On 10 July, the Spanish Official State Gazette published Law 11/2021 on measures to prevent and combat tax fraud, in compliance with European directives. This regulation contemplates tax changes that particularly affect wealth taxes in the period up to 2022.
Like almost all tax laws, its purpose is to increase tax revenue, but to achieve this, tax rates will not be increased, but rather the tax base will be increased.
The reference value: The new tax base
The most relevant novelty is the modification of the tax base for property taxes: Inheritance, Donations, Stamp Duty and Wealth. From now on, taxation will be based on the so-called “reference value”, a new property valuation system that is different from the traditional appraisal system.
This is calculated on the basis of the prices of transactions and properties reported to the Treasury by Notaries and Registrars – purchase price, state of conservation, age, etc. – and will be approved by the Cadastre, which will publish it in the last quarter of each year. When this value is not available, the taxable base will be the higher of the following amounts: the declared value or the market value.
The government argues that these new developments will lead to a reduction in the litigation caused by the procedure for checking the value of properties, which has caused so many legal setbacks for the regional tax administrations, although opinions on the consequences of this are mixed among experts in the field, as these communicated prices will generally be higher than the cadastral value or the value derived from applying the coefficients approved by the regional governments to the cadastral value. Therefore, the tax base will increase and, consequently, the tax payable.
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