The Supreme Court sets the criteria on the application of the AJD tax

One of the interpretative criteria that it resolves is the question of determining, in interpretation of article 9 of Law 2/1994, of March 30, on subrogation and modification of mortgage loans

 

The Contentious-Administrative Chamber of the Supreme Court has established doctrine on the application of the Law of Documented Legal Acts in public deeds that document modifying novation of a mortgage loan, where in addition to clauses that affect the interest rate or term, are included other financial clauses, without affecting mortgage liability.

The court explains that it should be examined on a case-by-case basis if, in compliance with the incorporated clauses, the legal requirements are met, especially the registration and that the content is valuable. In cases where the new clauses are subject to tax, the court concludes that the taxable base will be applied on the economic content of the financial clauses that delimit the economic capacity susceptible of taxation.

The ruling sets two interpretative criteria in this matter:

 

• In the first place, it resolves the question of determining, in interpretation of article 9 of Law 2/1994, of March 30, on subrogation and modification of mortgage loans, if the public deeds of novation of mortgage loans in which they are modified only the conditions referring to the interest rate and / or the term of the loan, but also other types of financial clauses are subject to and exempt from Property Transfer Tax and Documented Legal Acts, documented legal acts modality.

In this regard, the Chamber indicates that,

“… when the public deed simply incorporates modifications on the As financial clauses, these must be attended to to verify if fulfilling the legally required requirements, essentially that of registration and having as an object quantity or valuable thing, is the same subject or not subject to the tax of AJD, extending the exemption of art. 9 of Law 2/1994, in exclusivity to the clauses relating to the interest of the loan, to the alteration of the term of the loan, or to both”.

 

• The sentence also responds to a second question, in particular if, in the event that the deeds public novation of mortgage loans in which not only the conditions relating to the interest rate and / or the term of the loan are modified, but also other types of financial clauses not exempt from the tax, the tax base is determined by the total amount of Guaranteed mortgage liability or just for the economic content of the financial clauses whose modification is agreed upon “.

 

On this, the court states that,

” … the taxable base must be determined based on the material content of the taxable event, which in case of the simple modifying novation of a mortgage loan incorporated into a public deed is specified in the economic content of the financial clauses as valuables that delimit the economic capacity susceptible of imposition “.

 

Source: Law & Trends 19.03.19