Supreme Court to make final decision on mortgage tax on November 5
After ruling saying lenders should pay duty was suspended, fears mount over retroactive compensation payments
Spain's Supreme Court has set November 5 to make a definitive decision on whether lenders or their clients must pay a duty on new mortgages as part of the property transaction costs.
The court caused consternation on Thursday when it reversed one of its own decisions taken in February, saying that lenders should pay the duty and not borrowers. The next day it suspended the ruling pending a review.
The reversal caused shares in Bankia, CaixaBank, Bankinter, Sabadell, and BBVA to fall on the stock market on Thursday, though they recovered slightly the next day when the court said it would review the impact of its decision.
The result of that review will be learned on November 5, when the court will decide whether this new ruling sets a judicial precedent on future rulings, as well as clarifying certain aspects, such as whether it is retroactive.
Moreover, while the court's decision is final, it has not said whether clients will be entitled to compensation. Under Spanish law, customers can potentially claim compensation from tax authorities for cases going back four years.
Spain's tax ministry says some 3.6 billion euros have been paid by 1.5 million mortgage holders in the past four years.
Some estimates suggest that if Spain's eight million mortgage holders were to demand a tax refund, it could amount to as much as 24 billion euros.
The court ruling comes at a difficult moment for Spanish banks, which are struggling to make money on loans with interest rates at all-time lows.