Spanish Government Forces Banks To Pay Mortgage Tax
Spain News
Published: 09 November 2018 10:30 CET
Updated: 12 November 2018 11:30 CET
The Spanish government has acted swiftly after the country’s Supreme Court decided during the week to make mortgage customers pay the controversial mortgage tax Impuesto de Actos Jurídicos Documentados (AJD), which is levied on mortgage loan transaction paperwork.
The Supreme Court’s decision to make mortgage customers pay the tax came after announcing in mid-October that it would be the BANKS that had to pay it. On Tuesday evening, the the courts overturned their own decision and said it was the customers who would now have to pay.
The move caused public outcry and outraged the Prime Minister Pedro Sánchez and his cabinet who promptly overruled the court's decision and drafted a new Royal decree meaning the banks would need to foot the bill and not mortgage customers.
During the news conference that followed the Cabinet meeting, Treasury Finance Minister María Jesús Montero said that the reforms were justified due to the confusion that had ensued following the Supreme Court's decision.
Montero went on to say that the government would be ‘vigilant’ and make sure that the banks did not attempt to pass on the charge to the customer within the loan conditions and also not try to deduct the cost from their own taxes.
After approving the legal changes on Thursday, Prime Minister Sanchez vowed that “Spaniards will never again pay this tax.”
The new legislation which will be published in the official state bulletin (BOE) will take effect from this Saturday with any new mortgages signed subject to the new laws.
