Plusvalia tax reinstated in Spain as from 10-11-2021

Raymundo LarraĆ­n Nesbitt, November, 11. 2021

Lawyer Raymundo Larraín briefly walks us through the new revamped plusvalia tax law.

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By Raymundo Larraín Nesbitt
Lawyer - Abogado
11th of November 2021

As readers may recall, Spain’s Constitutional Court overturned plusvalia tax last 26th October 2021. We published a detailed article at the time. The legal effects would come into force as from the next day this landmark ruling was published in Spain’s Official Law Gazette (BOE, in Spanish), as with any other law. We advised at the time that it was highly likely a new law would be approved soon (days or weeks), so chances to wriggle through scot-free were slim at best.

Yesterday 9th November 2021, in an absolute record-time that would even make Usain Bolt blush in shame, the Spanish Government published the new revamped plusvalia tax which came into force yesterday 10th of November 2021. Gosh, I wish tax rebates were processed so fast! This new law, despite what was initially claimed by Spanish Tax Authorities, has in fact no retroactivity to the 26th October. Yay.

However, we are still awaiting the High Court’s ruling of last 26th October to be published in the BOE … and two weeks on we are still waiting and waiting. Aww.

The jaded me would say the key ruling has been ‘hijacked’ by the powers that be, but surely this cannot be the case in a Western EU Democracy under the Rule of Law, right? Certainly not, God forbid! I’ll slap myself on the wrist for having such dark thoughts.

Anyway, before I digress further into a rabbit hole, the point being is that plusvalia tax is reinstated as from today.

So, if you are:

  1. Selling property
  2. Gifting property
  3. Inheriting property

You need to pay plusvalia tax as from today.

Everything done and dusted, yes? Well, no.

Because, what happens with all the transactions that took place between the 26-10-2021 and the 09-11-2021? Had the Hight Court’s ruling been published, it would be clear cut that no plusvalia tax was to be paid in those two weeks. But then, the landmark ruling was never published in Spain’s BOE.

Also town halls need months to adapt their own local bylaws to this new tax law which brings into question what happens in the interim with all ongoing transactions?

Finally, questions are being raised on whether it's constitutional to approve a law that creates a tax as a Real Decreto-ley (such as yesterday’s) because, in strict accordance with the hierarchy of our laws, this is reserved only to a higher-ranking law (Art 133.1 of Spain’s Constitution, our Supreme law) approved by Congress itself. A Real Decreto-ley is just a law passed by the Government, but it is not enacted or ratified by our Congress. This, from a legal perspective, has huge legal implications. Which leaves the door ajar for lawyers to challenge yesterday’s law on grounds of being unconstitutional.

This would mean the new revamped law of yesterday - that was approved precisely to replace a law that had been overturned on grounds of being unconstitutional - could be yet again overturned by Spain’s Constitutional Court on grounds of being unconstitutional in a Kafkian turn of events. Are you still with me? You really couldn’t make it up.

I think I need a drink.


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