Spanish Constitutional Court Ruling on Unconstitutionality (2021) PDF

## SENTENCIA **EN NOMBRE DEL REY** The Plenary of the Constitutional Court, composed by Judge Juan José González Rivas, President; Judge Encarnación Roca Trías; Judges Andrés Ollero Tassara, Santiago Martínez-Vares García, Pedro José González-Trevijano Sánchez, Antonio Narváez Rodríguez, Ricardo Enríquez Sancho, Cándido Conde-Pumpido Tourón and Judge María Luisa Balaguer Callejón, has pronounced the following: **SENTENCIA** In the matter of unconstitutionality no. 4433-2020, brought before the Contentious-Administrative Chamber of the High Court of Justice of Andalusia, Ceuta and Melilla -located in Malaga-, regarding articles 107.1, 107.2.a) and 107.4 of Royal Decree-Law 2/2004, of March 5, approving the consolidated text of the Law regulating local finances, for potential violation of article 31.1 CE. The State Attorney, representing the Government of the Nation, and the Attorney General of the State have appeared and presented arguments. Judge Ricardo Enríquez Sancho has been the rapporteur. ### I. Antecedentes 1. On September 18, 2020, the Constitutional Court registry received a filing from the Contentious-Administrative Chamber of the High Court of Justice of Andalusia, Ceuta and Melilla -located in Malaga- (case no. 749/2016), which is accompanied, together with the record of the corresponding proceedings, by a ruling of July 28, 2020, by which it is agreed to raise a question of unconstitutionality in relation to articles 107.1, 107.2.a) and 107.4 of the consolidated text of the Law regulating local finances, approved by Royal Decree-Law 2/2004, of March 5 (hereinafter, TRLHL), for alleged violation of the principle of non-confiscatory (article 31.1 CE). 2. The following are, in brief, the background facts of the present matter of unconstitutionality: a) The company TEAN Y TETOAN, S.L. acquired on February 6, 2004, a property in the municipality of Benalmádena (Málaga) for a price of €781,315.74, being transferred on May 2, 2013, at the time of the incorporation of the company "Servicios Proactis, S.L." as a contribution to its capital for a value of €900,000. b) As a result of the aforementioned contribution, on September 18, 2013, Benalmádena City Council issued the transferring company a liquidation of the Tax on the Increase in Value of Urban Nature (hereinafter, IIVTNU) for a tax liability of €70,006.19. The tax base was calculated by applying to the cadastral value of the land at the time of the transfer (€808,152.33) the percentage established by the City Council arising from the application of the valuation rules provided for in Article 107.4 TRLHL [31.5%, at a rate of 3.5% for each of the nine full years that the property remained in the patrimony of the taxpayer (from 2004 to 2013)], a tax base of €254,567.98 on which the 27.50% tax rate set out in the corresponding municipal ordinance was applied, resulting in the aforementioned tax liability of €70,006.19. A penalty of €7,000.62 and a surcharge of 5% on both amounts (tax liability plus penalty) of €3,850.34 were also applied, so the total amount to be paid finally amounted to €80,857.15. c) On November 29, 2013, the plaintiff filed an appeal for review against the aforementioned administrative liquidation seeking its annulment : (i) for disproportion between the amount liquidated and the real value, as there had been no real increase in the value of the land, and (ii) for exemption from taxation of the corporate transaction carried out. This appeal for review was dismissed by a Resolution of the Mayor-President of Benalmádena City Council of December 9, 2014, as it had not been proven: (i) the absence of an increase in the value of the land, (ii) the exercise of an economic activity of the contributors for the purposes of IRPF, (iii) the contribution of the assets to the activity, or (iv) the maintenance of accounts according the Commercial Code. d) Against the aforementioned resolution, an appeal for contentious-administrative proceedings was filed, which was processed by Contentious-Administrative Court no. 5 of Malaga (ordinary proceedings no. 104/2015) which, by ruling no. 766/2015, of October 29, was partially upheld, annulling the penalty and the corresponding part of the surcharge applied to it. e) An appeal (no. 749-2016) against the aforementioned ruling was filed before the Contentious-Administrative Chamber of the High Court of Justice of Andalusia, Ceuta and Melilla -located in Malaga-, once processed and concluded the corresponding procedure, by a ruling of December 12, 2019, with suspension of the deadline for issuing a ruling, it was agreed to hear the parties and the State Attorney on the advisability of raising a question of unconstitutionality in relation to Articles 107.1, 107.2.a) and 107.4 TRLHL, given their possible opposition to the principles of economic capacity and prohibition of confiscatory (Article 31.1 CE). f) Once the period for submitting arguments had passed, the appellant in the a quo proceedings, by a filing received on January 8, 2020, and the State Attorney, by a report of January 14, 2020, expressed their consent to the question being raised. Benalmádena City Council did not submit any documentation, abandoning the process. 3. In the ruling of July 28, 2020, raising the question of unconstitutionality, the proposing judicial body, after clarifying the facts that led to the filing of the appeal, underlines that the method of calculation used by the legislator to obtain the tax base of the tax may give rise to tax liabilities that constitute an "excessive" or "exaggerated" tax burden on the taxpayer in cases such as the one under discussion, where, even though the amount of the tax liability does not exceed the actual capital gain, it is a very significant part of it. The court underlines that in Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded that “when the application of the rule of calculation set out in Article 107.4 TRLHL were to result in an increase in value greater than that actually obtained by the taxpayer, the tax liability resulting, in the part that exceeds the benefit actually obtained, corresponds with the unlawful taxation of non-existent income, against the principle of economic capacity and the prohibition of confiscatory that must apply, in each case, respectively, as an instrument legitimizing the tax burden and as a limit to the same” (FJ 4). The doubt of unconstitutionality that arises before the court is whether the relationship between the tax liability resulting and the actual increase in value experienced can constitute an excessive tax burden to the point of amounting to the prohibition of confiscatory that must act as a limit to the tax burden. It is true, it adds, that the tax liability liquidated in the situation under discussion has not consumed the entire amount of the capital gain generated, so that the taxable wealth has not been exhausted, which is what the principle of non-confiscatory prohibits (Constitutional Court rulings 150/1990, of October 4; 14/1998, of January 22; 233/1999, of December 16; or 26/2017, of February 16). However, it argues: - that, given the linkage The court stresses that Constitutional Court ruling 126/2019, of October 31, to declare the unconstitutionality of Article 107.4 TRLHL in those cases in which the tax liability exceeds the actual capital gain, it noted, as a reminder, that although the situation under review did not involve a situation of capital loss or lack of actual increase, the application of the tax rate set out in Article 108.1 TRLHL to the tax base calculated ex art. 107.4 LHL entailed requiring the taxpayer to bear an "excessive" or "exaggerated" burden, citing to this effect the case law of the European Court of Human Rights (ECHR of July 3, 2003, Buffalo Sri c. Italy; of March 9, 2006, Eko-Alda AVEE c. Greece; of May 14, 2013, N.K.M c. Hungary; or of July 2, 2013, R.Sz. c. Hungary). In this regard, it was concluded

Spanish Constitutional Court Ruling on Unconstitutionality (2021) PDF

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