Obligation from tourist apartments’ intermediaries to report to the Tax Agency – royal decree 1070/2017

Recent case law of the Supreme Court on payment of the expenses relating to the mortgage loan deed

Obligation from tourist apartments’ intermediaries to report to the Tax Agency – royal decree 1070/2017

Por Antoni Faixó

I. NEW TAX REPORTING OBLIGATION

Royal Decree 1070/2017, on 29 December 2017, amends several tax rules and introduces a new one, which is the one analysed in this article: particularly, a new article 54 ter of the General Regulations of actions and proceedings of tax inspection and management is created with the following heading: “Reporting obligation on the assignment of use of apartments for tourist purposes”.

The preamble of such Royal Decree states that this rule is created “in order to prevent tax fraud”, with no other explanation.

We will analyse in this article not only the rule, but also all the reviews that the same has received and the doubts arisen in respect to its applicability.

II. PERSONS AND TRANSACTIONS SUBJECT TO THE RULE

Both legal and natural persons intermediating between assignors and assignees of the use of tourist apartments are obliged to report, either if they do it on a free of charge or an onerous basis.

The rule defines the assignment of use of tourist apartments as the temporary assignment to use the whole or part of a furnished and equipped house that can be immediately used, either on a free of charge or an onerous basis. The rule also sets forth that assignments considered as housing lease or housing partial sublease, as well as the assignment of timeshare rights of real estate, are excluded pursuant to the Urban Lease Act.

Therefore, the rule refers to any assignment to use a house other than a lease under the Urban Lease Act (LAU).

The rule specifies that persons or entities incorporated as collaborative platforms, which may be considered as service providers of the information society and which may intermediate in the assignment of use shall be obliged to report, although they may not render the underlying service of assignment or impose conditions such as the price, terms or otherwise.

In other words, the rule imposes this obligation to all online platforms that allow publicising the assignment of use of tourist apartments, although they may not be the contracting parties or participate in the contractual terms.

III. INFORMATION TO BE REPORTED TO THE TAX AGENCY

Pursuant to the Royal Decree rule:
(a) Identification of the property owner and the holder of the right whereby the house is assigned, if they are not the same person. That is, if the person assigning is the lessee or the usufructuary, both this person and the owner must be identified. Such identification includes the name and surnames or corporate name and Tax Identification Number.
(b) Identification of the real estate specifying the cadastral reference number.
(c) Identification of the assignee: name and surnames or corporate name and Tax Identification Number. The rule also stipulates that the assignor shall keep a copy of the identification document.
(d) Days the house is used.
(e) Amount received by the assignor.

Additionally, pursuant to that set forth in 170 Return Form:
(f) Starting date of the house assignment.
(g) Intermediation agreement number.
(h) Intermediation date in the transaction.
(i) Identification of the means of payment used.

IV. EFFECTIVE DATE

Royal Decree 1070/2017 became effective on 1 January 2018, but this new article, since it regulates a new obligation, provides for a Ministerial Order to be approved for approving the relevant return form and filing term.

In this regard, we must say that there is a Draft Order approving Return Form 179 that establishes that returns shall be filed quarterly, in the month following the end of each quarter, but that in year 2018, due to its newness, returns of the first two months may be filed from 1 July to 1 December 2018, the third quarter return shall be submitted in October 2018 and the fourth quarter return in January 2019.

However, such Order has not been published in the State Official Gazette (BOE) yet, so that this temporary efficacy is not for the time being confirmed.

V. REVIEWS PUBLISHED AND POSSIBLE STAY OR ANNULMENT OF THE RULE

On 20 March 2018, the National Commission of Markets and Competition (CNMC) has issued a press release informing that on 22 February it sent a formal request to the Council of Ministers against several provisions of this new rule: that not all parties involved in the transaction should be subject to such obligation, because this may imply a material charge meaning a restrictive effect on competition; that the property owner should not be identified if such person is not the one assigning the use of the property, that the assignee should not be identified, that the assignment days should not be reported and that the identification document should not be kept.

The press release indicates that the CNMC may challenge the rule, so that the CNMC may do so if the Government does not rectify the article in question.

In addition, we must state that on 22 February 2018, the Spanish Association of Digital Economy issued a released informing that the Supreme Court had admitted its contentious-administrative appeal to proceed against the new rule introduced in Royal Decree 1070/2017.

In such release, Adigital remarks that also the Spanish Association of Tax Advisors (Aedaf) has lodged an appeal with the same approach.

Therefore, it is clear that the new rule is controversial even before its application and that it is perfectly probable that the same may be totally or partially revoked.

VI. ASSESSMENT

As mentioned in the reviews above, we understand that the rule is too demanding and severe so that its full applicability is hardly justifiable.

Firstly, because the rule sets obligations on a too broad range of parties involved which are not the natural parties to the agreement, so that such obligation is not justified.

Secondly, because the contents of the information required is too wide, since the parties involved and required to report may not have all the information and some required data may be unneeded, such as the details of the owner of the house if such person is not the assignor.

This subject would undoubtedly require a more transparent and developed national rule, since the existence of different local and regional rules on the obligations relating to this kind of agreements leads to a legal uncertainty situation on all the affected parties.

Recent case law of the Supreme Court on payment of the expenses relating to the mortgage loan deed

Por Antoni Faixó

I. BACKGROUND

On 23 December 2015, the Supreme Court delivered a judgment which was then considered as very outstanding and which analysed the possible nullity of several clauses of mortgage loan agreements signed between consumers and bank entities, declaring as null and void, among others, the clause imposing payment of all expenses and taxes relating to the deed on the borrower, because it was unfair.

However, the truth is that such judgment did not analyse or determine the material effect of such nullity. As a consequence thereof, after such judgment, the Spanish Courts of First Instance and Provincial Appeal Courts have been declaring these clauses null and void, but with different interpretations on the effects resulting from such nullity.

And this is so because when the nullity of a contractual clause is declared, the judge must interpret which are the obligations of the parties as regards the subject referred to in such clause, taking into consideration the applicable legal rules and the general principles of law. In respect to the obligation to pay any expenses attached to the mortgage loan deed, there is not a legal rule specifically regulating so, so that different court interpretations have been issued on the issue.

This legal uncertainty situation has been terminated, for the time being, after two judgments given by the Supreme Court on 15 March 2018 and which we will analyse below.

II. JUDGMENTS Nº 147/2018 AND Nº 148/2018 OF THE SUPREME COURT

On 15 March 2018 two judgments have been delivered, namely nº 147/2018 and nº 148/2018, which analyse two very similar appeals and which make the same interpretation, thus establishing case law on the expenses resulting from the mortgage loan deed.

It must be said that both judgments have been issued by the Plenary of the Civil Courtroom of the Supreme Court, which clearly shows the intention to establish steady case law on the issue.

Both judgments state that the Judgment of the Supreme Court nº 705/2015 dated 23 December 2015, declared the nullity of this kind of clauses in contracts with consumers, but it did not declare the effects arisen from such nullity.

III. WHO IS LIABLE FOR PAYING THE TAX

Both judgments analyse in depth the party liable for paying the Property Transfer Tax and Stamp Duty, concluding that:

(a) In accordance with the precepts of such Tax Law and pursuant to the case law of the Contentious-Administrative Courtroom of the Supreme Court, the taxpayer is the borrower and therefore the one liable for paying the tax.

(b) Notwithstanding the foregoing, there is a fixed fee of the Stamp Duty relating to the stamp of the original deed, which must be equally paid by the lender and the borrower, and the stamp of copies, which must be paid by the party requesting such copies.

Therefore, the Supreme Court decides that expenses corresponding to the tax must be paid by the borrower, that is, the bank entity cannot be judicially claimed to be sentenced to make such payment. Except for a very specific part of the tax that corresponds to the stamp of the original deed, which must be equally paid by the parties, and the stamp of copies, which must be paid by the requesting party. But this particular expense is of a very small amount (usually 30-60€).

IV. NOTARIAL AND REGISTRY EXPENSES

Both judgments discussed above do not analyse in detail which is the party liable for paying the other deed expenses, but they make a brief reference to the issue stating that any notarial and registry expenses shall be equally paid by the lender and the borrower.

Particularly, the judgments state that the solution to equally share these expenses is reasonable, as already set forth by Resolution of the General Office for Registries and Notaries on 7 April 2016.

Consequently, it could be upheld that notarial and registry expenses, i.e., the invoice of the notary public fees and the Land Registry invoice, must be equally paid so that the borrower would be entitled to claim payment of half of such expenses from the bank entity, if the borrower was the one to then pay 100% of such expenses, which is the standard.

We must say that this is the interpretation already applied in many courts, such as the Court of First Instance nº 50 of Barcelona, which is currently the one sole court dealing with these proceedings in the province.

V. OTHER EXPENSES

Unfortunately, the Supreme Court does not make any reference to the other expenses attached to the contract: fees of the processing agency and the real estate valuation.

In view of this omission, the Spanish courts will be forced to freely interpret the effects arisen from declaring the nullity of the clause imposing payment of the expenses on the borrower, with no clear case law on the issue.

We understand that the most reasonable option would be to analogically apply the apparent interpretation of the Supreme Court in the sense that all such expenses must be equally paid, because they affect both parties. However, there is some minor case law interpreting that the valuation expenses should be paid by the borrower.

VI. POSSIBLE CHANGE IN INTERPRETATION: COURT OF JUSTICE OF THE EUROPEAN UNION

As happened with the retroactive effect of the nullity declaration of the floor clause or the right of the defendant consumer in mortgage loan proceedings to claim the existence of unfair clauses, it is perfectly feasible that the Court of Justice of the European Union delivers judgment on this issue in the near future and establishes who must pay each expense, either following the criterion interpreted by the Supreme Court or otherwise.

We must remember that the case law of the Court of Justice of the European Union is higher ranked than the Supreme Court case law, so that if there is any European judgment different from that stated by the Supreme Court, the opinion of the European judgment shall prevail.

In any event, we hope that new decisions are passed soon clearly and definitively establishing the interpretation to be given by all courts on this issue, because otherwise legal uncertainty and inconsistent judgments will remain in respect to which party is liable for paying certain expenses attached to the mortgage loan.