What is the real value of a property which is transferred, for the Transfer Tax?

13 September, 2018

Can this value be different from the one that would be fixed by the Tax Administration according to a valuation method through multiplying coefficients on the cadastral value assigned to the property?

In accordance with art. 10 of Transfer Tax Law, the taxable base is formed by the real value of the transmitted good and, according to art. 57.1 General Tax Law, the real value of the property transferred is fixed applying a multiplier on the cadastral value assigned to the property.

But, what should we do when the real estate that we acquire has a lower price than the one obtained according to the valuation method through multiplying coefficients on the assessed value assigned to it? What is the value that we should declare? The amount actually paid, or the value that the Tax Administration would give you in case of checking it?

According to the Sentence of the Supreme Court of July 2, 2018, the value that we should declare is the value actually paid, which, perhaps, may be less than the value determined by the Administration, due to the fact that “the real value is the one having been agreed upon by two independent legal subjects in a free market context, and this is obviously conditioned by circumstances of varying magnitude and significance and, among others, the severe and prolonged economic crisis suffered since the second half of the previous decade. which means that the real value, far from being immutable, can vary depending on the temporal, spatial or other character to which it refers.”

Valor_Real_ITP_Impuesto_Transmisiones

On the other hand, the Supreme Court stated that the method of applying abstract coefficients on the Cadastral Value is a legal method, but not an ideal method, because of its abstraction, to establish the real value. Likewise, the Supreme Court establishes that the Administration cannot reverse the burden of proof, that is to say that it cannot oblige the taxpayer to prove that the value obtained by the Tax Administration does not correspond to the real value, but it is the Tax Administration who shall justify why it does not accept the declared value and shall prove that the declared price does not correspond to the actually paid price or that it does not correspond to the real value.

Since the burden of proof falls on the Administration, the taxpayer is not legally obliged to justify that the declared value of the property coincides with the real value, but, if the tax payer is dissatisfied with the taxation made by the Administration in its checking, he can use any admissible evidence in law, being one of them a contradictory expert appraisal.

If you have doubts because you have bought a property and have to liquidate the taxes, but the price for which you acquire it is lower than the amount that would be obtained by applying the multiplier on the cadastral value, you can contact us and we will be happy to give you advise.

Dimitrichka Anghelova – Lawyer

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