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Floor Clause: We clear your doubts on the procedure

We have been struck by the open debate on the Tax on Documented Legal Acts and the person responsible for paying this tax for the sales made in Spain with mortgage guarantee loans. Who would be the passive subject? The borrower or the lender? Before entering that debate, I would like to point out that your question is related to the processes on soil clauses that have recently attracted a lot of attention. These clauses imply that the loan agreements contain a limitation of the borrower's right to obtain reductions in the reference interest rate, EURIBOR, to which the loans are often linked. These types of clauses have been considered abusive by the Spanish courts, something that has led to the opening of a large number of proceedings against Spanish banks, where the reimbursement of the negative differential interest rate has been demanded. In addition to the ground clauses, it was debated who was responsible for paying for the registration of the mortgage loan, specifically the Tax on Documented Legal Acts, and last fall a section of the Supreme Court made a decision that was also very much commented. Previously, the borrower was responsible for paying this tax. However, in today so famous decision of the section of the Supreme Court, it was concluded that the bank is the party required to pay. The decision caused much turmoil in the stock market and the course of several Spanish banking shares fell.Given that the decision in question had great socio-economic importance and, in addition, implied a change in the previous practice, the Supreme Court soon after decided that the question should be resolved again, this time in full, that is, by the Supreme Court in its totality unlike the first resolution taken by a single section. In November of two thousand and eighteen, the Supreme Court retracted and returned to the previous practice, ie the taxpayer who corresponds to liquidate the Tax on Documented Legal Acts is the borrower. The decision caused the course of many Spanish banking actions to rise again, but also originated enough political activity giving rise to the approval of Royal Decree Law 17/2018, of November 8, which modifies the revised text of the Law of the Transfer Tax and Stamp Duty, which implies that the banks are the taxpayers responsible for paying the Stamp Duty Tax with respect to the loans with mortgage guarantee. The Royal Decree came into force after its publication in the Official State Gazette and is unlikely to have retroactive effect, which means that the processes with reference to this issue will continue. Both the land clauses and the Tax on Documented Legal Acts with respect to the loans with mortgage guarantee are relatively complicated issues and at the moment legal processes are being carried out on this subject. If you have signed a loan agreement that contains a floor clause or if you are about to request a loan with a mortgage guarantee, you can come to us to receive an evaluation of your case. We are backed by years of legal advice based on Swedish and Spanish legislation.

Lars Isacsson

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