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Although it is common, when discussing family businesses, to focus on the taxes that primarily affect the company’s operations (VAT and corporation tax), or on disputes relating to tax reliefs applicable to family businesses under Inheritance and Gift Tax (IGT) or Wealth Tax, there are other taxes that also directly affect family businesses.
This is the case with Property Transfer Tax (ITP), which, in its various forms, may be levied, in the property sector, on transactions commonly carried out by family-run businesses, such as the purchase of residential properties for letting (very often subject to the ‘Onerous Property Transfers’ category), or the waiver of the VAT exemption on the purchase of properties used for business activities (taxed under the Stamp Duty (AJD) scheme, which in Autonomous Communities such as Catalonia amounts to 3.5 per cent) or the winding-up of companies with the allocation of property to members of the family group, which is taxed at 1 per cent under the Corporate Transactions scheme. Real estate transactions are also of particular relevance under the Inheritance and Gift Tax (ISD), which is levied on inheritances and gifts within family groups.
Now, in the case of the two taxes mentioned (ITP and ISD), property transactions are radically affected by the concept of the ‘Reference Value’ introduced by the 2021 Act on Measures to Prevent and Combat Fraud.
Prior to the passing of this Act, both the ITP and the ISD generally established the so-called ‘actual value’ as the basis for calculating the tax liability. The difficulty in determining this actual value led to a vast number of disputes between taxpayers and the tax authorities, particularly those of the Autonomous Communities. This was the case, for example, when a family-run business purchased commercial premises and the tax authorities issued a stamp duty assessment on the grounds that the declared value was too low; or in the case of inheritances involving property, where the declared value was deemed insufficient by the regional tax authorities.
To resolve these issues, the taxable base for both taxes was set on the basis of the so-called ‘Reference Value’, which is an administrative value determined objectively by the Directorate-General for the Land Registry and derived from an analysis of the prices of all property sales recorded in public deeds. It is calculated individually for each property based on data from the land registry itself, is updated annually and is capped at market value (which thus replaces the ‘actual value’). The application of this value may only be avoided if the value declared by the taxpayer is higher.
Thus, if a company within a family group is engaged in property letting and purchases a property subject to ITP, it must check whether the Land Registry has published a Reference Value for that property and use this as the minimum basis for calculating the tax. The same may apply in future to acquisitions of industrial units or commercial premises, which currently do not have a Reference Value assigned but are very likely to have one in the future.
However, it is possible that this Reference Value may not correspond to the price or value actually agreed between the parties, or to the specific conditions of the property purchased. In that case, it is necessary to know whether we can object to its application.
Has the introduction of the Reference Value in 2021 placed a greater burden on taxpayers?
Formally speaking, no, as it is capped at market value and, normally, given the way it has been regulated, will be below this. In certain areas, it may even prove insignificant. Consider, for example, those Autonomous Communities that have substantially reduced inheritance tax between relatives: the taxpayer will prefer to align with the highest possible market value, as this value will serve as the benchmark to be taken into account for any capital gain arising from a future transfer of the property.
On the other hand, the Reference Value can be a useful tool, for example in cases where there is no clear and identifiable market value.
However, there are undoubtedly situations in which taxpayers will be disadvantaged: for example, when the property in question has suffered deterioration not taken into account in the land registry valuation; or when the acquisition takes place through channels that substantially reduce its purchase price (such as an auction).
Is it possible to challenge the reference value?
Yes. Taxpayers may appeal against the reference value when it is used in the tax assessment. However, it is not possible to challenge it once it has been published.
The usual procedure is to submit the relevant self-assessment tax return (for example, the transfer tax return for the purchase of a property) and request a correction.
Are there any legal grounds for challenging the Reference Value?
Yes, of course.
The valuation set by the Land Registry may be based on incorrect data. It may also be the case that there is information regarding the condition and maintenance of the property of which the Land Registry is unaware when setting the Reference Value. The data and parameters used as the basis for setting the Reference Value are available via the Land Registry’s online portal.
It is also possible that the regulations have been applied incorrectly (for example, by applying a particular coefficient incorrectly). And finally, it could be the case that, quite simply, the Reference Value is higher than the market value, even though the data used by the Land Registry and the application of the regulations are correct. In this case, the challenge will be predominantly technical, and it will be necessary to commission an expert report to defend the taxpayer’s rights. This approach has already been accepted by some High Courts of Justice.
But is the Reference Value really constitutional?
At first glance, one might think that taxing property transactions on the basis of an index-based value would violate the principle of economic capacity enshrined in our Constitution. This was the case with the municipal capital gains tax, whose method of calculation – based on the cadastral value and failing to take into account actual taxable wealth – was struck down by the Constitutional Court (TC).
And indeed, the tax was challenged before the Constitutional Court on the grounds of the objective determination of the tax base and its methodology – described as “cryptic and incomprehensible to the average citizen” – which failed to take account of the unique characteristics of the properties and shifted the burden of proving the property’s actual value onto the taxpayer.
Notwithstanding the above, the Constitutional Court’s judgement of 12 February 2026 resolved the matter by dismissing the appeal in its entirety, and declaring that the reference value constitutes a constitutionally legitimate legislative option that respects the principle of economic capacity.
In our view, however, the matter is not yet settled, and family businesses still have one last card to play here should they have been adversely affected by the application of the much-cited Reference Value. Indeed, it remains to be clarified whether this Reference Value actually complies with the principle of statutory reservation, given that it has been determined not through implementing regulations as required by law, but through annual resolutions issued by the Directorate-General for the Land Registry, which clearly lacks regulatory authority.
We will therefore need to keep a close eye on the appeals already underway that are based on this line of argument. If your company requires advice on matters of this kind, we at Ceca Magán would be delighted to assist you.
Tax department
