The new reference value for property in Spanish taxes

Act 11/2021 introduced new minimum values for the tax base of the taxes due on the sale or inheritance of property, so that tax is paid on a value closer to the real value of what is transferred: the REFERENCE VALUE (valor de referencia).

About Act 11/2021 and its purpose

On 10 July 2021, Act 11/2021 of 9 July on measures to prevent and combat tax fraud was published, transposing Council Directive (EU) 2016/1164 of 12 July 2016.

The new law sets the rules for how property is valued for tax purposes, to prevent professionals and the public from manipulating values. It establishes a reference value that is the minimum on which transfer and acquisition taxes must be paid.

How can I find out the reference value of a property?

The reference value is set by the Spanish Land Registry Office (Catastro) and can be obtained with the property’s cadastral reference.

How does it affect me?

From 1 January 2022, the reference value of each property is the minimum value to be used when paying tax on transfers or acquisitions of property, both for Transfer Tax and Stamp Duty (ITPAJD) and for Inheritance and Gift Tax (ISD).

The new tax base for ITPAJD and ISD must be the highest of:

• The reference value.
• The value stated in the deed.
• The agreed price or consideration.

So even if a different value is stated in the deed, if the reference value set by the Catastro is higher, tax will be paid on the reference value.

What if I disagree with the reference value?

Until now it was for the tax authorities to prove that a property had a different value from the one the taxpayer used. The new law reverses the burden of proof: it is now for the taxpayer to prove that the property has a different value from the reference value.

There are two ways to challenge the reference value:

1. Pay the tax on the official value and then challenge it with an expert valuation supporting a different value.
2. Pay the tax on the value the taxpayer considers correct and, once the tax authorities review the values, challenge their assessment.