Since January 1, 2022, an important novelty has been in force in tax matters that affects inheritance and donations in Catalonia, among other taxes related to the transfer of real estate.
This is the new reference value of Cadastre in Catalonia, which determines the taxable base of taxes related to the transfer of real estate as is the case of the Transfer Tax (ITP), which is paid with the purchase and sale of used housing; or the Inheritance and Gift Tax (ISyD). This novelty can affect our investment decisions, and also the way we plan the transfer of our real estate assets in Catalonia.
Therefore, in this post we want to tell you in detail what has changed and how it affects when planning an inheritance or donation in Catalonia.
New Cadastre reference value in Catalonia: How does it affect inheritance and donations?
The first thing you should know is that, as a result of this change, the taxpayer will not pay taxes for what he has paid (purchase price) for his property, but for its market value, and the law presumes that this market value corresponds to the reference value approved by the General Directorate of Cadastre.
However, this presumption admits proof to the contrary, so there is the possibility of claiming.
This new value is not the same as what we know as the cadastral value.
In short, the reference value of the Cadastre is based on a calculation from market prices of real estate sales and purchases provided by Notaries and Registrars, without taking into account the specific state of the property (if it needs renovation, if it is occupied…), nor the purchase price. Only the cadastral characteristics of the property will be assessed, but not the specific circumstances of each property. In addition, this value will be updated annually to adjust to reality, simultaneously in all municipalities.
Since January 1, 2022, the Cadastre reference value is already the taxable base for the Transfer Tax and Stamp Duty (ITPAJD), and the Inheritance and Gift Tax (ISyD) in all of Spain, including Catalonia.
The result is that, regardless of the price paid for a property, the new Cadastre reference value is already the minimum value on which to be taxed if a property is purchased or if it is received as an inheritance or donation. If a taxpayer submits a self-assessment that does not correspond to this new value, he/she will be in breach of the law and will be exposed to a rectification by the Treasury, as well as to possible sanctions.
However, in case of discrepancy, the taxpayer will have the possibility of using any proof admitted in Law to demonstrate that the market value of the property does not correspond with the reference value of the Cadastre.
In addition, it must be taken into account that the new Cadastre reference value also affects the acquisition and transfer value in relation to the IRPF and the municipal capital gains tax, in those cases in which the regulations of these taxes refer to the tax values provided for in the Inheritance and Gift Tax.
It also affects the basis of calculation for the Wealth Tax in Catalonia which, let us remember, taxes the net wealth that exceeds the threshold of 500,000 euros in Catalonia, with an additional allowance for own housing.
However, as far as this last tax is concerned, it is not strictly used as the taxable base.
Thus, the taxable base in this case is considered to be the higher of the following values: the cadastral value, the value determined for other taxes or the purchase price.
The value determined by the Administration is the cadastral reference value.
How to claim the new Cadastral reference value in Catalonia
If you consider that the reference value of the Cadastre does not adjust to the reality of the market, it will be possible to claim before the Treasury, taking into account that the regulation of Patrimonial Transmissions, as well as that of Inheritance and Donations, presumes that both values are equivalent.
One way is to appeal the liquidation that the corresponding organism notifies you when you have not presented self-assessment or you have done it declaring a lower value than the reference value.
To do so, you will need the assistance of a lawyer specialized in inheritance and donations in Catalonia, as well as in the taxation related to these taxes.
As a taxpayer, and as a result of this new regulation, the burden of proof becomes your responsibility, so you will have to prove that you are right using any means of proof admitted in Law.
Finally, bear in mind that, in the case of Wealth Tax, there is no possibility of challenging the reference value of the Cadastre.
You will have to appeal this value in the Transfer Tax or in the Inheritance and Gift Tax, as the case may be, so that it does not affect the Wealth Tax.
Another key factor is that, in the case of many autonomous communities (as is the case of Catalonia), inheritance and donations of wealth are highly subsidized, so the consequences for the taxpayer will be very small . However, this value can affect other taxes, such as Wealth Tax.
That is why it may be convenient to claim it anyway.
On the contrary, if you are going to sell in a short time the inherited property or received in donation, it can be better not to claim, since this way you will avoid to extend the patrimonial gain obtained with the purchase-sale.
For any questions about inheritance and donations in Catalonia, as well as to know the best way to plan the taxation of the transfer of your assets, please contact our team of lawyers in Barcelona.
