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Spanish Supreme Court U-turn: citizens must pay mortgage tax, not banks

Judges reverse earlier decision favoring clients following negative impact on markets and prospects of big reimbursements costs

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06 November 2018 08:22 PM

by

ACN | Madrid

The Spanish Supreme Court has made a final decision on whether banks or clients must pay a tax on new mortgages: and it has ruled that it's the citizens, not the lenders, that should be paying.

The ruling comes after an unprecedented series of U-turns that have caused embarrassment in the judicial system, confusion to clients, and even some losses in the financial markets.

The 28 judges of the Supreme Court debated for two days on the issue. And they decided against favoring the clients by a slim majority: 15 voted for citizens to pay, while 13 said banks should be the ones taking on the duty.

The extraordinary session was called after the court reversed its own decisions. In February, the Supreme Court said clients, not banks, should pay the duty. On October 18, it ruled that it was the lender or bank, that must pay it. A day after, the very same judges unprecedentedly hesitated, and put on hold the decision.

This came as the financial sector warned that the ruling could have damaging effects, and Spain's stock market went negative. Moreover, there were doubts over whether citizens that had already paid the tax should get their money back, retroactively.

Estimates suggested that there are more than 235,000 people in Catalonia who would have the right to reclaim the costs, should the court have confirmed its October decision that it is the lender who should pay. That could have led to claims worth 830 million euros in Catalonia alone.

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  • Spanish Supreme Court on November 2 2018 (by Tania Tapia)

  • Spanish Supreme Court on November 2 2018 (by Tania Tapia)