The Constitutional Court in plenary meeting unanimously agreed to declare the unconstitutionality and nullity of articles 107.1, 107.2 a) and 110.4 of the new text of the Law governing Local Finances, approved by the Legislative Royal decree 2/2004, of March 5.

The Court concluded that taxing the increase in the value of urban properties is admissible, provided they abide by the principle of financial capacity (article 31.1 CE); we also point out that the Plusvalía tax may not burden acts or facts that “do not reflect an actual or potential wealth” for the purpose of safeguarding this principle.

It declared the unconstitutionality of articles 107.1, 107.2, a) and 110.4 of the new Text of the Law governing Local Finances, approved by the Legislative Royal decree 2/2004, of March 5, which were taxing conveyances in which there is no increase in value i.e. no capital gains made on the sale of the property. This is in breach of the principle of financial capacity, which is essential in the Spanish tax system.

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Diseño: Miriam Bidondo