In light of the numerous news reports that have appeared in recent days regarding the mortgage loan tax (or Stamp Duty Tax, hereinafter AJD) and the doubts it may generate, the main banking associations consider it important to clarify certain matters:
Who demands payment of this tax? Do banks collect the corresponding funds from clients?
As with other taxes, the requirement to pay AJD is determined by tax regulations and its collection goes to public coffers.
Banks have not charged their customers any amount for this concept. Customers have paid the tax directly to the regional tax authorities as a consequence of what was established in the Tax Regulations.
In other words, it is the tax authorities who require payment of this tax and who collect it. Therefore, banks have not received any amount.
If the bank is the party interested in the mortgage existing, why does the customer have to pay the tax?
In a mortgage loan, the loan and the mortgage form a single economic reality. The party interested in the mortgage loan is the customer, who wants long-term financing to purchase a home, under very favorable conditions in terms of term and interest rates. Without a mortgage, the loan would have less attractive conditions, such as those of consumer loans, which do not have mortgage security behind them and, therefore, are not granted for such long terms or at such low interest rates.
There is much confusion regarding whether the Supreme Court’s decision will be retroactive. Why does the financial sector claim that no retroactivity should be applied?
Banks have acted at all times in accordance with the law, with the tax regulations in force for more than 23 years, specifically in accordance with the Regulations of the Tax on Asset Transfers and Documented Legal Acts, approved in 1995. These regulations, as well as numerous Supreme Court rulings (the most recent from November 2017 from the Third Chamber, Administrative Litigation, and from March 2018 from the First Chamber, Civil), establish that it is the borrower, that is, the customer, who must pay the AJD tax upon the execution of a mortgage loan.
The entire Spanish legal system as a whole has always understood that the taxpayer for this tax was the customer. This is the only way to understand, for example, that reductions are established based on age, disability, or large family status—conditions that can only be met by customers—that the mortgage subrogation law exempts payment of this tax, or that in the value of the house for the purpose of calculating capital gains, this tax has always been included as part of it.
Furthermore, if a new ruling annuls a regulation in force until that date, the law establishes that its application will be from the day the ruling is published, meaning it should not have retroactive effect. This is what the principle of legal certainty consists of, and this is what our rule of law is based on, which is a guarantee for everyone, not only for companies but for all citizens.
Credit institutions need to operate with legal certainty, especially in the mortgage market given that contract terms are very long.
Mortgage regulation must continue to allow access to home ownership for all segments of the population.
Is Spain the only country that applies this tax? In other countries, who pays the tax?
In European countries where similar taxes exist, the taxpayer (the one who must pay it) is the borrower, that is, the customer. This is the case, for example, in France, Italy, Luxembourg, Portugal, and Austria.
This is also the case in the Spanish regions with regulatory authority in this matter (the Basque Country and Navarre), where regional laws establish that the taxpayer is the customer.
