04 April 2022

In the judgement, the Constitutional Court made it clear that declaring it to be unconstitutional “means its removal from the statute book, leaving a vacuum with regard to determination of the tax base, preventing this local tax being assessed, verified, collected and reviewed and, therefore, enforced. It is now up to the legislature (and not this court) which, exercising its freedom to make the law, to introduce the necessary modifications or amendments to the rules governing the tax in order to bring it into line with the requirements of Article 31.1 of the Spanish Constitution, which are evident in all the constitutional rulings on the legal provisions ruled null and void herein, since more than four years have elapsed since the publication of CCJ 59/2017 (Official State Gazette number 142, of 15 June)”.

In response to this declaration and using the mechanism provided for in Article 86 of the Constitution, the Spanish Government enacted Royal Decree-Law 26/2021, of 8 November, which brings the revised text of the law governing local tax departments enacted by Royal Legislative Decree 2/2004, of 5 March, into line with the recent case law of the Constitutional Court in respect to the Tax on the Increase in Value of Urban Land. This Royal Decree-Law was published in the Official State Gazette on 9 November 2021 and came into force on 10

Two political groups sitting in parliament then filed appeals, numbered 735/2022 and 825/2022, for the new Royal Decree-Law to be declared unconstitutional. In the court docket of 22 February 2022, which was finally made public on 24 February, we learned that the Constitutional Court has decided to hear both appeals asserting the unconstitutionality of this Royal Decree-Law.

The most immediate practical consequences of this decision would be that tax assessments
or self-assessments made in accordance with the new law in force since 10 November 2021
could be affected if it is ruled unconstitutional. However, the affected taxpayers would have
to initiate the relevant proceedings to contest and seek review of their assessments within
the time limit permitted for safeguarding their legitimate rights and interests. The timing
remains to be seen, depending on how long this law takes to go through parliament,
but in the judgment handed down by the Constitutional Court on 26 October 2021, in an unprecedented pronouncement, its effect was limited in the following terms: The tax obligations acquired in relation to this tax that have, on the date of this judgment, been ruled final in an unappealable judgment or final administrative decision, cannot be deemed eligible for review on the basis of this judgment.
For these exclusive purposes, the following will also be deemed consolidated situations (i)
provisional or final assessments that have not been contested at the date of this judgment
and (ii) self-assessments whose rectification has not been requested ex art. 120.3 LGT at that date”.

Thus it cannot be ruled out that, if the Constitutional Court declares the new Royal Decree-Law unconstitutional, its effects may be further restricted, so it is advisable to initiate
the relevant procedures for contesting and seeking the review of assessments in order
to keep the matter open and, as we said, to safeguard and protect the taxpayer’s rights in the event that the new law is ultimately declared unconstitutional.