Lenders will pay stamp tax on mortgages and will not be able to deduct it for corporate income tax purposes
Tax Alert 16-2018
From November 10, 2018, the party liable for stamp tax on the creation of mortgage loans will be the lender. This is the rule laid down by Royal Decree-Law 17/2018, of November 8, 2018, published in the Official State Gazette of November 9.
This change was introduced after the annulment of article 68.2 of the Corporate Income Tax Regulations (by three judgments of Panel Two of the Judicial Review Chamber of the Supreme Court) which established that the party liable for the tax was the borrower; and the subsequent decision by the plenary session of the Judicial Review Chamber of the same Court, in which it was again concluded that the borrower was required to pay the tax.
However, the Royal Decree-Law clarifies that mortgage loan deeds in which the borrower is one of the persons or entities listed in article 45.I.A) of the Transfer and Stamp Tax Law will be exempt from any of the headings of transfer and stamp tax.
Lastly, the Royal Decree-Law provides that the tax debt derived from paying stamp tax will not be deductible by the lender for corporate income tax purposes. This rule will apply for fiscal years starting on or after November 10, 2018.