New doctrine concerning the method of verification of value: Analysis of the sentence from the High Court on the 23rd May 2018


As you may all possibly know, when we purchase a property in Spain we must pay the Transfer Tax (ITP). This tax is from 8% to 11% of the value of the property and we must pay same in the maximum period of one month from the date of purchase/sale.

When we present the declaration, we calculate the tax on the value declared in the deed. However, the Tax Office of the Illes Balears (ATIB) has four years in which to revise these values and, if a lower value to that known as real value is declared, we will be claimed to pay tax on the difference.

For example: If a property has been purchased for 100.000 euros, the amount of 8.000 euros will have been paid for ITP. If the real value of the property was 140.000 euros, the ATIB will request the payment of 8% of  40.000 euros, plus interest and fines.

These verifications very infrequently keep in mind the physical state or location of the property, as the real value is calculated based on other information, such as the land registry value or the surface of the property. Therefore, very often it is unfair to have to pay more when one has obtained a good offer for a property.

Recent sentences from our High Court, have established that this calculation in not correct unless in addition there be a direct verification by the Administration of the property that is being inspected. Specifically, the sentence of the High Court dated the 23rd May 2018 explains that the valuations must include this addition, «in order to allocate a final specific value, of a real individual verification, motivated and based on a direct immediate observation of the verified property». The same sentence mentions that, «as the Constitutional Court reminds, the expression of real value enforces the Administration to the obligation of being limited, within a sphere of appraisal, to certain views of a technical nature that cannot be avoided […] (STC 194/2000)».

On the other hand, who has to approve that the real value is above that declared is the Administration itself and not the citizen.  The burden of the proof will fall therefore on the ATIB. The same sentence from the High Court previously mentioned specifies that, «The act of fixing the real value of the properties verified by the Administration – that, therefore, corrects or verifies the values declared by the interested party as price or magnitud of the legal Business completed – must be: a) individual; b) motivated; y c) result of an examen of the property, normally through a visit to same.» Further on is stated that «the interested party is not legally obliged to prove that the value appearing in the declaration or payment of the tax coincides with the real value, as the Administration is who must prove this fault».

What can we do if we are not in agreement with the valuation carried out by the Administration through the application of rates?  There are various options, that should be studied in each case, but whatever, the client may appeal to any means of proof accepted in Law, as for example a notary act that shows the state of the property. It is not necessary, as up until now, the use of a contradictory expert valuation. Moreso, this method is not at all wise to challenge an act motivated purely by an arithmetic operation.

It is without doubt an interesting matter and moreso for all us professionals dedicted to the real estate and planning sector in the Balearic Islands and, obviously we could peruse much further into this subject, therefore for any query please do not hesitate to contact our lawyers in Mallorca and Ibiza.




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