The Spanish Supreme Court has just issued a ruling establishing that the lenders (and not the borrowers) are liable for the payment of the stamp duty triggered by the creation of the mortgages securing financings.
In this decision, the Supreme Court changes its criteria and amends the existing case law that used to consider that the borrowers had the obligation to pay the stamp duty. This Supreme Court traditional case law was based on article 68.2 of the Stamp Duty Regulation (Royal Decree 828/1995, of 25 May) which expressly establishes that the borrower is liable for the stamp duty.
However, the Stamp Duty Law (Royal Decree-law 1/1993, of 24 September) does not establish this obligation specifically for the borrowers and it foresees that the obligation has to be imposed on the person who benefits from the granting of the mortgage. According to the Supreme Court, the mortgage is granted only in the interest of the mortgagee and with the single purpose of securing its credit and therefore it must bear the payment of stamp duty.
Consequently, the Supreme Court also declares article 68.2 of the Stamp Duty Regulation null and void as contrary to the law and this new interpretation.
We are still analysing the sentence in depth and there are a lot of unanswered questions raised. It will be essential to determine the scope of this decision and how it would affect past transactions in which the mortgage stamp duty has been paid by the borrower and the time frame for that retroactive application, if any. Who the borrowers might claim the refund of the stamp duty cost is an open question too. It is also uncertain the impact that the application of this ruling will have on future transactions from a practical but also a financial stand point, considering that the stamp duty is calculated on the maximum secured amount and tax rate ranges between 0.25% and 1.5% depending on the region where the assets are located.