Local Tax Modifications: Added Value of Property

The Constitutional Court, in judicial decision 182/2021, of October 26, established the unconstitutionality and nullity of the articles of the TRLHL referring to the determination of the taxable base for the calculation of the “plusvalía municipal”, for contravening the principle of economic capacity.

What situations are likely to be reviewed based on this ruling?

The TC establishes that those tax obligations that have a definitive character will not be reviewed, including:

a) Provisional or definitive returns that have not been challenged as of the date of the judicial decision [10/26/2021].

b) Self-returns whose rectification has not been requested (…) on that date [10/26/2021]

In order to end the regulatory legal void left by the said ruling, the Council of Ministers approved by Royal Decree-Law 26/2021, of November 8, a new regulatory framework for the “plusvalía municipal”, which comes into force on date 10/11/2021.

What is the method of calculating the “plusvalía municipal” with the new regulations?

The most relevant modification implies that from now on there will be no subjection to said tax when it is found that there is no increase in value. The taxpayer must prove the non-existence of an increase in value through the contribution of transmission and acquisition titles.

It is established that now the taxpayer will be able to choose between the following two methods to determine the taxable base, as appropriate:

1) Real value method: The taxable base will be the difference between the transmission value and the acquisition value, applying the proportion between the cadastral value of the land with respect to the total cadastral value.

           BI = (V. Transmission – V. Acquisition) * (V. Land Cadastral / Total Cadastral V.)

2) Objective method: It was the only method until today. The tax base is determined taking into account the cadastral value of the land and the approved coefficients.

BI = (Land Cadastral V.) * Coefficients


  • Now it is taxed for value increases generated in periods of more than one month.
  • The City Councils have 6 months from the approval of the RDL to adapt their ordinances to the new regulations and set the coefficients whose maximum value is set by the RDL.
  • The coefficients are increased for short generation periods and reduced for long generation periods.
  • Now City Councils are allowed to reduce the tax base by up to 15%, based on the evolution of the real estate market.

The maximum tax rate remains at 30%.

What are the temporary effects of the judicial decision and the new RDL?

Although the judicial decision and the RDL are not very clarifying in this sense, the effects would be the following:

  • Accruals prior to 10/26/2021: According to our criteria, it is not taxed if:

(a) There has been no return or self-return as of that date.

(b) There is return or self-return, but it is contested as of that date.

* Doubts about whether a final return or self-return could be appealed, although the sentence rejects it.

  • Accruals between 10/26/2021 and 11/1/-2021: in principle, it is not taxed.
  • Accruals as of 11/10/2021: taxed with new regulations.

In the event that there is a transfer of the property that is subject to the tax and this has to be settled before the City Council in question has updated its regulations, it must be processed according to what each City Council has approved during this period of time in between.


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