Determination of the tax base in the transfer of real estate

The determination of the tax base in the Transfer Tax and Documented Legal Acts Tax (ITPAJD) is a critical aspect of any real estate acquisition operation. A recent binding ruling from the Directorate General of Taxes (DGT) establishes the rules for determining which value must be used as the basis for the tax calculation.

What the DGT has resolved

The tax authority has specified that the tax base shall be the reference value of the real estate cadastre in force on the date of accrual. However, this value is not absolute if higher amounts exist. The criteria establish that:

• If the declared value or the agreed price in the transaction is higher than the reference value, the higher of these amounts shall be taken.
• In cases where no cadastral reference value exists, the tax base shall be the highest among the declared value, the agreed price, or the market value.

This resolution is based on the TRLITPAJD (RDLeg 1/1993) and the General Tax Law (Law 58/2003).

What it means for you

For entities acquiring properties, this criterion implies that the cadastral reference value acts as a minimum, but not as a ceiling. If the purchase price is higher than what the Cadastre indicates, the tax will be calculated on that higher price. This obliges companies to perform a prior check of both values to avoid errors in the self-assessment and potential penalties for insufficiency in the tax base.

What should be done

It is necessary to verify the cadastral reference value before formalizing the transfer. In the event that the reference value is higher than the actual value due to the inclusion of property improvements that do not reflect reality, there is the possibility of requesting a rectification of the self-assessment by challenging said value. It is recommended to assess each particular situation to ensure that the applied tax base is correct according to current regulations.