In the light of a recent ruling by the Spanish Constitutional Court, vendors can claim back €4,500 on average in overpaid tax, according to a new study.
When you sell a property in Spain you have to pay a municipal tax called the Plusvalia, which is based on the rateable value of property and the number of years that have passed since the property last changed hands. Properties increase in value for many reasons, but one of them is because of public improvements to the area carried out by the local government and the community at large. The Plusvalia gives the municipal government a share of the profits that it has helped create.
But what if property prices fall? Does the municipal government share the loss? No way. Up until now the Plusvalia has been calculated on the basis of assumed profits, forcing loss-making vendors to pay a type of capital gains tax on losses.
But a recent ruling on the Plusvalia by the Spanish Constitutional Court in a case in the Basque province of Guipúzcoa declared that the local government had no right to charge the Plusvalia tax in this case, because property values had fallen.
In the light of that ruling, an outfit called Reclamador.es (Reclamar means reclaim) has calculated that vendors in recent years can claim back an average of €4,500 in overpaid Plusvalia taxes, with a total claim pot of €2.5 billion. I read about this in the Spanish daily El Mundo, but it has to be said the story rather favours the business of Reclamador.es.
The Spanish appraisal firm Tinsa has calculated that 550,000 vendors have a case to reclaim overpaid Plusvalia tax.
Contact your Spanish lawyer if you think you might have a case.
nevillewillmott says:
Interesting. Does this reasoning/court judgement have implications for the 3% of sale price withheld by Agencia Tributaria, for CGT liabilitities of non-residents, when the property price has decreased?
barrymc1 says:
Hello Mark,
I notice there haven’t been any updates on the theme of the “plus valia” tax being charged to sellers of property when clearly making a loss on the transaction. Whilst I appreciate that the constitutional courts declared that the tax shouldnt be collected, it is still being withheld and made virtually impossible to reclaim. In the case of non-resident sellers, it is withheld by the buyer, or in one case I worked on, by the gestor appointed by the buyers mortgaging bank (ING) to protect the buyer, and then on trying to reclaim it seems necessary to reclaim the tax in the name of the buyer, and not the actual vendor….so the buyer gets the refund, if at all it is ever refunded.
Anyway, any experiences from others out there?