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Party liable for stamp tax in cases of unilateral mortgages given to the tax authorities
The Directorate General of Taxes (DGT) has recently been taking the view that, where a unilateral mortgage is given to the tax authorities, the party liable for stamp tax is the mortgaging debtor itself rather than the tax authorities. Taxand Spain provides commentary on this view.
According to the DGT’s interpretation on the stamp tax treatment of unilateral mortgages, since the mortgage is not accepted at the same time that it is given, the transferee of the asset or right cannot be the party liable for the tax. This is because the transferee is undetermined, and the alternative rule needs to be applied whereby the party liable for the tax is the party that has caused the documents to be issued, which is the party interested in giving the mortgage.
In recent years this issue has had a significant impact on numerous enterprises and in particular on football clubs. Commonly facing cash flow pressures, many football clubs have resorted to deferrals and payments by installment of their tax debts as well as offering real estate as collateral. Furthermore when formalising the collateral they have been faced with provisional stamp tax assessments from the autonomous community assessment offices, many of which are being appealed.
The recent decision by the Central Economic Administrative Tribunal, which was issued to provide definitive ruling on a point of law, has finally confirmed the position whereby when a unilateral mortgage is given to the tax authorities to secure stays, deferrals or payments by installment of tax debts, the tax authorities are the party liable for stamp tax.
Also published in Thomson Reuters' Taxnet Pro, 25 April 2014
The Central Economic Administrative Tribunal concluded that if the collateral is given under the instructions received from the administrative body that agrees to grant the deferral or stay, the mortgage must be deemed to have been tacitly accepted and therefore it cannot be said that there is an undetermined transferee. This decision is binding for all tax authorities therefore the autonomous community governments will stop issuing assessments in this regard and the appeals currently before the regional economic administrative tribunals should be resolved in the same manner.