According to the court, the tax regulations are clear in establishing that the taxable base of the Stamp Duty Tax is the real cost value of the new construction that is declared, without mentioning the market value and without providing for update coefficients.
In its judgment of 18 May 2026 (appeal 8043/2023), the Supreme Court has established doctrine on how to quantify the taxable base of the Stamp Duty (AJD) modality in the deeds of declaration of new construction.
The case in question is based on a deed of declaration of new construction granted in 2014 on a construction executed more than fifty years earlier.
The taxpayer self-assessed the tax based on the historical cost of the work at the time it was carried out. The Tax Agency of the Balearic Islands processed a verification of values and issued a provisional settlement, concluding that this cost should be updated with certain monetary correction coefficients, because the accrual of the tax had occurred more than half a century after the material execution. The controversy, therefore, is not about whether the deed is subject to AJD, but about how to quantify the taxable base when the work has been executed many years before, a question that arises with some frequency in practice.
The Administration maintained that the cost could not be fixed at the historical moment of its realization and should be updated to reflect a magnitude referring to the accrual, given that the taxable base of the tax was significantly reduced only by the passage of time. The taxpayer defended that the cost of the work is the cost of material execution effectively paid, without the regulation enabling any updating mechanism. The Regional Economic-Administrative Court of the Balearic Islands upheld the taxpayer’s claim and the High Court of Justice of the Balearic Islands confirmed the decision issued in economic-administrative proceedings. The autonomous community appealed in cassation to the Supreme Court and the question admitted was whether, in the calculation of the tax for AJD of these deeds, it is possible to apply coefficients of monetary updating when the accrual occurs long after construction.
The Supreme Court dismissed the appeal, based on the provisions of article 70.1 of the ITPAJD Regulations (Royal Decree 828/1995, of 29 May), according to which the taxable base in the deeds of declaration of new construction is constituted by the real cost value of the new construction that is declared.
The Court bases its conclusion on an already consolidated line of jurisprudence. In its judgment of 9 April 2012 (appeal 95/2009) it rejected that the basis could be determined with cadastral valuation criteria or the regulations on social housing, concluding that the real value of the cost of the work is the cost of material execution, not a valuation of the finished property. The same criterion was reiterated in the judgment of 11 April 2013 (appeal 2991/2012), which separates the cost of execution from the value of the finished property, which is influenced by factors unrelated to the construction, such as location, use, urban planning situation or market expectations; and this criterion was insisted on in the judgments of 18 May 2020 (appeals 4382/2017 and 5535/2017).
The novelty of the 2026 judgement is to close an aspect that continued to generate controversy in practice. Specifically, it is resolved by denying that, due to the time elapsed between the execution of the work and the execution of the deed that determines the time of accrual, corrective mechanisms can be applied that increase the taxable base as a result of the effect of inflation.
The reasoning of the Supreme Court is based on the principle of reservation of law. The court recalls that the taxable base is an essential element of the tax, in accordance with article 8 of the General Tax Law and that article 30.1 of the revised text of the ITPyAJD Law (Royal Legislative Decree 1/1993, of 24 September) refers, when mentioning the first copies of public deeds that have a valuable amount or thing as their object, to the declared value, without prejudice to the administrative verification, while the specific rule applicable to the declaration of new construction is in article 70 of the regulations. Admitting the collaboration between law and regulation, the regulation refers to the “real cost value of the new work that is declared”, without mentioning the market value and without providing for updating coefficients, corrective indices for age or equivalent mechanisms. Without regulatory authorization, therefore, the Administration cannot reconstruct the base with criteria that the regulation does not contemplate.
The court also rejects the argument of economic capacity maintained by the autonomous community. For the Court, this approach confuses the current value of the property with what is actually taxed. In a declaration of new construction there is no transfer nor is the present value of the property subject to taxation, but a work already executed is documented so that it has a registry record. The time lag explains, precisely, why the work has not enjoyed registry protection during those years, but it does not alter the magnitude that the regulation takes as a basis. The tax falls on the public documentation of the work, not on the revaluation of the property.
The reading is also based on administrative doctrine. The binding resolutions of the Directorate General of Taxes V1465-15 and V3306-19 had already held that the real value of the cost is that of the time of execution, without deflators or corrections for age and regardless of the date of accrual. The Central Economic-Administrative Court had ruled along the same lines in its resolution of 20 September 2018 (RG 00/04588/2015).
The content of this judgment is relevant, given that, for registry, urban planning, inheritance or property planning reasons, it is not uncommon for a building to be entered in the Registry many years after its construction. The ruling prevents the Administration from transferring the base to the current value by means of cadastral values, replacement modules or other indirect methodologies, and confirms that the magnitude that must be respected is the real cost of material execution.
This criterion is also of interest in relation to nearby figures, such as the horizontal division of old buildings. Article 70.2 of the regulation orders the inclusion in the base of both the real cost value of the new construction and the real value of the land. Therefore, this doctrine can be transferred to this figure in the part corresponding to the work carried out in the past, without prejudice to the fact that the value of the land has its own valuation rule and that each case must be analyzed according to its specific circumstances.
In any case, and regardless of the technical criterion, the most delicate issue will continue to be evidentiary. In the case of old buildings, it is possible that complete documentation of the construction cost is not kept and it will be necessary to assess what means allow it to be accredited or reconstructed in a reasonable way: urban planning files, building permits, approved projects, final work certifications, ICIO files, first occupancy licenses, municipal certificates, cadastral documentation, historical price bases or reports from architects and technicians. The suitability of each means will depend on the property and its age.
Notwithstanding this, the lack of documentation should not be enough, by itself, to replace the historical cost with current, cadastral or market values. The Administration can verify the declared value, but this verification must respect the nature of what it verifies. In other words, it is not a question of establishing how much the property is worth today, but of accrediting, with the means available, what was the real cost of material execution of the work declared at the time the construction was undertaken.
The distinction has significant economic effects on properties located in areas where the market value has increased significantly and on long-term periods where inflation may have had a significant effect. Admitting the automatic updating of the cost or its replacement by current values would delink the base from the cost of the work and bring it closer to the present value of the property, something alien to the legal and regulatory configuration of the tax.
