The Plusvalía Municipal (officially: Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana or IIVTNU) is a Spanish municipal tax levied on the increase in the value of urban land when a property is transferred. Whether you sell, inherit or donate: as soon as a property changes hands, the municipality wants its share. However, since the change in the law in November 2021, you pay this tax never more if you sell at a loss.
What is the Plusvalía Municipal and when is it due?
The Plusvalía Municipal is a tax on the theoretical or actual increase in the value of the land (not construction) during the period you owned it. This distinguishes this tax from national profits tax (Ganancia Patrimonial), which looks at the total added value of the property.
Expert Insight: "Many Belgians confuse the Plusvalía Municipal with the national capital gains tax. They are two completely different taxes. You pay the Plusvalía to the municipality (Ayuntamiento), the national capital gains tax to the Spanish state (Hacienda)."
The tax is payable on any transfer of property:
-
Sales: The seller pays.
-
Donation: The recipient pays.
-
Inheritance: The heir pays.
Read more about the national capital gains tax.
The New Plusvalía Rules: End to Unlawful Taxation
Since the Royal Legislative Decree 26/2021 came into force on 10 November 2021, the system has been thoroughly reformed.
Previously, municipalities calculated the tax based on an automatic annual increase in value, even if the market price had fallen. The Spanish Constitutional Court declared this methodology unconstitutional. The new legislation guarantees that no tax is payable if the taxpayer demonstrates that the land value has not increased.
The two calculation methods (Choose the most advantageous)
As a taxpayer, you now have the legal right to choose between two calculation methods. You naturally choose the option that leads to the lowest amount.
Option 1: The Objective Method (based on Cadastral Income)
In this method, the cadastral value of the land (valor catastral del suelo) multiplied by a coefficient depending on the number of years you owned the property.
-
Formula: Cadastral land value $imes$ Coefficient (set by the municipality, within statutory limits).
-
New: The coefficients are updated annually to reflect market realities.
Option 2: The Real Method (based on Actual Added Value)
This involves looking at the difference between the buying and selling price.
-
Formula: (Sale price - Purchase price) x Percentage of land value in total cadastral value.
-
Note: An anti-abuse provision applies. For sales within two years of purchase, the coefficients may be higher or the real method is more strictly controlled to counter speculation.
Tip: In 90% of cases with long-term ownership (>10 years), the objective method is often still more advantageous unless you make losses.
Find more information on the methods of calculating the plusvalía municipal here.
Who pays for Plusvalía (Crucial for Non-Residents)
The law clearly designates the taxpayer, but the practice in transactions with non-residents requires extra vigilance.
Buyer's risk with non-resident seller
If the seller not a tax resident in Spain is, the buyer is at risk. If the seller leaves without paying, the municipality (in the context of 'substituto del contribuyente') recover the tax from the property itself.
-
Opinion: When purchasing a non-residential property, the buyer (or their lawyer) deducts the estimated amount of the Plusvalía from the purchase price and pays it directly to the municipality.
Exemptions and Exceptions
Not every transfer results in a payment. The main exemptions at a glance:
-
Selling at a loss: If you can prove with official deeds that the sale price is lower than the purchase price, the levy is zero.
-
Transfer between spouses: For example, when allocating assets after a divorce or when bringing assets into the matrimonial community of property. Read more about tax at the end of a co-ownership.
-
Historical Heritage: Properties in certain protected zones (such as the historic centre of some cities) can enjoy bonuses of up to 95%, depending on the local municipal ordinance.
Frequently asked questions (FAQ)
Can I deduct the Plusvalía Municipal from the national profit tax?
Yes, the Plusvalía Municipal paid is considered a sale cost. You may deduct this amount from the sale proceeds when calculating the national capital gains tax (Ganancia Patrimonial), reducing your taxable base.
What happens if I don't pay the Plusvalía?
Municipalities carry out active checks through the land registry. Failure to pay results in penalties and default interest. For buyers of a non-resident property, this could mean that the property will be seized if the seller defaults.
How do I know how much Plusvalía I have to pay?
The final calculation depends on the specific rates of the municipality where the property is located. We recommend having a simulation made by a specialised firm before the sale to avoid surprises at the notary.
Does the new 2021 law apply retroactively?
No. Transactions that were final (whose objection period had expired) before the Constitutional Court ruling in October 2021 can no longer be reviewed under the new rules, unless an objection procedure was already under way.
About the author: Glenn Janssens is a lawyer specialising in Spanish real estate transactions and tax regulations. Since 2017, he has been helping Belgian and Dutch individuals and entrepreneurs to safely purchase and structure real estate in Spain. He guides files from A to Z: from due diligence, ownership and tax control to estate planning and optimisation for residents and non-residents. Thanks to his years of experience, hundreds of handled files and focus on transparent communication, Glenn makes complex Spanish legislation understandable and practically applicable for every property buyer.
Update: December 2025
