CAPITAL GAINS AND THE CT: WHEN TO CLAIM WHAT WAS PAID BASED ON THE CONSTITUTIONAL COURT’S DECISION
THE RULING OF THE CT AND ITS CONSEQUENCES
Without entering into a complex assessment of STC 182/2021 of 26 October (RTC 2021, 182), it is necessary to briefly explain the previous and subsequent events to better understand who can claim and why they should do so:
- There is a question of unconstitutionality raised jointly before the Constitutional Court. The principle of contributive capacity is alleged and it is stated that the objective system for determining the capital gains tax may cause the tax to be confiscatory in nature. In other words, what is claimed is that the way of determining the net amount should be changed, since, among other things, there were taxpayers who paid for a transaction in which they had lost money, there was no real gain to be taxed.
- The answer to the question of unconstitutionality is clear: the precepts of the Law of Local Treasuries that determined how to settle the tax are annulled.
- Following this response, a legal limbo is produced in which the taxpayer could not settle the tax on the basis of a system established by law: it is not possible to calculate what is to be paid, these articles are repealed.
- From this moment on, a doubt arises for the people who have paid the capital gain in this period in which, in fact, there was no way to calculate on the basis of the tax legislation the liquid quota of the tax.
This is a summary of the succession of facts that have led a large number of people to ask themselves: can I claim the refund of what I paid for the capital gain? And, if so, what is the way to do it?
THE CONSTITUTIONAL COURT’S DECISION: PRINCIPLES DEFENDED BY THE COURT
The explanation of how this point is reached has already been made (in a cursory manner). However, it is also necessary to understand why the Constitutional Court decided to write this judgment.
Within all the principles that are defended by the Court in this judgment, there are two that radiate over the rest: that of legal certainty and that of legality.
On the one hand, Article 9.3 of the Spanish Constitution includes this principle of legal certainty. It is clear that a precept that violates certain constitutional principles, in any way, is also violating the legal certainty that must exist in any legal transaction.
On the other hand, the principle of legality (linked to Article 103 of the Spanish Constitution, which speaks of submission to the Law and the Law) must be protected through the revision of the law itself if necessary. If the law must be respected, but it is flawed, this principle of legality, which aims to protect justice in general and, therefore, the citizens, loses its meaning.
DIFFERENCE BETWEEN ECONOMIC CAPACITY AND MISCALCULATION OF THE VALUE OF THE REAL ESTATE: THE TWO WAYS OF REFUNDING THE CAPITAL GAINS TAX
In the case of speaking of economic capacity, it is not compatible with a miscalculation, as these are two different types of claims.
The economic capacity, enunciated in art.31 of the Spanish Constitution, is translated in this article in that the citizens will contribute to the payments determined by the tax legislation according to their economic capacity and in a fair system. Interpreting this beyond the fact that a citizen has more or less capital, it means that for a tax to be considered fair, there must be a taxable event that generates wealth for the taxpayer; that is to say, that his wealth, income… is increased.
In this case, in order to claim the refund of the amount paid for the capital gain, it would be necessary to point out that there has been no real gain with the transfer of the property. That is to say, when declaring unconstitutional the payment system that was installed with the old Law of Local Treasuries, being rigid and not adapted to the reality of the taxpayer, it would be possible to claim the refund of the tax if, for example, the value of the previous purchase was 3 million and the value of the sale is 2 million.
But there is another argument that differs from the previous one: the claim for a miscalculation in the cadastral value of the urban property transferred. Using article 216 d of the General Tax Law, it is offered as a possible way of claiming tax assessments that have become final. Together with rectification, revocation and the extraordinary appeal of article 244 of the General Tax Law, these are the special review procedures.
HOW AND WHEN TO CLAIM THE CAPITAL GAINS TAX REFUND: DIFFERENT SOLUTIONS
As two important issues to be aware of when it comes to knowing if you can claim for the payment of the capital gain:
- Provisional or definitive liquidations that were not challenged before the publication of the Constitutional Court Ruling 182/2021 of October 26 cannot be claimed by way of this ruling (it does not have retroactive effects).
- The settlements that became final prior to the publication of the ruling cannot be claimed through this ruling (again, the non-retroactivity of its effects is alluded to).
What does this mean? It means that there are two requirements to claim through this ruling: that the liquidation does not become final before the date of publication and that it is claimed before the date of publication. All this to ensure respect for the principle of non-retroactivity, which operates in this case..
Regarding the ways of claiming the amount paid, we are offered different possibilities:
- Writing to the competent Town Hall where the refund for undue payment is claimed.
- Writing to the Town Hall where the rectification of the self-assessment is requested.
- Writing to the Town Hall where the nullity of full nullity of the liquidation is alleged.
In the first two cases, it is the individual who has initiated the procedure, and now wants to receive what he/she has paid and should not have paid. In the third case, an act of liquidation carried out by a competent authority is challenged and is null and void. All the ways are valid, but the deadlines must be taken into account:
- For the claim for self-assessment, the term is 4 years from the realization of such self-assessment.
- For the claim by liquidation, the term is 1 month from the realization of this liquidation.
To conclude the explanation, two main reasons for claiming the capital gain can be extracted for the affected taxpayer:
- The reason that occupies the main article, the one linked to the ruling of the Constitutional Court, which is linked to the miscalculation in the valuation of the cadastral property (here the deadline of October 26 is set as the deadline to have appealed).
- The claim for non-existence of real profit in the sale and purchase of the property (the sale has a lower value than the purchase, it is not possible to tax a transaction that has generated losses).
If you need help with this procedure, please contact us.