Critical analysis of the tax on the increase in value of urban land, a very conflictive local tax

Abstract

The Tax on the Increase of Urban Land Value has been found unconstitutional on three occasions, but the last one (Constitutional Court Ruling 182/2021 of 26 October) was the final blow when declaring the unconstitutionality of the method at the time of determining the taxable base, what means the impossibility of settling, reviewing and verifying it until new regulation. The Royal Decree-Law 26/2021 of 8 November adapts the tax without being retroactive but does not include a solution to the problems reflected in the considerable body of case-law settled since its first declaration of unconstitutionality. Through the tenets reflected in scientific journals and case law, since 2017 a ground of argument on the prove of the lack of increase has been established to avoid the transmition from being taxed, thus covering the deficiencies of the aforementioned tax. However, being regulated by a Royal Decree-Law, the misconfiguration of the tax has not been corrected. Given the new regulation of the tax and the legal vacuum produced as a result of its last declaration of unconstitutionality, discrepancies arise on the possibilities of tax clearing for periods, now legally void, on future settlements, and on admissible administrative or judicial reviews.