter into force immediately, once published in the Official State Gazette (BOE), without prejudice to the fact that it can subsequently be processed in Parliament as a bill subject to changes.
In fact, the magistrates of the Constitutional Court (TC) Cándido Conde-Pumpido and María Luisa Balaguer already warned in their joint private vote against the ruling that the opinion “causes an unnecessary and unbalanced regulatory vacuum that will benefit those who, even having obtained significant capital gains , they will not be forced to pay the tax. ” For this reason, they considered that the legislator should have been given a period of time to implement an alternative system to the current one to tax capital gains.
The judgment, of which Judge Ricardo Enríquez has been the rapporteur, indicates that the method of calculating the tax base leads to a result that departs “notably” from the real values of the properties in the real estate market. However, the high court ruling does not allow taxpayers to claim self-assessments that are already final or that have not been appealed at the date of the sentence.
After noting that since 2017 they have been calling the legislator to modify this tax, the ruling indicates that situations that can be reviewed based on this ruling cannot be considered the tax obligations accrued by this tax that have been decided on the date of issuance of the same. definitively by means of a judgment with force of res judicata or by means of a final administrative resolution.