The Supreme Court recognizes the patrimonial responsibility of the Legislator State in relation to the Tax on the Increase in Value of Urban Land

The Supreme Court grants the judicial review proceedings regarding administrative action filed against a resolution of the Cabinet of Ministers that rejected the claim of patrimonial responsibility of the Legislator State in relation to the Tax on the Increase in Value of Urban Land (increase in value) after the Constitutional Court Decision No. 59/2017, of 11 May, which declared the nullity of Articles 107.1, 107.2 and 110.4 of the Revised Text of the Law Regulating Local Treasuries (TRLRHL).

Firstly, the ruling mentions that the claimant paid the amount of 2.570.42€ for the liquidation of the capital gain to the Jaca Town Hall, for the purchase of a property, and that, once the appeal for reversal lodged with the Town Hall had been rejected, it filed a judicial review proceedings regarding administrative action before the Administrative District Court of Huesca claiming that the liquidation had to be annulled because the taxable event had not taken place, since there had been no increase in the value of the land sold, and invoking the unconstitutionality of the rule in which the Town Hall had been protected in order to turn the liquidation around, because it encumbered a fictitious or non-existent economic capacity. This judicial review proceedings regarding administrative action was dismissed by a Ruling of 24 November 2016, which could not be appealed on the grounds of the amount involved, but, despite this, and after the Constitutional Court Decision No. 59/2017 of 11 May, the claimant made a claim for the patrimonial responsibility of the Legislator State.

Secondly, the Supreme Court, after listing the requirements for the concurrence of the patrimonial responsibility of the Legislator State and the unlawfulness of the damage, delimits the scope of the Constitutional Court Decision no. 59/2017 in the sense of considering, in essence, that the nullity of the arts. 107.1, 107.2 of the TRLRHL is partial and that, on the other hand, the nullity of the art. 110.4 of the TRLRHL must be interpreted as total.

Finally, the Judgment, after examining the specific case, considers that the non-existence of the increase in the value of the land has been accredited, and, therefore, grants the judicial review proceedings regarding administrative action lodged and orders the local Administration to pay the amount of 2,570.42€ plus interest, and imposes the procedural costs on the State Administration in the amount of 4,000€.

The Supreme Court thus finds that an anti-legal injury has occurred as a result of the application of a rule with the rank of law declared unconstitutional under the terms of article 32.3 of Law 40/2015, of 1 October, on the Legal System of the Public Sector. In addition, according to the fourth paragraph of the same article, ‘if the injury is the result of the application of a rule with the rank of law declared unconstitutional, compensation will be due when the individual has obtained, in any instance, a final judgment rejecting an appeal against the administrative action that caused the injury, provided that the unconstitutionality was subsequently declared’, a requirement that also applied in the case under trial.