When a property is sold or inherited, it is necessary to pay the Plusvalia municipal, a tax on the value of the land in case there has been a gain for the taxpayer. This tax can be self-assessed or sometimes the citizen must present the “declaration of liquidation” to inform the corresponding town hall of the transfer: this one notifies him later a liquidation quantifying the tax. The problem is that the town hall usually takes more than six months to notify, so the procedure expires to the taxpayer’s delight: he can avoid paying this tax.
What happens if the city council notifies the liquidation beyond the six-month period? Alfonso Soler, partner of the law firm CLF International Lawyer, points out that if the taxpayer complies with his obligation to declare the tax in due time (30 working days for intervivos transfers and six months, extendable to one year in the case of inherited properties), the City Council has only six months to notify him of the liquidation of the municipal capital gains tax. And this period starts to run not from the date on which the taxpayer filed the tax return, but from the last day to do so. On the other hand, if the taxpayer files the tax return after the deadline, the six months to notify the taxpayer of the liquidation are counted from the day following the filing of the tax return.
Article 129.1 of the LGT is clear in stating that “the Tax Administration must notify the liquidation within a period of six months from the day following the end of the period for filing the return”.
But the expert assures that the municipalities usually take more than six months to issue the tax liquidation, which favors the taxpayer. And the fact is that Article 130 of the General Tax Law establishes that the declaration procedure with liquidation ends “by expiration, once the period of six months has elapsed (from the day following the end of the period for filing the declaration) without the liquidation having been notified, without prejudice that the Tax Administration may initiate this procedure again within the statute of limitations period.”
What does this mean for the taxpayer?
Mr. Soler reminds that caducidad means that nothing acted upon has interrupted the statute of limitations. “And nothing is nothing. That is to say, neither the taxpayer’s declaration, nor the liquidation of the City Council, nor the appeal that the taxpayer may have filed to request that such expiration be declared, nor the resolution, administrative or judicial, that gives him the reason, and considers the procedure expired, will have such an interruptive effect”, points out the expert.
This means that, once the expiration of the declaration procedure with liquidation has been declared, there is the possibility that the City Council can no longer initiate the procedure again, because this right has lapsed. This will be the case even in the event that the taxpayer has filed the tax return after the deadline. This has been recently recalled by the TEAC, in resolution of 26-2-2021, which follows the doctrine set by the Supreme Court in judgment of 25-11-2019 (6270/2017).
And it is that the High Court, in response to the question of whether “an extemporaneous declaration interrupts the statute of limitations and, consequently, the restart of the file can be considered to have been carried out without the statute of limitations period having yet expired”, decided that “once the expiration of a file initiated by declaration has been declared, the acts thereof, including the declaration, do not interrupt the statute of limitations period, so the procedure can only be restarted if the legally established period has not elapsed.”
What taxpayers should do
Mr. Soler advises that the most prudent thing to do is not to allege expiration at first because then the City Council will have all the time in the world to uphold the appeal filed and start again from scratch. Therefore, he recommends delaying the allegation as long as possible, to gain time. Or at least to ensure that, at the very least, the city council of the day has hardly any margin to start the procedure again.
“We are, in short, before a procedural route by means of which it is possible to annul any liquidation of capital gains. And this, regardless of whether there has been a gain or loss in the transfer,” says Alfonso Soler.
What happens if the taxpayer does not declare the sale or inheritance of the property?
The question changes a lot if it is the taxpayer who does not declare the sale or inheritance of a property. That is to say, when he does not even present the declaration required by the municipal ordinance. In this case, the City Council would initiate a procedure of limited verification to verify the lack of declaration of the tax and, immediately afterwards, to proceed to its liquidation.