On 9 July, Law 11/2021 entered into force in Spain as a transposition of Directive (EU) 2016/1164, measures to prevent and combat tax fraud. The text includes measures like modification of the SICAV regime and new reporting obligations for virtual currencies – but the Law also includes a series of adjustments with special relevance to the real estate sector. This new law covers new requirements related to the Tax on Patrimonial Transmissions and Documented Legal Acts (ITPyAJD) and Inheritance and Donations Tax, which will enter into force on 1 January 2022.
As of 1 January 2022, and with no retroactive action permitted, references to “real value” in the tax base calculation are to be replaced by “market value” (the concept of which is defined as the “most likely price for which it could be sold, between independent parties, an asset free of charges”) or “reference value” in the case of immovable property. According to the text itself, “reference values” will be “provided for in the regulations governing the real estate cadastre at the date of accrual and that will be published in the electronic headquarters of the General Directorate of the Cadastre”.
In the event that a reference value does not exist or cannot be determined, the taxable base of the property should be the largest of declared value, agreed price or market value.
This measure has been accompanied by a reformulation of the third final provision of the Consolidated Text of the Real Estate Cadastre Law (TRLCI), meaning that the new “reference value” will be calculated from the prices communicated by the public notary in real estate transactions. Going forward, The General Directorate of the Cadastre will publish an annual market report with the data of the previous year’s transactions and a map of values before 30 October each year. The map of values will be used to calculate the following year’s ‘reference value’.
This reference list will be made public on 20 December 2021.
Reactions to the impact of this measure on the market are already visible. While the objective of the Law is to reduce uncertainty around “real value”, which has been difficult to quantify, some analysts point out that the recent rebound in the real estate market is related to this measure, which seeks to reduce uncertainty in the face of a possible rise in the tax base.
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