News on Plusvalía (Municipal) Tax

Posted in: Taxes


There has been a very recent Supreme Court Judgement at the end of March on plusvalía tax. This is because it has been under appeal for many years regarding the calculation of the tax.

What is Plusvalía?

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

Plusvalía is the tax on the surplus tax value of urban land when an increase in value, paid when there is a sale, inheritance, donation. This is a municipal tax on a gain on land. 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 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 not, the answer is no if there is a gain. The Resolution confirms how the tax is currently calculated. Thus 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.

However, the Supreme Court referred to a previous ruling and 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 it 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 this issue. Or for instance if we can you help with or buying or selling a property or dealing with any other matter.