Date: 1-12-2024
Was the municipal capital gains tax paid without an increase in value? Request a refund, even with a firm settlement
The Supreme Court (TS) offers new opportunities for taxpayers to claim a refund of the municipal capital gains tax, especially in cases where the sale, inheritance or donation of real estate or land did not generate a capital gain or even losses were recorded. During November, the high court published more than six rulings that, although they do not modify its previous doctrine, facilitate the process of recovering what was paid, even when the settlement or self-assessment of the tax is firm.
New criteria for claiming a refund
The Supreme Court clarifies that refunds cannot be requested based exclusively on the Constitutional Court’s ruling of October 2021, which declared the method of calculating the tax unconstitutional and annulled its general application. Instead, taxpayers must base their claims on different arguments, such as the fact that the tax was applied to operations where there was no increase in value in the land.
This difference is crucial, since the 2021 ruling by the Constitutional Court prevented the challenge of liquidations or self-assessments that had not been claimed before October 26 of that year. However, the Supreme Court details that it is possible to challenge these payments if they are based on other previous rulings, such as that of 2017, which declared some articles of the tax void in situations of losses.
Challenging final liquidations
In one of the rulings of November 21, with a report by Judge María de la Esperanza Córdoba Castroverde, it is established that although it is not possible to appeal liquidations or request the rectification of self-assessments under the criteria of the 2021 ruling, taxpayers can do so by appealing to different arguments, such as those provided by the Constitutional Court in 2017. This criterion applies especially in cases where there was no real capital gain in the operation. On the other hand, a ruling of November 25, drafted by the magistrate Francisco José Navarro Sanchís, recalls that the municipalities have the obligation to review ex officio settlements that are already final if it is proven that they taxed transfers in which there was no increase in the value of the land.
The impact of the rulings and the review of the jurisprudence
The partial annulment in 2017 and total annulment in 2021 of the tax by the Constitutional Court has generated an avalanche of litigation and claims. However, the limits imposed by both the Constitutional Court and the Supreme Court have complicated the panorama, sowing doubts among taxpayers about how to proceed. Little by little, the Supreme Court has been outlining in which cases it is feasible to claim refunds.
In a ruling of November 20, drafted by the magistrate Rafael Tolenado Cantero, the Supreme Court left open the possibility of reviewing and even modifying its jurisprudence to more clearly address the refunds of payments made in situations where there was no increase in value.
How to proceed if you are affected by the tax?
If you paid the municipal capital gains tax even though there was no profit in the operation, you can request an ex officio review from the corresponding City Council. Make sure to base your claim on the most recent rulings of the Supreme Court and the Constitutional Court, especially if your payments were not contested before the 2021 ruling. Jurisprudence continues to evolve, so having specialized advice can make a difference in your case.