Lozano Schindhelm wins the first trial against the Plusvalía of Calpe

Lozano Schindhelm has successfully sued against the taxation of Plusvalía (municipal value added tax) by the City Hall of Calpe. The final judgment of the Administrative Court No. 2 of Alicante from November this year condemns the Town Hall to repay the paid taxes plus default interest and to pay the costs.

In the concrete case, the saleswoman had sold her property for a lower price as purchased. There was thus a loss of value. Nevertheless, the City Hall of Calpe demanded the payment of the municipal profit tax, because at that moment the far-reaching judgment of the Constitutional Court of 11 May 2017 had not yet been spoken. In this sentence the Constitutional Court declared the taxation of Plusvalía in cases where there has been no increase in value unconstitutional. But even after the judgment, the city hall refused to take back the collection of the tax, for which reason the seller filed suit.

The Administrative Court of Alicante has now ruled that the burden of proof that there has been an increase in value lies with the town hall. This can be done through expert appraisals. According to the judgment it is not the seller who has to prove that there has been a loss of value through an expert opinion, but the submission of the purchase and sale deeds is sufficient. In the present case, as evidenced by the documents, the property had lost value and the town hall had not submitted an expert opinion according to which the value would have increased. The court came to the conclusion that in this case no Plusvalía is payable and withdrew the tax assessment.

So far, the legislature has not yet responded and adapted the relevant rules to the judgment of the Constitutional Court. Until then, the town halls may not demand a Plusvalía for a sale where there is a loss of value. In fact, judgments of certain administrative tribunals, for example, by the Administrative Court No 1 of Santander, even suggest that the tax can not be levied even if the value of the property increases, as long as the legislature does not specify how this capital increase has to be determined.

The tax experts of Lozano Schindhelm advise private clients and companies legally and tax-wise regarding the taxation of their real estate transactions. Together with our partners of the Schindhelm Alliance, with more than 200 lawyers in 25 offices in 12 countries we are there for you, where you need us. We speak your language and advise you in our habitual quality.