Is it necessary to pay the tax of plusvalía municipal when there has been no increase in the value of the transferred land?

The tax on the increase in value of urban land, commonly known as tax of plusvalía municipal, is the tax levied on the increase in value that an urban land has had over time as a result of a transfer of its property, either sale, donation or inheritance. It should be pointed out that this tax is only levied on the increase in the value of the land, and that, in principle, it is independent and has no relation to the purchase price of the property.

In each of these forms of transmission, and unless otherwise agreed, the plusvalía is assumed by the seller in the sales, the donee in the donations, and of course the heir or legatee, in the inheritances or legacies.

The now famous Judgment of the Spanish Constitutional Court 59/2017, of May 11, established that the tax of plusvalía municipal was unconstitutional in those cases in which there is no increase in the value of the land at the time of transmission.

Applying this doctrine, in February 2021 the Contentious-Administrative Court No. 1 of Palma de Mallorca has ordered the Calvià City Council to refund the amount of 13,131 euros paid by the taxpayer as plusvalía, considering "the lack of value increase" in the transaction.

In summary: If you sold your property, received it as a donation or inheritance, and as long as there has been no increase in the value of the transferred land, you can claim the entire amount paid for the tax of plusvalía from the City Council.

If the claim by Administrative Procedure is rejected, it will be necessary to go to the Court procedure, for which it is advisable to carry out a detailed study before filing the lawsuit into the Administrative Litigation Courts.

As long as we are on time, the chances are high. At Legal Steps, a Law Firm specialized in Real Estate Law, we are at your disposal for any advice in this regard.