Contradictory Expert Appraisal: Tax Implications & Valuation
Contradictory Expert Appraisal: Tax Implications
Question: Would such action be correct?
I believe the Administration’s action would not be correct. Article 135 of the General Tax Law (LGT) regulates contradictory expert appraisals. Specifically, paragraph 1 states: “Those interested may promote a contradictory expert appraisal in the mass correction value for tax purposes specified in Article 57 of this Act, within the first action or claim made against the tax applicable in accordance with proven administrative values….”
The deadline for filing both an economic and administrative claim in the first or only instance, as an appeal, must be filed in accordance with Articles 235 and 223 GTL respectively, “one month from the day after the notification of the contested measure.”
Carmen requested the conflicting expert appraisal later, which should not value the outcome that results from it, and the payment shall be made to the value originally found by the Administration: EUR 1,090,000.
What would have happened if the value given initially by Carmen for the property in question was 700,000 euros and a contradictory expert appraisal was requested on January 14, 2009?
First, I must say that if the conflicting expert appraisal was requested on January 14, 2009, it would have been within the prescribed period, and therefore the request for an expert appraisal would be valid.
If we continue reading the wording of Article 135 LGT, in particular its paragraph 2, it follows that: “…If the difference between the value determined by the expert of the administration and the valuation by the expert designated by the tax obligation, considered in absolute values, is equal to or less than 120,000 euros and 10% of that valuation, the latter will be the basis for settlement. If the difference is greater, a third expert shall be appointed in accordance with the following paragraph.”
In this case, the valuation difference (1,090,000 – 700,000 = 390,000 euros) is greater than 120,000, which is correct to appoint an umpire.
According to paragraph 4: “The umpire assessment will form the basis of the clearance to proceed with the limits of the declared value and the value originally tested by the tax authorities.” That is, the valuation of the third expert is taken to make the final settlement, which, acting in this case, it would be correct.
Question: Would there be any effect if the tax authorities had not deposited the fees for the umpire?
Yes, there would be. LGT Article 135.3 establishes: “The umpire may require that, prior to the performance of their duties, provision is made in the amount of their fees by deposit in the Bank of Spain or public body as each tax authority within 10 days.” It then added that “the lack of deposit by either party will accept the valuation made by the expert of the other, whatever the difference between the two ratings.” Therefore, if the tax authorities do not deposit the fees, they are deemed to accept the valuation of 700,000 euros by the expert of Carmen, and that amount shall be the tax payment.
Question: What if Carmen had declared the value of property resulting from the official values published by the government?
According to Article 134.1 LGT: “The tax authorities may carry out the verification of values according to the means provided for in Article 57 of this Act, unless the tax must have been declared using the values published by the Administration acting under any of those means.” Therefore, if Carmen had declared the value of property resulting from the official values published by the Administration, the Administration could not proceed with the verification of values.