THE BANKS WILL HAVE TO PAY
Socialist government set to defy the courts in order to save customers thousands of euros over mortgage tax
THE PUBLIC outcry caused by a Supreme Court ruling – which reversed a previous decision ordering banks to pay the substantial mortgage tax rather than their clients – has forced the government to announce a reform of the law.
Financial experts stated that the original court decision over the ‘impuesto de actos jurídicos documentados’ – which every customer who contracts a mortgage in Spain has to pay – could cost banks or regional governments billions of euros in back payments. The tax inflates the price of a property sale for buyers, although the amount varies in each region with clients in Valencia, Murcia and Andalucía paying the most, which is 1.5% of the total price of a mortgage – the highest amount in Europe.
This means that in Valencia and Murcia buyers who contract a mortgage of €200,000 have to fork out an additional €3,000.
The system was thrown into chaos at the end of October when Supreme Court judges ruled that it was the banks that would have to pay.
At the time financial experts stated that this judgment could allow more than one million customers to claim back the tax. The share values of Spanish banks plummeted following the announcement.
The next day, Supreme Court president and Spain’s top judge Carlos Lesmes controversially suspended the decision and a committee of 28 judges was convened to rule on the matter. On Tuesday evening they shocked the country by reversing the decision of their peers – and ruling that customers would have to continue paying the tax.
In response to the outcry over the judgment, Prime Minister Pedro Sánchez gave a press conference on Wednesday to state that his government will legislate to ensure that banks have to pay the tax.
He said that during a Council of Ministers due to be held yesterday (Thursday) afternoon, they would issue a royal decree to change the law.
This will be published in the official state bulletin (BOE) today, meaning that the changes to the tax will become effective immediately, although it will have to be ratified by Parliament.
However, the initiative falls short of expectations for millions of mortgage payers who had hoped they would have the tax returned to them.
At the same time, Sr Sánchez announced that his Socialist (PSOE) government will set up an independent watchdog to protect the financial rights of citizens.
Opposition parties and consumer associations have railed against the Supreme Court judges and demonstrations have been called tomorrow (Saturday) at 18.00 outside the court buildings in Madrid and ‘all the courthouses in Spain’.
Consumers’ rights group FACUA labelled the judges’ decision ‘abhorrent’ and lamented that they had succumbed to pressure from the banks.
They called on political parties and residents’ organisations to rally their members to defend an ‘independent judicial system in Spain’.
FACUA and political party Podemos have said that Sr Lesmes should stand down.
Pedro Sánchez on Wednesday