In a recent ruling, the Civil Chamber of the Supreme Court has reaffirmed the established case law of the Court’s own Administrative Chamber on the payment of taxes in the notarial deed for mortgage loans, which concluded that, when the loan is created, payment of the Tax on Property Transfers and Stamp Duty (AJD) falls to the borrower. The Supreme Court’s case law recalls that the regulations governing this tax establish that the taxable person for the variable portion of AJD is the borrower. In addition, the Supreme Court also specifies in its ruling that payment for the stamped paper for the original deed must be shared equally between the borrower and the lender.
Prudence is required when considering the Court’s decision, given that we still do not know the full judgment. However, this prudence should not prevent us from questioning the underlying reasons behind many public interpretations of the ruling whose purpose is to maintain uncertainty and confusion. This is precisely the opposite of the high court’s ultimate objective. And as a society, we must always defend legal certainty.
Increasingly stringent regulation and legal uncertainty may make it difficult for banks to effectively fulfil their ultimate responsibility of financing growth and generating economic prosperity. Ensuring legal certainty in the mortgage market is particularly important, as banks assume very long-term risks—over 20 years—with mortgage loans.
It is to be expected that the recent ruling of the Civil Chamber of the Supreme Court will mark the final epilogue to the judicial interpretation disputes on this issue that have arisen in recent years. It is also important for certainty to return to mortgage regulation, preserving the characteristics of our mortgage market given the importance of homeownership for Spanish families.
José Luis Martínez Campuzano, spokesperson for the Spanish Banking Association
