The stamp tax base on mortgage loan modifications is limited to the value of the modified aspect
Spain Tax Alert
Certain novations of mortgage loans are exempt from stamp tax, particularly those cases where only the interest rate and/or the repayment period are modified. However, where other financial clauses are amended, stamp tax does apply.
In its judgment of March 13, 2019, the Supreme Court ruled that the applicability of stamp tax must be determined on a case-by-case basis. The first aspect to look at is whether the changes agreed meet the statutory requirements to be subject to stamp tax; that is, if it is a registrable act with valuable content. As a new criteria, the Court added that stamp tax should be assessed not against the total amount of the loan responsibility secured, as had been the tax authority’s practice up until now, but rather against the “economic content of the valuable financial clauses that determine the economic capacity subject to taxation”.
Although some questions or uncertainties may arise when applying this new case law to each specific real-world case, there is no doubt that its content paves the way for a revision of stamp tax assessments on mortgage loan modifications in recent years.
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