The recent Supreme Court sentence 1505/2018 has made the AJD, a property transfer tax (ITP) modality the main issue, not only among tax professionals but also between any person who has contracted a mortgage during the last years.
Click on the following link if you want to download the sentence:
Supreme Court sentence 1505/2018
What is the AJD for mortgages?
The AJD, as we said, is a modality within the ITP that taxes the realization of certain acts or contracts, among them, are the notarial documents, that is any public deed, act or notarial testimony.
Regarding who is the obligated for the payment of the tax, the ITP Law establishes that the taxable person will be the one who is interested that the notarial documents are issued; With this, it is understood that in the case of a mortgage is the lender – that is the bank – the interested party in which the mortgage contract is registered, and therefore is notarized, but the Regulation of this tax explicitly provides that when it concerns a constitution of a loan with guarantee, the borrower will be considered the taxpayer, that is, to the one to whom the loan is granted.
When does the TS Sentence establish?
The judgment of the Supreme Court dictates that it must be the banks who must pay the tax on AJD associated with the registration of a mortgage and not the clients, giving the reason to the general rule established in the Law of the ITP, but in the opposite direction of the specific assumption for mortgages, regulated in the Regulation of the same tax. What the Supreme Court understands, is that the only one interested in notarizing and registering a mortgage is the lender, that is, the bank.
What will happen to mortgages signed before the judgment?
It is still not clear that this Sentence is retroactive but if we consider the scenario where it is considered to be so, what should be done is a request for undue income to the competent body in each Autonomous Community for the last 4 years, since it is a tax whose management is assigned to them. And yes, we say four years since the taxable events prior to 2014 are already prescribed.
What could be done to claim such amounts in cases prior to 2014 is to try to negotiate their refund directly with the bank or initiate a legal proceeding, although taking into account the costly both economic and temporary, the latter is not the most recommended option. In this case, it should be argued that this is an abusive clause and that banks should reimburse such expenses through the courts.
Another great debate is that what is going to happen with the expenses of notary, agency and registry, since the sentence of the TS indicated does not deal with this issue, a previous criterion determines that it should be distributed equally, although there is no explicit positioning in this regard, so we will have to wait for the Supreme Court to rule on this in future judgments.
GM Tax is a specialized consultancy in the tax field, so if you are interested in hiring our services for the management or advice on the return of the AJD of mortgages or any other tax matter do not hesitate to contact us, we will analyze your case and we will advise you to measure.
