According to classical mythology, Prometheus, as punishment for deceiving Zeus and giving men the fire previously stolen from the gods, was condemned to have his liver, which grew back, eaten every day by an eagle, only to be devoured again by the same raptor the next day.
It seems that some similar sin has been committed by financial entities when their legal liver is constantly being gobbled up as a consequence, either of unfavorable sentences issued by our courts, or of regulatory changes in those few cases in which said sentences perchance are not contrary to your interests.
That voracious eagle that attacks the viscera of financial entities, and some other fund of the commonly called ‘vultures’ (it seems that the game is going on among raptors), has materialized this time in the recent ruling of the Supreme Court of 19 May 2020, number 509/2020.
In said case, it was elucidated whether in a dation in payment of a property in favor of a financial entity, the tax base of the tax on onerous property transfers was constituted by the real value of the property delivered, or by the amount of the debt pending to be amortized. and that is canceled as a result of the delivery.
The highest court concludes that the tax base is not determined by the actual value of the property, but by the amount of the canceled debt, as this is assimilated to the consideration agreed between the parties that carry out the legal business of dation in payment.
It denies, as the financial institution under appeal claimed (the Cantabria Supreme Court concluded that the tax base was determined by the real value of the property), that the legal business of dation in payment can be broken down into two different businesses: an onerous business (transfer of the housing for its real value) and another free, which is the cancellation of the debt.
According to our Court of Cassation, the business is unique and as such, the debt that “disappears” with the operation is the consideration received by the person who delivers the home.
“The third purchaser will determine the tax base of its acquisition by the consideration paid to the seller, and not by the debt that will be canceled”
Putting myself in the mode of an aggrieved politician, “I accept and respect the sentence, but I don’t share it.” And I do not share it, said with the humility that should preside over my opinions when I question a resolution issued by distinguished jurists such as the magistrates that make up the Supreme Court, because if the established criteria are followed, essentially identical operations will be taxed differently.
Thus, let us imagine that instead of proceeding to dation in payment, as occurs in the alleged case, what is done is to transfer the property to a third party, but to the extent that the debt, and therefore the amount for which the mortgage that encumbers the property, exceeds the transfer value that an independent third party is willing to pay, the debtor agrees with the financial entity that authorizes the sale to that third party in exchange for delivering the entire price obtained and the subsequent total cancellation of Debt.
In this case, there is no doubt that the third purchaser will determine the tax base of its acquisition by the consideration paid to the seller, and not by the debt that will be canceled by said agreement between the latter and its creditor.
Or, imagine another situation. The financial entity agrees with the debtor, in order to avoid judicialization of their relations, the reduction of the debt up to a certain amount in exchange for paying the amount that remains alive either by paying the installments, or by selling their home, and Days, months or years later, seeing that he cannot continue to deal with the debt, what he does is a dation in payment.
“Financial entities and those funds that have agreed to dations in payment of debts would do well to review the state of their liver”
In this case, there should also be no doubt that the tax base is the value of the property (which, curiously, will coincide with the debt pending settlement).
A different issue is the fiscal treatment that must be granted to the partial cancellation of the debt (taxation in the Personal Income Tax, Inheritance Tax or Corporation Tax), which in my opinion should not condition the determination of the tax base of the Property Transfer Tax. Expensive.
In any case, since Zeus (in our case, the Supreme Court) has spoken from Olympus, the opinion of this simple mortal does not seem to be the arrow that, as Heracles did in the myth, ends with the ravenous eagle .
For this reason, the financial entities and those funds that have agreed to dations in payment of debts would do well to review the state of his liver, because this sentence opens the possibility for the regional treasuries to dust off files of less than four years to see if there are dations in payment in which the tax drawn has been on the value of the property and not on the total outstanding debt.
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