Spain’s Constitutional court, in a new landmark ruling from last 11th of May, stated that the ‘plusvalía’ tax can no longer be charged by town halls when a vendor sells a property at a loss. This ruling has ramifications nationwide.
On selling property in Spain, a vendor is liable for two taxes:
1. Capital gains tax (paid to regional Authorities).
2. Plusvalía tax (levied by town halls).
On selling, property vendors need to pay this tax as a result of the increase of value in the land to the town hall where the property conveyed is located. If there is no increase in value it stands to logic no tax should be collected
The new key ruling from 11th of May has done just that. Spain’s Constitutional Court has declared, with nationwide effects, that when a vendor sells a property at a loss they are no longer liable to pay plusvalía tax, In plain English; no profit, no taxation