Impact of the amendments to the Municipal Tax Law and the Urban and Building Permits Regulation Law

On 31 December 2021, Legislative Decree No. 1520 ("Decree") was published, which, among other provisions, amends the Municipal Taxation Act and Law 29090 and the Urban and Building Permits Regulation Act. The main amendments incorporated by the Decree are the following:

1. Transfer formalization requirement: For the registration or formalization of legal acts, notaries must require the accreditation of the payment of all the periods in which they maintained the status of taxpayer with respect to assets subject to property tax, property sales tax and vehicle tax.
   
   Until 31 December 2021, the requirement was limited to the fiscal year in which the act that was intended to be registered or formalized was carried out.
    
2. Increase to the Property Tax base: The increase in the amount of Property Tax, as a result of the new urban habilitation and/or building, will be enforceable from the end of the term of validity of the respective license and/or extensions, if any. In the specific case of buildings, the rule states that the greater amount of the aforementioned municipal taxes resulting from the increase in the tax base will be demanded by the municipality, provided that it issues a "verification" proving that the building is inhabited or delivered to its final owners by the construction companies.
   
   According to the text in force until 31 December 2021, increases to the tax base were not allowed during the execution of the works, unless after the expiration of the term of validity of the license, the building or urban habilitation work had not been completed.
   
   In view of this modification, the increase in the Property Tax would be applicable from the year following the municipal "verification." With respect to the taxes, meanwhile, it is foreseeable that the increase will be intended from the month following the aforementioned "verification."

The Decree is in force since 1 January 2022.