To determine how much must be paid for both the Property Transfer Tax and Stamp Duty as well as the Inheritance and Gift Tax in Spain, the determination of this “real value” has often been a source of disputes and litigation.
In this regard, the Spanish Supreme Court has established as jurisprudential doctrine that when there is a market for the assets in question, the “real value” coincides with the “market value.”
How the Reference Value of a Property in Spain is Established
The General Directorate of the Cadastre determines the “reference value” of a property in Spain objectively, and it is limited by the market value, based on the data recorded in the Cadastre. This value is obtained by analyzing the prices reported by notaries public for real estate sales transactions.
In property transfers, if the value declared by the parties, the agreed price or consideration, or both, exceed the “reference value,” the higher of these amounts will be taken as the taxable base.
When there is no “reference value” or it cannot be certified by the General Directorate of the Cadastre, the taxable base—without prejudice to administrative verification—will be the highest of the following values:
- The value declared by the parties involved
- The agreed price or consideration
- The market value
The “reference value” of a property in Spain is the minimum taxable base for the Property Transfer Tax and Stamp Duty (ITP and AJD) and the Inheritance and Gift Tax.
At AB Lawyers, we encourage you to contact us for further advice.
