New rules for calculating the tax base of municipal added value


The Government approves Royal Decree Law 26/2021 that establishes the new rules for calculating the tax base of municipal added value.

On October 26, the Plenary of the Constitutional Court declared the unconstitutionality and nullity of two articles of the Consolidated Text of the Local Finance Law, referring to municipal added value tax. This circumstance prevents the settlement, verification, collection and review of this local tax and, therefore, its enforceability. However, settlements that have not been contested and that, therefore, are final administratively or that, having been contested, there has been a final judicial resolution, may not be appealed on the basis of the Judgment.

The Constitutional Court also indicates that “it must now be the legislator (and not this Court) who, in the exercise of its freedom of regulatory configuration, carries out the pertinent modifications or adaptations in the legal regime of the tax to adapt it to the requirements of art. 31.1 of Spanish Constitution.

Municipal added value calculating

New rules for calculating the tax base of municipal added value

On November 9, Royal Decree-Law 26/2021 was published in the Official State Gazette, which adapts the revised text of the Local Tax Regulatory Law to the recent jurisprudence of the Constitutional Court. Ultimately, the Government comes to fill the regulatory gap that has been created as a result of the nullity of the precepts that regulated the calculation of the tax base of the municipal added value tax. In turn, it adapts said calculation to constitutional requirements. Next, we will highlight the most relevant aspects of the Royal Decree-Law.

There will be no subject to the tax in respect of which the non-existence of an increase in value due to the difference between the values ​​of said lands on the dates of transmission and acquisition is verified. The interested party must be the one who verifies that the increase in value has not occurred, by providing the titles that document the transfer and acquisition. In the case of a sale, these will be the purchase and sale deeds. If the value of the land had been verified by the Tax Administration and this verified value was higher than the price or value that appears in the titles, it will be the verified value that will be taken to verify whether or not there has been an increase.

The Royal Decree-Law tries to improve the technique of the objective system for calculating the tax base, trying to reflect the reality of the real estate market. In addition, this method becomes optional (thus saving the requirement of the Constitutional Court), so that the taxpayer may request that the taxable base of the municipal added value be calculated through the difference in value reflected in the acquisition title and the transfer title. Thus, for example, in the case of a sale, the taxpayer may choose to request that the capital gain be calculated based on the difference between the purchase price and the sale price, without taking into account other expenses. In this way, as long as the sale price is lower than the purchase price, no municipal added value tax will be generated.

When the objective calculation is applied, the value of the land is multiplied by some coefficients that must be approved by the respective town halls, which may not exceed those indicated in the articles that have been expelled from the legal system. The coefficients are based on the period of generation of the capital gain (permanence of the asset in the property of the taxpayer). In turn, the value of the land is made up of the cadastral value. When the cadastral value is the consequence of a presentation of values ​​that does not reflect planning modifications approved after the approval of the aforementioned presentation, this tax may be provisionally settled in accordance with it. In these cases, in the final settlement, the value of the land will be applied once it has been obtained in accordance with the collective valuation procedures that are instructed, referring to the accrual date.

One certain coefficient is set to tax the municipal added value generated in less than one year. That is, those that occur within less than one year has elapsed between the acquisition and transmission date.

Municipal added value

Royal Decree-Law 26/2021 does not refer to past situations

The Royal Decree does not refer to past situations, so it applies only to situations that arise in the future. That said, we must distinguish the following scenarios:

Transmissions that have occurred before October 26, 2021 (date of the Judgment of the Constitutional Court). In this case, two situations are distinguished

1.1.- If the town hall has liquidated the municipal added value and it has not been contested, it may not be appealed based on the Judgment of the Constitutional Court. In the same sense, in those town councils in which it is managed by self-assessment, if it is already presented, it will not be possible to rectify it either. Although, we note that there are prosecutors who maintain that it is convenient to challenge self-assessments in view of the fact that this is endorsed in the future by the Court of Justice of the European Union.

1.2.- That the self-assessment has not been submitted or the settlement has not been carried out by the town hall. In these cases, there are doubts about the position that the tax administration may take. In the event that the municipal added value is liquidated, an appeal could be considered alleging that it has been generated at a time when the existing rule has been declared void, and the Judgment of the Constitutional Court only indicates that it will not be retroactive for the liquidations that have become firm.


Transmissions that have occurred between October 26, 2021 (date of the Judgment of the Constitutional Court) and November 9, 2021 (date of publication of the Royal Decree).

Impossibility of demanding municipal added value, since there is no rule for calculating it in that time frame.


Transmissions occurred from November 10, 2021, onwards

The municipal added value will be liquidated in accordance with the rules established in the Royal Decree-Law.

Writen by Laura Martín | Nov 16, 2021

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