Lenders to pay mortgage tax in Spain

LEVY: Banks to pay mortgage tax (inset) Sanchez vowed Spaniards will never again pay it. PEDRO SANCHEZ: (inset) CREDIT: Shutterstock

LEGAL changes which will make banks as opposed to borrowers responsible for paying a controversial mortgage tax, have been approved by the Spanish Cabinet.

And measures are being put in place to ensure that lenders cannot deduct this cost on their own tax returns.

The decision, made last Thursday, came 24 hours after Prime Minister, Pedro Sanchez (PSOE), vowed ‘Spaniards will never again’ pay the levy.


The leader of the Socialist Party reportedly made ‘unusually critical remarks’ about the court which has been made ‘contradictory decisions’ regarding who should pay the fee for a number of weeks.

Indeed, this recent move annuls the Supreme Court’s decision in mid-October to make customers pay the Actos Juridicos Documentados (AJD) tax.

That ruling came a day after courts overturned 20 years of jurisdiction by deciding the lender, not clients, should pay.

The approved decree is due to be published tomorrow (Friday) on the Spanish Government’s Official Gazette.

The new law will come into effect the following day and mortgages signed from then on will be subject to the new rules.

Finance ministers confirmed the government is not scrapping the AJD tax altogether, as it generates around €2 billion in annual revenue for regional authorities to fund education, public healthcare and certain benefits.

Experts have warned that financial institutions would simply raise interest rate, in affect passing the cost back onto clients with more expensive mortgages.

But an Authority to Defend Bank Clients is expected to be introduced to ‘watch over consumer rights and ensure there are no abusive clauses’.


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