The Supreme Court in Spain has ruled that taxpayers can recover overpaid IBI (property tax). If the Land Registry has reduced the value of the property, they can reclaim it from the municipality.
In two rulings, the Supreme Court states that municipalities must comply with the decision of the competent cadastral management body. These are rulings from December 21 last year and January 18, 2024. If the valuation on the basis of which the tax could be paid is annulled, the corresponding liquidations must also be annulled. In that case, there is no need to wait for a change in the land register.
IBI
The January judgment stipulates that in terms of IBI, “that as a result of a procedure for correcting defects […] the cadastral value of a property is lower’, this affects the final settlement of the property tax. It is possible to directly request a refund of the undue income from the above. In doing so, it is not necessary to apply for an appeal procedure in respect of the settlements’.
Municipalities must act in accordance with the principle of good governance
The ruling indicates that municipalities must act according to the principle of good governance. They may not refuse to withdraw IBI assessments if they find them to be unlawful. And must automatically revoke their tax assessments if they have unequivocal evidence that the tax base on which they are based was incorrect.
In a case of a company that asked a municipality to reimburse the overpaid IBI, the Supreme Court has now ruled in its favour. These were overpayments from 2017 to 2020. A land registry authority had reduced the value of the property. The municipality in question refused. Because the settlements were final, according to the municipality. Nor would there be any retroactive effect.
The Supreme Court decided otherwise. ‘The procedure for the repayment of sums unduly paid shall be appropriate as a legal instrument for the recovery of the overpayment of IBI … when, by administrative decision following the self-assessment, the cadastral value on the basis of which they were paid does not correspond to the economic value or the physical or legal reality of the property”, the court added.
Finally, the refusal to repay the overpayment is contrary to the principles of economic standing and equal treatment, the Court held.
Also read: Spain revises cadastral value on thousands of homes
