Catalonia brings back its tax on legal entities’ non-productive assets
The Catalan tax, introduced in May 2017, was suspended when the Spanish government filed an appeal with the Constitutional Court and now the suspension has been lifted after the court held it was constitutional.
Law 6/2017, of May 9, 2017, created a new tax in Catalonia on legal entities’ non-productive assets. It stopped being charged after an appeal relating to its constitutionality was lodged by the Spanish prime minister, a suspension that has now been lifted by the Constitutional Court in judgment 28/2019, rendered on February 28, 2019, holding the tax constitutional and denying that it overlaps with wealth tax or local taxes such as the real estate tax or the tax on mechanical traction vehicles. It also held that the tax does not go beyond its allowed geographic scope because it is only charged on (i) properties located in Catalonia and (ii) any other assets that the law classes as “non-productive” which are owned by entities domiciled in that autonomous community (wherever located).
For this reason, the tax will now come into force with effect from 2017, so anyone with obligations related to this tax must file self-assessments for 2017 through 2019 between October 1 and November 30 2019. In later years, returns must be filed in June of the year the tax falls due.
You are reminded that this tax is charged on assets that the law treats as non-productive, meaning properties, motor vehicles with at least 200 horse power, pleasure craft, aircraft and art and antiques worth over the value set out in the Law on Historic Property; where:
- The taxable person’s owners, members or investors (or to persons related to them) have been granted the right to make private use of them, unless (i) for grants made for no consideration, income in kind is recognized for personal income tax purposes in respect of that use; or (ii) for grants made for consideration, the price paid for the right to use them is the market rate and the users work for the owner and receive in exchange income higher than the assignment price.
- The assets are not used for economic activities and no right to use them has been granted.
These types of assets are taxable, in the case of real estate assets, where they are located in Catalonia. In all other cases, where they are owned by taxpayers domiciled in that autonomous community. All in all, in the case of properties the tax may be payable by companies and entities domiciled outside Catalonia.
For further information, see our family business Newsletter for June 2019 (here).
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