Claiming your Wealth Tax Refund

Is it advisable to contest and claim the refund of the Wealth Tax for 2021 and 2022?

The Constitutional Court has admitted the appeal of unconstitutionality against the regulation of the Wealth Tax for the fiscal year 2021 and the following.

This opens the possibility that such tax may be declared unconstitutional for the mentioned periods. In such a case, those who have contested the tax, in due time and form, will be able to request a refund.

We explain all the details below.

The Wealth Tax was established in 1977 as a temporary and complementary tax to the income tax. It has been modified and was even abolished for a few years. Until, by means of Royal Decree Law 13/2011, its application was reestablished on a temporary basis for the years 2011 and 2012.

Since then, it has been extended annually by means of the General Budget Law, but in the last Law 11/2020 of the General State Budget for 2021, its indefinite nature was established in its article 66, modifying article 30 of Law 19/1991 that regulates the wealth tax (LIP).

Well, it is precisely this modification that is considered unconstitutional, since the nature of the Wealth Tax, which had been considered temporary since its reestablishment in 2011, was established indefinitely.

The Court must now settle whether through the regulations approving the General Budgets it can turn a tax that originally had a temporary nature into an indefinite one. This raises possible vices of nullity, since Article 134.7 of the Constitution establishes that “the Budget Law cannot create taxes, it can only modify them when a substantive law so provides”, which is not the case in this situation.

If it finally succeeds and the Court considers it unconstitutional, the Wealth Tax of 2021, 2022 and soon the one of 2023 would be unconstitutional and its refund would proceed.

In view of this situation, at CINC we see as an opportunity for Wealth Tax taxpayers to request the rectification of the self-assessments corresponding to the fiscal years 2021 and 2022, and soon, also that of 2023.

The reason why we believe it is advisable to contest this tax prior to the ruling is motivated by the criterion followed in the past by the Constitutional Court regarding the unconstitutionality of the municipal capital gains tax. In this case, only taxpayers who had challenged the liquidation or requested the rectification of their self-assessment prior to the date of the ruling were allowed a refund.

If the Constitutional Court decides to apply the same criteria, only those who challenged before the ruling will be able to obtain the refund.

If you are interested in requesting a Wealth Tax refund, do not hesitate to contact our Tax Department, we will analyze your situation and will assist you in the whole procedure.