Tax implications of the new cadastral reference value

Among the main points of the law passed by the Spanish government to combat tax fraud, one of the most relevant changes is the introduction of a cadastral reference value for property owners, which will be mandatory from January 2022. The intention of this measure is to resolve the hitherto controversial situation in assessing the value of a property for tax purposes. 

In future, the reference value of a property is to be determined by the respective land registry offices of the municipalities on the basis of an annual price analysis of all property purchases and sales made before a notary. In determining this value, other criteria will also be taken into account, such as differences in the quality of construction, age as well as the current state of construction of the property.

It should be noted that this reference value has no effect on the amount of property tax (IBI) to be paid annually. However, in future it will serve as a basis for determining the amount of any transfer, inheritance and property tax to be paid.

The new legislative decree also establishes a minimum tax base based on this reference value. And implies that if the declared value or the consideration paid is higher than the reference value of the property, the higher of these values will be used as the tax base.

With regard to wealth tax, the reference value can only apply to real estate acquired on or after 1 January 2022, but not to existing real estate.

The respective reference values are to be available on a website of the national cadastral authority as of 2022, as soon as the necessary steps for this have been completed. 

On this website, property owners will also be able to view all the criteria info that was applied in the individual determination of the reference value of their property. In addition, they can obtain at any time a certificate stating the method used to measure the reference value, so that they have all the technical info used to determine the value.

Property owners also have the right to appeal to the competent authorities against the determined reference value, for example for the assessment of land transfer tax or inheritance tax. Furthermore, in the event of discrepancies regarding the description of the property in the cadastre, the cadastral procedures provided for in the Ordinance may be initiated for registration or revision (correction of discrepancies, correction of errors, etc.).

It should be noted that up to now there has been considerable controversy, as taxpayers declare a value and in case of disagreement the administration has to verify it and prove the difference, which has led to numerous legal disputes over the years. With the entry into force of the regulation, this situation will be reversed and the taxpayer will have to prove that the reference value indicated in the cadastre does not correspond to the real value of the property, which also opens up the possibility of litigation with the administration.

Please do not hesitate to contact us if you have any questions or uncertainties on this subject.

Omnia Consulting

C/ Sant Miquel, 46 esc. dcha, 2º piso, despacho 10-A y 10-B

E-07002 Palma de Mallorca

Tel. 0034 971 288 442

Fax 0034 971 282 924

This report contains basic information, is to be considered general and does not constitute legal advice in any way. All rights are reserved. It is forbidden to use, reproduce, distribute, publish and communicate and transform all and/or part of this article without written authorisation from OMNIA CONSULTING MALLORCA, S.L.U.

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