Thursday, April 11

The bipartite launches the adjustment of the tax ordinance to recharge the capital gain

The Local Government Board expects to approve next Tuesday the draft file for the modification of the Regulatory Fiscal Ordinance of the Tax on the Increase in the Value of Urban Land (IIVTNU), better known as municipal capital gains for its initial approval. The revision of the municipal document has been instructed to include the changes required by the recent ruling of the Constitutional Court, which declared unconstitutional and, therefore, null sections of the law regulating local treasuries by “establishing an objective method of determining the base of the tax that determines that there has always been an increase in the value of the land during the taxation period”, regardless of whether it has actually occurred and its real amount.

That sentence was the final blow for the tax as it was collected until that moment (October 2021), which is one of the first ways of financing the municipalities. In fact, in the Consistory of Alicante it was the third direct tax that collected the most, with 15.3 million forecast in 2021, only behind the Tax on Real Estate (IBI), with 85.4 million, and the Tax on Vehicles, with 15.9 million euros.

About two weeks after the ruling of the high court, the Council of Ministers approved the reform of the municipal capital gains tax, through the decree-law formula, which restored the constitutionality of the tax so that it reflected the reality of the real estate market and to ensure that taxpayers do not have to pay for it if it is sold at a loss. The state reform already clearly establishes that operations where there is no increase in value will not be subject to taxation and that it must be verified at the request of the taxpayer that no profit has been obtained.

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With these adjustments of the Council of Ministers, the applicable annual percentages on the cadastral value of the land are replaced by maximum coefficients, depending on the number of years elapsed since the operation. By this new method, the taxable base of the tax will be the result of multiplying the cadastral value at the time of accrual by the coefficients approved by the municipalities. The maximum coefficients established in the state standard range from 0.13 when one year has elapsed since the purchase to 0.45 when twenty years or more have passed. These figures are identical to those included in the proposal to modify the Alicante Tax Ordinance on the Tax on the Increase in the Value of Urban Land, the last revision of which was approved in plenary session in 2018.

The approval by the Local Government Board of the ordinance modification file will open the term for the presentation of amendments by the opposition, a step prior to its debate and first vote in the municipal Plenary.

The municipal government, after the adjustments required by the Constitutional ruling and reflected in the subsequent decree-law approved by the Council of Ministers, anticipates that revenues will be significantly reduced by one of the direct taxes that bring more money to the municipal coffers. According to the Budget promoted by the bipartisan, still pending approval, the collection is expected to go from 15.3 to 9.7 million euros.

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