In this article we are going to address the issue of claiming reimbursement for undue Municipal Capital Gains Tax payment, which may and should be claimed by those whom have sold, or transferred ownership of a property within the last four years, given that the sale or transfer price is inferior to the property acquisition price.
In February 2017, the Spanish Constitutional Court made a ruling in favor of consumers, in this case with regard to undue revenue charged by City Councils for Municipal Capital Gains Tax (or City Council Taxation on the Increase in Value of Urban Land). The Constitutional Court ruling stipulates that in the case that there is no increase in value on transfer of a property (this is to say that the property is allocated or transferred for less than its acquisition value), the transaction shall be exempt from taxation.
Amongst the claims that can be made when transferring property at a loss, those involving Inheritance or Donation shall also be included.
What is the time limit for claiming Municipal Capital Gains Tax?
The time limit to make a claim is of four years as from the date of the transaction. This is to say that if you paid your MUNICIPAL CAPITAL GAINS TAX during the last four years, you will still be able to claim for reimbursement of undue payments, as long as your transaction resulted in capital loss (i.e., as from the date of publication of this article, you can make a claim for any undue Municipal Capital Gains Tax settled as from March of 2014).
The procedure to be followed to claim reimbursement for Municipal Capital Gains Tax
I.-Filing a formal complaint against the City Council
The complaint should be filed at the corresponding City Council, and must expressly request reimbursement for the undue payment made.
If the complaint is accepted and reimbursement granted, the procedure shall conclude here. If the request is dismissed by the City Council, or they do not respond to it, we should proceed to the next step.
II.-Administrative Claim or Appeal for Reconsideration
As we mentioned previously, when facing dismissal of our initial complaint to a City Council, we can alternatively choose between the following options:
- To lodge an Administrative Appeal for Reconsideration before the City Council
- To make an Economic-Administrative claim before the competent Economic-Administrative Body or Tribunal
In the case that the aforementioned actions are dismissed, no further action may be taken via the administrative channel, then we should initiate a claim for judicial review.
III.-Appeal for Judicial Review before the Supreme Court
There is a maximum time limit of (2) months to make a claim for judicial review before the Supreme Court. (In the event of claims for Municipal Capital Gains Tax resulting from transferal of property in the Costa Blanca region, the claim should be brought before the TSJ, Tribunal Superior de Justicia of the region of Valencia.)
In order to make a claim, it is essential to present the initial public purchase-sale deeds or transfer deeds, and the subsequent sale or transfer documentation, together with the Capital Gains Tax payment receipts.
Likewise, to strengthen accreditation of the declared sale value (Value leading to transferal at a loss), a report by an expert or chartered surveyor should be presented in order to prove the validity of the transfer value at the time of the transaction.
At MSG LEGAL we can provide you with expert advice on how to go about your reimbursement claim for undue payment of Capital Gains Tax, and any appeals the claim may involve. At MSG LEGAL previous to taking action, we always carry out a meticulous feasibility study of every case, on an individual basis.
Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice.