The Supreme Court clarifies that the municipal capital gains not appealed before the judgment of the TC are firm

2023-07-21 18:27:13

The Supreme Court has set criteria regarding the nullity of the municipal capital gains and stops the avalanche of claims that are taking place as a result of the ruling of the Constitutional Court (TC). The calculation of the Tax on the Increase in the Value of Land (known as municipal capital gains) was declared unconstitutional by the TC in October 2021. From then on, the courts have received dozens of claims from taxpayers who were within the term to appeal the liquidation even though they had not filed the appeal, but the Supreme Court has come to order by clarifying that tax liquidations that had not been challenged before the high court ruling are final. With this judicial resolution, a criterion is set in a matter that has been resolved in an uneven way in the different Courts and Contentious-Administrative Tribunals.

The Supreme Court magistrates clarify that, however, it is possible to annul tax assessments by application of other unconstitutionality rulings in which the Constitutional Court did not limit the temporary effects of its decision, such as the cases of real estate transfer assessments in which there was no profit, or when the tax is confiscatory because it absorbs all the gain, in addition to any other reason other than the declaration of unconstitutionality.

In the case resolved, the Provincial Council of Pontevedra appealed to the Supreme Court the ruling of a contentious-administrative court that annulled a tax assessment for capital gains, in contradiction with the decision of the Constitutional Court to limit the temporary effects of the declaration of unconstitutionality of the rules of that tax.

The Supreme Court upholds the appeal and declares that a tax assessment that had not been appealed before the declaration of unconstitutionality was known is a consolidated situation because the Constitutional Court declared it so in its judgment of October 26, 2021, and that, as such a consolidated situation, “it is not affected by the declaration of unconstitutionality of the tax, nor can it be annulled based on it.”