Tue. Dec 10th, 2019

Division in the Supreme Court before the problem of the retroactivity of the mortgage tax

División en el Supremo ante el problema de la retroactividad del impuesto hipotecario

The Supreme Court (TS) faces today a full conflict, in which it will have to decide if it ratifies or corrects the doctrine approved on October 16 so that the banks are the ones that pay the taxes of the mortgages, and not the client, as It had been happening until that date. The Contentious Chamber is very divided and in reality there is very little chance that the 31 magistrates that compose it reach an agreement today.

The plenary session, in fact, could be extended for more than a day, and it has a very uncertain end, because the existing positions among the judges are diverse and in some aspects very remote. The most acute problem, but not the only one, is that of retroactivity. Before reaching this point, the magistrates will have to overcome several obstacles, because a part of the Chamber wants to restart the debate from scratch.

The achievement of consensus, therefore, will be a delicate operation. It will depend on the plenary being able to advance in steps. There are magistrates who want to propose that the matter be returned to the Second Section of the Chamber of Contentious Matters, which was the one that modified the previous doctrine, and that it is the magistrates from whom the change started who rethink their decision. This thesis has little chance of prospering, but it will be put on the table.

Sources of the own TS estimate that this way would be very negative, because it would not solve the present uncertainties and would delay the solution of the conflict. But if the group of magistrates supporters of this idea asks for a vote, the plenary will have to debate this possibility first.

As it is expected that the matter does not return to the aforementioned Second Section, the next step will be to debate whether the payment of taxes corresponding to the legal acts documented corresponds to the financial entities or to the borrowers. This is the core of the problem. As the resolution issued by said Supreme Court on the 16th has already been confirmed and is final for all purposes, what the Full Court of the Contentious Court must decide is whether it maintains the same criteria, or changes it again, to return to the starting position and provide that the mortgage taxes fall back on the borrower's account.

In the Supreme Court there is full awareness that this solution would be very controversial, because it would offer the image that there have been strong pressures from the bank and that they have prospered. The plenary may assume the risk of appearing at the feet of financial institutions if there is really a solid majority that considers with well-founded legal reasons that the most plausible solution was the one that has been applied for many years, in the sense that the taxes must be paid by the purchaser of the premises or dwelling.

But it is doubtful that that majority exists. The perch of the debate that is going to reopen arrives at the plenary session of the hand of three new cases very similar to the resolved ones in the sentences that varied the doctrine of the Supreme one. Two of these appeals have Judge Nicolás Maurandi as rapporteur and the third is in the hands of magistrate José Navarro. And according to the Supreme's own sources everything indicates that they are going to propose different solutions.

If it is agreed to maintain the new doctrine – that the tax corresponds to the banks – it will be necessary to move to a third level of the discussion, the most difficult one, relative to retroactivity. That is, until what date could be returned to demand the return of taxes. The formula that could prosper is to place that limit in the last four years, the period foreseen to claim the taxes not satisfied. But the bank has already manifested itself against this hypothesis, which complicates especially the search for solutions. In the end, the arrangement could come with a minimum retroactivity, from the day the Supreme changed his doctrine, last month, or by agreeing that banks will pay taxes, but without retroactivity, is say, only as of the November date when the new judgments are notified.

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