Important victory in Supreme Court against tax on empty properties

The firm advises on an appeal against Barcelona City Council’s tax on empty properties for breaching the principle of tax legality and for not having the power to impose this tax.

The Supreme Court has confirmed the annulment of the taxes on empty properties that Barcelona City Council approved on September 30, 2016. These taxes amended Barcelona’s Tax Ordinance 3.1, which regulates taxes on general services, by introducing two new taxes in article 2.9: one set a rate of €633 for each case opened once an unoccupied dwelling was discovered, and the other set a rate of €286 for each additional injunction in cases where the owner failed to comply with the municipal order.

The Tax and Litigation Practice Areas, with a team made up of Miró Ayats, Fernando Remón and Irene Álvarez, advised a group of clients on appealing against these taxes.

Our team scored its first victory in the High Court of Justice of Catalonia in 2017. Barcelona City Council appealed this ruling in the Supreme Court, which led to our team filing the corresponding opposition.

Now, the Supreme Court has ruled in our favor and canceled the controversial taxes because Barcelona City Council (i) does not have the power to impose such a tax, and (ii) breached the principle of tax legality.

The Supreme Court declared that Barcelona City Council chose a procedural method that cannot control or review the interpretation of regional regulations, such as Act 18/2007, of December 28, on the right to housing in Catalonia. Also, as a matter of annulment interest, the Supreme Court defined the interpretation of the principle of tax legality and its reach in establishing taxable events for municipal taxes under article 20 of the Royal Decree Law 2/2004, of March 5, approving the consolidated text of the act regulating local tax administrations (TRLRHL), and article 52 of Act 1/2006, of March 13, regulating the special regime for the municipality of Barcelona (LREAB).

As far as this issue is concerned, the Supreme Court decided that the disputed municipal taxes (i) are not on the list of taxable events under article 20.4 of the TRLRHL; (ii) are not legally similar to the services and actions it describes; and (iii) cannot be covered by the expression “any others” under article 20.2 of the TRLRHL, which would require an act to cover the new taxes created. For these reasons, the court concluded that the taxes Barcelona City Council approved breach the principle of tax legality.

The importance of this ruling surpasses this particular case, as it indirectly questions the legality of similar taxes that other city councils approved for the same taxable events.

This ruling opens up the possibility of recovering amounts city councils required for the same taxable concepts.