The Plusvalía tax is generated by the transfer of a property to another person. Normally, the seller pays this tax in case of a sale, while in cases of inheritance or donation, the person who receives the property is responsible. If the seller is a non-resident in Spain, the buyer becomes the substitute taxpayer.
Constitutional Court Decisions
Over the last few years, the Spanish Constitutional Court has repeatedly declared the Plusvalía tax unconstitutional. The most recent decision ruled that the way of calculating the taxable base was not in line with the Spanish Constitution. Previously, the Court had already declared that no tax could be applied when there is no real gain from the sale of the property.
This situation created uncertainty until the Spanish Government approved a new regulation, introducing a revised method for calculating the taxable base in compliance with the Constitutional Court’s ruling.
Current Regulation: Two Possible Scenarios
Under the new regulation, there are two possible situations when calculating the Plusvalía tax in Spain:
1. When There Is a Loss
If the seller has a loss on the sale, there is no obligation to pay this tax. However, the seller must inform the Town Hall and provide proof of the loss, usually with the public deeds.
2. When There Is a Gain
If the seller obtains a profit from the sale, they must declare it and pay the tax at the Town Hall. The seller can choose between two calculation methods:
- Real Method: Calculated by the difference between the purchase price and the sale price, taking into account the land value.
- Objective Method: Based on the number of years the property was owned (up to 20 years) and the new coefficients set by the Government.
The final tax amount depends on the municipality where the property is located, as each Town Hall can apply a maximum rate of up to 30% of the taxable base.
Conclusion
The Plusvalía tax in Spain has undergone major changes due to Constitutional Court rulings. Today, sellers must carefully assess whether they had a gain or a loss and choose the most beneficial method of calculation. With the right legal advice, navigating this process can be straightforward and compliant with current regulations.
