The Royal Decree-law number 21/2018, issued on the 14th December, as a matter of emergencies in the matter of housing and rent, includes important changes in this area, mainly regarding the regulation of rents.
I would like to highlight now an alleged increase in the tax burden for the “unoccupied property with permanent character”, as well as the modification of Article 72.4 of the Law on Local Taxes, which allows municipalities to demand a surcharge of up to 50% of the quota of the IBI tax.
This is not a new issue, given that in the past there were several attempts to put it into practice, although our Courts of Justice rejected them, mainly for hierarchy reasons, by requiring the national legislator to define what a “permanent immovable property” is including such definition in a written regulation, and rejecting the possibility of realizing it by means of Autonomous Laws (Superior Courts of Justice of Andalusia, of Catalonia, of Asturias and of the Basque Country). The new rule does not seem to solve the problem definitively, by allowing a referral to the regional legislator.
The surcharge “will be accrued on the 31st December and will be settled annually by the municipalities, once the inoccupation of the property on that date has been verified, together with the administrative act by which it is declared.” On the contrary, the IBI is accrued on the 1st of January, as well as the start of the tax period with the calendar year. And this is the first problem that we face: whether there is a new deadline for voluntary payment of IBI tax or should be set within two different periods established and, in such situation, there could be the paradox that a non taxable person appears as a starter on the 1st of January, and even another paradox regarding the surcharge, for having acquired the property on the 2nd of January and for keeping it empty the rest of the year.
Once this issue has been dealt, the main problem is to define what we mean by “free permanent unoccupied property”, especially in touristic areas like the one I work in, where there are homes that spend most time of the year unocuppied and are often only used for fifteen days a year.
The first thing here is to try to clarify the reasons for this alleged charge, since we understand that one thing is the social utility of housing (in residential areas, where owners have their everyday residence, especially in those cases of bank houses as a result of public intervention in the housing promotion) and a different one is to intend to force the usage of homes that, a priori, are destined for a different use, such as tourism, holiday or seasonal use.
Residential housing (especially in case of social housing) does have an occupation duty, but not the holiday home, which also tries to submit the rule. And although the idea that foreigners and tourists are the main source of municipal charges (although they are mostly enjoyed by those who reside permanently in the municipality) sounds very attractive, from a legal perspective this is difficult to explain.
Given the aforesaid situation we must pay attention to the multitude of circumstances that can be happening and that will presumably be ignored by the rule, which seeks to prioritize the taxation rather than offering solutions. And I also refer to the houses that are empty, because they do not fulfil the conditions of habitability, when their owners cannot rehabilitate them for lack of means (think of a house in ruins) and, in an even worse case, they are subject to an overburdened type of IBI tax, which only aggravates the situation of these owners.
The main problem that I face, in the area of professional performance I normally deal with (mostly touristic and seasonal occupied), is the one referring to the definition of permanent inoccupation: would it be enough to spend only one day a year to be able to avoid this surcharge? If so, would a consumption of one kilowatt or one cubic meter be enough to prove that the house has not remained empty? And, seeing then the temptation to establish devices that guarantee a minimum and wasteful consumption, what is the sense of this type of norms that force us to simulate a minimum consumption?
Considering the above, regardless the municipal fundraising desire that is covered up with nice ideals, how can they try to impose a minimum occupation to a house that has been bought with a very different aim to the one residential areas have? Has not there been enough controversy in the last years with the increase of the tax, not only because of the increase in the cadastral value -especially difficult to understand in times of crisis in the real estate market- but also because of the increase in rates, as for now to expect an increase of up to 50%?
At the same time, it is important to bear in mind the environmental cost of a simulated consumption, which has no other explanation than trying to avoid a tax surcharge.
Finally, opposite to the definition of a negative fact, such as inoccupation, the definition of “habitual residence” seems much less controversial. This concept originally gave rise to numerous controversies, therefore there have been many administrative and judicial resolutions over the years to clarify the legal concept and demanding requirements. If a there is a positive event which generates a lot of controversy and is found difficult to definitively resolve, imagine what happens with a negative one, whose definition can remain in the hands of the regional legislator, with the risk of offering different definitions and causing inequalities.
Given the background, we may foresee an increase in litigation in those municipalities that decide to apply this surcharge. This fact could only be slowed down by the small amount of the procedures and the traditional reluctance to litigate against the Administration. Such reluctance has been broken in recent times due to the liquidations of municipal capital gains taxes.
Doctor in law
Venancio Parra Torres