The Supreme Court (T.S.) determines that the “Impuesto de Actos Jurídicos Documentados” levied on public deeds for the constitution of mortgages must be paid by the lender (bank) and not by the client who receives the loan.
We have all been surprised by this change in jurisprudence regarding mortgage costs.
But today it is a firm sentence and as such it must be complied with. Nevertheless, it will be on Monday 5/11/2018 when the 31 judges of the Plenary of the Contentious-Administrative Chamber will sit down to deliberate whether or not they maintain the new criterion that it should be the banks, and not the client, who pays it.
Economic-financial impact
There are a couple of data on the economic impact of this ruling. “El Confidential” published that the collection of the “Impuesto de Actos Jurídicos Documentados” this year grew at a rate of 9%. But it comes from three consecutive years with double-digit increases. For this reason, the Regional Governments expect to collect more than 8,800 million euros with this tax for the year as a whole. A growth of 5.5% compared to the previous year, a figure which, at this stage of the year, already seems too conservative. And a large part of this amount corresponds to “Impuesto de Actos Jurídicos Documentados”.
On the other hand, according to Expansión, in 2017 the bank won nearly 15.000 million euros. Consecuently we can deduce that this sentence implies a brutal blow to the profits of Spanish banks. Without prejudice to the possible retroactivity of that sentence. Retroactivity is requested to clarify the next 5/11/2018. At stake are between 2,500-24,000 million euros according to different studies, whether it is retroactive for the last four fiscal years or for all living mortgages in Spain.
Hence the impact that this sentence has had on the stock quotes of Spanish financial institutions, to a greater or lesser extent depending on whether their profits depend more or less on their domestic business.
“Impuesto de Actos Jurídicos Documentados”. Current Jurisprudence.
But let’s do a little memory in this controversial matter, on the other hand of great social significance.
The Sala de lo Civil del T.S. in a sentence dictated on 23/12/2015 argued that the clause that imputed the payment of the tax accrued on a loan with mortgage guarantee to the borrower (client) was null and void for abusive. And it understood that the taxpayer was the lender. Because he was the acquirer of the right in rem, which is what was registered.
This ruling opened a flood of lawsuits. And it forced the CGPJ to enable Courts specialized in these procedures as well as to meet demands for floor clauses. By the way, the courts have already collapsed.
In March of the same year, the T.S. determined the expenses to be paid to the financial entity. Leaving out of them the “Impuesto de Actos Jurídicos Documentados”, which was also the highest amount. He then interpreted that in both loans and mortgage-backed credits, the liable party for this tax was the borrower.
“Impuesto de Actos Jurídicos Documentados”. Judgment.
Well, after only 7 months, Section 2 of the T.S. in its judgement no. 1505/2018 clarifies the divergence of criteria that existed between the First and Third Chambers of this Court. On the other hand, it had given rise to a multitude of disparity of sentences in courts and hearings.
To this end, it provides a legal response to two tax issues:
who must be the taxpayer in a public deed documenting a mortgage loan
and exemption in social housing for large families.
Focusing on the first of these, the Court understands that the person obliged to pay the tax is the mortgagee. He is the subject in whose interest the loan he has granted is documented in a public instrument and the mortgage is constituted as a guarantee of repayment of the aforementioned loan.
Legal Arguments
And it bases this jurisprudential criterion on two fundamental reasoning:
What determines the submission to patrimonial transmissions is the inscription in the Registry. The loan is not registrable in the Land Registry. However, the mortgage to be a right in rem of security if. And therefore being a complex legal business, the principal for tax purposes is the mortgage and not the loan.
The beneficiary of the mortgage document is the financial entity. He alone is interested in the registration of the mortgage in the Land Registry. This would allow him to exercise the actions that the law offers him.
Effects of the sentence
Having said all of the above, it is convenient to address the effects of this ruling on citizens who have been granted a loan with a mortgage guarantee.
Since the borrowers paid the tax, since they are the taxpayers, it seems logical to think that the procedure for claiming the Documentary Legal Acts Tax should be carried out by the latter and before the body that was paid in. That is to say, the Treasury Department of the Autonomous Community. By means of a rectification of the self-assessment and a request for the return of undue income to the Regional Treasury. Plus interest.
Without prejudice to the obligation of the financial institution to pay the aforementioned tax before this same body. Therefore, although there is no reference to retroactivity, we understand that at least the taxes paid in the last 4 years can be claimed.
There is no doubt that this ruling will give a lot to talk about, and will have great repercussions. Independently of the claim procedure and deadlines, it will have to be studied in more detail.
Our Legal and Tax Departments will analyze your case specifically. And we will be able to advise you on the most opportune procedure to follow depending on your special circumstances of subscription of the loan with mortgage guarantee.
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