In the cinephile slang, the popular saying is well known: "second parts were never good", to refer to certain film productions whose first installment was a worldwide success at the box office level not achieving the same subsequent deliveries. However, there are successful sagas and, therefore, second parts, which were able to maintain the level of the first, cite for example, Terminator
Well, as has happened in the film sector, in real life and, more specifically, in the legal-tax sector, sometimes we find situations where the second parties continue to exceed the expectations of taxpayers, we We refer of course to the famous Tax on the Increase in the Value of Urban Nature Lands (IIVTNU), better known as “The municipal capital gain”.
Background. The May 11, 2017 Judgment of the Constitutional Court.
On the occasion of the bursting of the real estate bubble, there have been few transfers of real estate made by taxpayers who saw how the sale price could not cover the purchase cost. This meant declaring a capital loss in its annual declaration of Income Tax for Individuals (Personal Income Tax), or Corporate Income Tax (IS).
However, the municipalities continued to demand and, therefore, liquidating the municipal capital gains tax regardless of the fiscal result of the operation. Some "daring", urged legal action to combat this totally burdensome and harmful situation, which led to some sentences of great media impact that accepted the non-subjection of the taxable event when it was proved that the sale of the property had caused a loss of property For the transmitter.
Judgment nº 59/2017 of May 11, 2017 of the Constitutional Court, hereinafter TC, came to declare the unconstitutionality of the precepts of the Law of Local Haciendas (articles 107.1, 107.2.a) and 110.4).
It was noted in the aforementioned judgment that: "The precepts in question must be declared unconstitutional, although only to the extent that they have not planned to exclude from the tribute the inexpressive situations of economic capacity due to the absence of value increases".
Manifest later that also “Art. Must be declared unconstitutional and void. 110.4 LHL, by preventing taxpayers who can prove the existence of an inexpressive situation of economic capacity ”.
Therefore, the TC declared the precepts of the Law of Local Haciendas unconstitutional to the extent that they had not foreseen cases in which there may be no economic capacity subject to taxation, as there is no increase in land value and, also, by prevent the taxpayer from providing evidence to the contrary, to show that non-increase in value.
Effects of the Judgment of the Constitutional Court. Is the tax still valid?
As we have indicated, the TC annulled the municipal capital gain for those inexpressive cases of economic capacity. In "Roman Paladino", when real estate is transferred with losses. In addition, the TC, urged the Government, to modify the regulations to establish the means and procedures of proof that allow to accommodate the situation of the tax to the constitutional doctrine.
To this day, that is, nine months after the Judgment, the reform has not even begun to be processed in the parliamentary way. This is motivating an increase in legal uncertainty both for taxpayers and for the municipalities responsible for managing and collecting this tax, because we are in a kind of legal limbo until the legislator definitively reforms the tax.
Therefore, to the question: is the tax in force ?, we can say that, from a legal point of view, the matter is not clear. After years of litigation, at least, since 2012, and several Judgments of Superior Courts of Justice (TSJ) that gave the reason to the taxpayers who claimed that they should not pay the tax because they had no increase in value, the TC , has annulled key precepts of the tax and urged the legislator to reform the law that regulates it.
The cancellation of the tax only affects certain items, but since they are the ones that determine the calculation of the tax, we already have Judgments that understand that it cannot be settled, which cancels it even in cases of credited earnings.
And if there is an increase in value in the sale?
A Judgment of the Contentious-Administrative Court number 2 of Barcelona has exempted a taxpayer from the payment of goodwill even though there was an increase in value, which was accredited by an expert report, because the Government has not reformed the tax and considers that there is no way to liquidate it and, therefore, any liquidation must be annulled. Said Judgment, follows the criteria of other TSJs such as Madrid, which, by means of Judgment of July 17, 2017, came to establish that any liquidation made under the precepts that were declared unconstitutional, would not be adjusted to Law.
If after the Judgment of the TC we were clear that any transmission with losses could imply the non-subjection to the taxable event of the tax, now, we find that certain Courts and Courts are annulling the settlements even in cases of credited earnings, so He said at the beginning of this article, sometimes, "the second parts, yes they were good."
Miguel Angel Molina Martinez
Partner.
TOMARIAL Lawyers and Tax Advisors.
Media Appearance:
