New ruling over mortgage tax
The Spanish Government is to amend the law so that banks pay mortgage tax.
President of the Go-vernment, Pedro Sánchez, announced in a press briefing that “Spanish people will no longer pay mortgage tax, but rather banks will”.
Pedro Sánchez announced that the Council of Ministers will approve a Royal Decree-Law to amend Section 29 of the Property Transfer Tax and Stamp Duty so that banks pay this tax.
The government will take this measure following the ruling by the Judicial Review Division of the Supreme Court to “reject the appeal lodged and return to the criteria whereby the taxpayer of Stamp Duty for mortgage loans is the borrower”. The change will come into force when it is published in the Official State Journal.
Pedro Sánchez stated that “the government respects the work and independence of the judiciary, but regrets the ruling handed down”. The govern-ment, added the President of the Government, “has a commitment to legal certainty and to citizens’ interests”. For that reason, he asserted, “the government will guarantee a foreseeable and stable scenario in the interests of all the operators involved”.
In the same vein, the President of the Government reported that the government will send Parliament a proposal on the creation of the Independent Authority to Protect Clients of Financial Products, which will seek to strengthen protection against abuse, improve the capacity to resolve conflicts and guarantee legal certainty.
Stamp Duty is regulated under Royal Legislative Decree 1/1993, of 24 September, which approved the recast text of the Property Transfer Tax and Stamp Duty. This tax is assigned to the regional governments. The levy applied in each region under the system varies between 0.75% and 1.5%. Navarre and the Basque Country apply a levy of 0.5%. This tax is applicable, among other circumstances, on the execution of a mortgage loan.