On 19 January the BOE (Official Gazette of the Spanish State) published Royal Decree 1/2010, 8 January, (hereinafter, the “Royal Decree”), in amendment of given formal tax obligations and procedures for tax application and the amendment of other tax rules which, among others, introduces an amendment to the Regulation on the Organisation and Operation of Spanish Notaries, approved by the Decree dated 2 June 1944, to define, with regard to certain means of payment, the specific data that must be included in deeds relative to the acts or agreements by which ownership and other real rights on real estate are declared, established, transferred, levied, amended or cancelled against payment, whether by documental accreditation or notarised declaration, evidence which shall involve sufficient identification of such means of payment for access of the aforementioned deeds to the Land Register.
To this respect it is worthy to recall that when the compensation consists fully or partially of cash or token that represents it, the aforementioned deeds of sale should identify the means of payment employed by the parties. For such purpose it should be indicated whether the price was received prior to or at the time of deed execution, the amount thereof as well as whether it was paid in cash, by check, bank check or otherwise and, as appropriate, to order or to the bearer, any other draft instrument or by transfer.
For this purpose, a series of rules are mentioned below:
- The appearing parties shall indicate the amounts paid in cash, reflecting such representations in the deed.
- The Notary shall attach a notarial certificate of the checks and other draft instruments delivered upon execution of the deed.
Furthermore, with respect to the checks and any other draft instruments delivered prior to execution of the deed, the appearing parties shall provide the aforementioned data, likewise indicating the number thereof and the debit account code. In the event of bank checks or other draft instruments issued by a credit institution and delivered prior to or at the moment of deed execution, the appearing party making the payment shall state the debit account code to which the funds were provided for the draft or, as appropriate, that it was issued against the delivery of the amount in cash. All of these representations should be recorded in the deed.
- In the event of payment by transfer or bank debit, the appearing parties shall state the data corresponding to the debit and credit account codes, and such statements shall be recorded in the deed.
The amendment introduced by the Royal Decree requires that if the appearing parties refuse to identify the means of payment employed (as opposed to the prior and broader wording that envisaged the case of a refusal “to furnish any of the aforementioned data or documents”), the Notary shall verbally admonish them on the formal closing of registration for such deeds penalised by the Spanish Mortgage Act, noting this admonition therein.
As previously mentioned, the amendment introduced by the Royal Decree specifies, for the purposes of the formal closing of registration envisaged in the preceding paragraph, that the means of payment shall be deemed as identified if the essential elements thereof are recorded in the deed by means of supporting documentation or declaration. For this purpose it is specified that if payment is made by check an indication of the drawer and drawee shall suffice, beneficiary if it is a personal check, data and amount, and in the case of a transfer it shall be deemed as sufficiently identified, even if the debit and credit account codes are not furnished, providing that the ordering party is indicated, along with the beneficiary, date, amount, issuing and ordering and recipient or beneficiary institution.
In accordance with the foregoing, it shall be understood that not all failures to identify means of payment lead to the formal closing of registration as envisaged in the Mortgage Act, but only the aforementioned essential elements, whether by supporting documentation or declaration.
On the other hand, the amendment introduced by the Royal Decree specifies that, in particular, the General Council of Spanish Notaries Public shall provide the Tax Authorities with information on payments by transfer or direct debt when the Notary has not been notified of the debit and credit accounts. Such notice of information was established in general, among others, in cases of transactions in which the obligation to notify the Notary of the means of payment utilised was not fulfilled or, where appropriate, of a refusal to identify the means of payment.
Lastly, it should be recalled that the deeds of sale in question should likewise include the prior tax return on the movement of the means of payment (model S-1) when appropriate in accordance with legislation on the prevention of money laundering, likewise indicating the breach of this obligation on such deed, where appropriate.