Tax advice Spain: The Supreme Court rules on the return of municipal capital gains

The TS affirms in its judgment that the tax advice of this tax is unconstitutional

On May 18th, the Supreme Court (TS) ruled on the requests for the refund of undue income related to the liquidation of the capital gains tax. According to the ruling of the Constitutional Court 59/2017, this capital gain is protected in the declaration of partial unconstitutionality of the tax.

In the field of tax advice, the TS affirmed that the regulatory precepts of this tax were unconstitutional when inexpressive situations of economic capacity occurred. This would be effective, as long as it is proven that the taxable event had not taken place due to the lack of value of the land in the transmission.

However, the TS has changed its doctrine stating that the request for refund of undue income, derived from the liquidations for the declaration of unconstitutionality, must be made as established in Chapter II of Title V of the General Tax Law (LGT). In other words, this process will be carried out by the review of null acts, of revocation or by the extraordinary appeal for review.

On the other hand, this body establishes that the declaration of unconstitutional, corresponding to art. 107.1 and 107.2 a) of the Local Tax Law, does not determine the settlements of this tax. In fact, the firm growth of the latter in the administrative process incurs the nullity assumption provided in sections a), d), e) and g) of art. 217.1 of the LGT.

Finally, the TS announces the new doctrine on these tax acts based on the following criteria:

  • Rights susceptible to constitutional protection have not been injured, since article 31.1 of the Constitution (economic capacity) is not a fundamental right of that nature.
  • The legally established procedure has not been completely dispensed with.
  • No powers have been granted to the applicant that he lacked.
  • A law cannot be identified that specifically determines its nullity as a consequence of the partial declaration of unconstitutionality of the law that serves as its basis.

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Etiquetas: Madrid tax advice, Spain tax advice, Supreme Court, return of municipal capital gains, firm liquidation