Stamp duty exemption on the novation of mortgage loans

Background: Amendment to Act 2/1994

Act 2/1994, of March 30, on the subrogation and modification of mortgage loans (“Act 2/1994”) grants an exemption on stamp duty applicable to public deeds for the novation of mortgage loans by agreement between the creditor and the debtor, provided the creditor is among the entities listed in article 1 of Act 2/1994 and the modification concerns the conditions of the interest initially agreed or in force, an adjustment to the loan term, or both.

In November 2022, the subjective scope of Act 2/1994 was modified under Royal Decree-Law 19/2022, of November 22 (“RDL 19/2022”). It replaced the reference to “financial institutions” contained in article 2 of repealed Act 2/1981, of March 25, on the mortgage market, with the term “lenders of real estate loans” under article 4.2 of Act 5/2019, of March 15, governing real estate loan agreements (“Act 5/2019”), defined as “individuals and companies whose profession involves granting loans to those referred to in article 2.1, letters a) and b)”.

Doubts as to the interpretation of the modification

The above regulatory reference to Act 5/2019 has raised doubts as to whether the scope of application of Act 2/1994 could be much more limited, as it could entail the following requirements:

• The borrower or guarantor being a natural person.
  

• The purpose of the agreement being “the granting of loans with a mortgage or other in rem right on residential immovable property,” in the terms set out under the act, or “the granting of loans the purpose of which is to acquire or preserve the property rights on land and buildings constructed or to be constructed, provided the borrower or guarantor is a consumer.”

The Directorate General for Taxes’s clarification

The Directorate General for Taxes (“DGT”) has expressed its position in this regard in its binding response to the tax consultation made on March 14, 2023 (V0612-23), which is still pending official publication.

The DGT is inclined towards a “comprehensive interpretation of the regulation,” stating that “(…) it follows that the reference in article 1 of that act is specific to the individual or entity defined as a “lender of real estate loans,” irrespective of the beneficiary of the financing or the purpose of the mortgage facility, given that the provision defines lenders that can be replaced by the debtor in mortgage loans granted by other similar lenders.”

Ultimately, according to the DGT “(…) the purpose of the modification is to extend the range of individuals and financial institutions subject to Act 2/1994, along with the benefits provided under it.”