On Thursday, the Constitutional Court of Spain upheld the use of the cadastral value as a basis for calculating taxes associated with real estate transactions, including sales, donations, and inheritances. This decision assesses the compatibility of the cadastral value with the economic capacity principle established for consumers. The court argues that the mechanism in place, which has been active since 2022, offers an objective basis for assessing potential economic capabilities, ensuring a fair approach in taxation related to property.

The court's ruling specifies that the cadastral value effectively determines the taxable base for several taxes, such as the inheritance and donations tax and the property transaction tax. This approach is considered reasonable by the court and is intended to simplify the taxation process while ensuring that it aligns with market values. This ensures that taxpayers are levied taxes in a manner consistent with their economic situation and the market conditions regarding the properties they may transmit.

Moreover, this conclusion by the Constitutional Court could have significant implications for future fiscal policy in Spain, potentially influencing how property taxes are approached and calculated. By endorsing the use of the cadastral value in taxation, the ruling could set a precedent that balances the state's revenue needs with taxpayer's economic realities, thereby enforcing a more equitable taxation system in property dealings.