Spanish Constitutional Court knocks down the “plusvalía” taxes when the vendor did not make a profit in the sale of his property

The Spanish Constitutional Court has void the known as “plusvalía tax”, being theoretically speaking a tax to be paid in those cases in which a property has been sold at a profit. However this tax is paid always, even in those cases in which the vendor has incurred in a loss.

For the Spanish Constitutional Court is not legal to impose a taxpayer to pay a tax when there has not been such economic profit.

Therefore, the ruling pronounced by the Spanish Constitutional Court
will force to modify this local tax, technically called Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana, being an extremely important source of income for the Spanish Town Halls.

The Spanish Constitutional Court considers unconstitutional those taxes affecting those situations in which there is not such an economic profit, being non existent, virtual or invented.

This tax works against the Spanish Constitution, as taxes in an objective way the tax to pay when selling a property and it is calculated taking as a reference the cadastral value and the length of time the property has been owned the . Therefore it is calculated not taking into consideration whether the property owner has made a profit or not, not allowing the property owner any actions against the calculation.