Plusvalía tax (Municipal Tax)

Posted in: Administrative Law


Plusvalía tax was affected by an important Supreme Court Judgement at the end of March 2019. There had been an appeal for many years regarding the calculation of the tax. We have dealt with any claims for plusvalía tax paid when there had been a loss. Please contact us if we can help you.

What is Plusvalía?

Plusvalía is a municipal or town hall tax. Almost all urban properties are revalued each year. The tax on the value increases from when you buy a property until you transfer it again.

Plusvalía is based on the surplus tax value of urban land when there is an increase in value. Not paid each year but paid when there is a sale, inheritance, donation. Or a transfer of the property basically. It is a municipal tax on a gain on land. Very often it is confused with capital gains
tax which is charged by the Tax Office (government) on any gain in value of the overall property.

The New Ruling

For many years the formula for the calculation of plusvalía tax has been in question in the Courts. There has been a long running appeal going up to the highest Court in Spain, the Supreme Court.

Those who have transmitted property (sale, inheritance etc) have been waiting to see if they had overpaid plusvalía. Therefore if they could claim or can have a reduced bill now. Unfortunately the answer is no if there is a gain. The Resolution confirms there will be no reduced bills or overpaid tax returned when there is a gain on the property. As the plusvalía tax has been decreed valid.

Plusvalía if there is a loss

However, the Supreme Court referred to a previous ruling. It upheld that if there has been a loss, then there is no plusvalía to be paid. This does not mean that the plusvalia is invalid. Just that this is an exception.

Those that have paid plusvalía tax in the past with a loss can now possibly claim it back. The time limitation is 4 years since the plusvalía was paid.

Contact us if you would like any assistance with reclaiming an overpayment of plusvalía tax. It can take time as the authorities are slow, but the sooner you start the better. We can also help you with buying or selling a property.