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Date Published: 08/11/2021

ARCHIVED - New capital gains tax approved in Spain

ARCHIVED ARTICLE

Sellers of land now have two options to calculate capital gains tax in Spain

<span style='color:#780948'>ARCHIVED</span> - New capital gains tax approved in Spain

The Council of Ministers has approved a royal decree law on Monday November 8 that will drastically change the way municipal capital gains tax on land is calculated in Spain.

Last month, the Constitutional Court ordered the Treasury to reform the law, stating that it was unconstitutional to charge this tax every time a person sells, donates or inherits a home, regardless of whether or not the land value has increased.

The Ministry of Finance has assured that the changes will “guarantee that nobody who makes a sale at a loss will have to pay [capital gains]” as taxpayers will have two calculation methods to choose from, and can opt for the one that benefits them the most.

The fee owed towards capital gains tax can be calculated through the cadastral value of the land at the time of the transfer; that is; the monetary value of the estate in the Spanish land registry records at the time of the transfer of ownership.

Alternatively, another option will involve assessing the difference between the original purchase value of the land and the one at the time of sale.

According to the Ministry of Finance, this figure will reflect the difference between the purchase cost and the real-time value of the property, resulting in a tax that is constitutional but will still allow municipalities to generate revenue.

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