On November 9, Royal Decree-Law 26/2021, of November 8, was published in the BOE, which adapts the revised text of the Local Tax Regulatory Law to the recent jurisprudence of the Constitutional Court regarding the ' Tax on the Increase in Value of Urban Land, the well-known municipal capital gain.

This Royal Decree-Law approves the new regulation to calculate the Tax on the Increase in Value of Urban Land (IIVTNU), given that the aforementioned Judgment of the Constitutional Court declares the unconstitutionality, exclusively, of the method of calculating the tax base of that tax.

The judgment also expressly establishes that it is not possible to request the rectification of self-assessments submitted prior to October 26, 2021, against which rectification had not been previously requested, nor of settlements and tours, which were not contested. , prior to that same date.

Since when will the new regulations apply?

Its entry into force took place on November 10, and although the City Councils will have to adapt their tax ordinances in the next 6 months, until now they will be able to settle the tax in accordance with what is established in the Decree-Law.

Will it be retroactive?

No, it will not have retroactive effects, so that the operations carried out between 10/26/2021 and 11/10/2021, when the Royal Decree-Law came into force, in principle will not be subject to the aforementioned municipal tax.

Nor, in principle, are cases that correspond to taxable events prior to these dates and that have not been settled (for example: inheritances pending acceptance) are subject to this tax.

What changes are introduced?

1) The first novelty introduced is the taxation of capital gains generated in periods of less than one year. The RDL imposes the taxation of those operations of sale, inheritance and donation, as long as they generate a capital gain, even if a year has not elapsed since their last transmission.

2) The second novelty is the possibility of choosing between two systems, because that is how the Constitutional Judgment itself imposed it when determining that the calculation of the capital gain could not be limited to a single method. The two systems that are articulated are the so-called objective and the one that responds to the really generated surplus value.

- “Objective” system: it is the same as that up to now has been applied, it consists in that the taxable base of the tax is the result of multiplying the cadastral value of the land at the time of accrual, but applying new coefficients that are already set by the Decree itself and that they will be updated, limiting the capacity of the Town Councils when approving them, since they will only be able to correct them downwards (up to 15%) depending on their degree of updating.

- “Real Capital Gain” system: which can be used in those transfers of a property in which there is land and construction. Here, the real capital gain of the land will be equal to the difference between the sale price and the acquisition price after applying the proportion that represents the cadastral value of the land over the total cadastral value. That is, it will be taxed based on the real capital gain obtained at the time of the transfer of a property and that will be determined by the difference between the transfer value of the land and the acquisition value. If the taxpayer shows that the real capital gain is lower than that resulting from the objective estimation method, he may apply the real one.

These calculations may be subject to verification by the Town Councils, according to another novelty that the standard introduces.

Will I have to pay taxes even if there is no capital gain?

No. The Royal Decree-Law also fulfills the mandate of the Constitutional Court in its Sentence 59/2017 of not subjecting to tax those situations where there is no increase in the value of the land. To do this, a new assumption of non-taxation is introduced for operations in which it is found, at the request of the taxpayer, that an increase in value has not been obtained.

What will I have to do to avoid paying taxes if I have no capital gain?

The interested party must prove the non-existence of an increase in value by declaring the transfer, and must provide all the documents related to the transfer and acquisition. To verify the non-existence of an increase in value, the transmission or acquisition value will be taken as the one that is greater than what appears in the title that documents the operation or the one verified, where appropriate, by the Tax Administration, in accordance with the new faculty that is granted to the Town Halls.