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1. What are the implications of the recent ruling by the Court of Justice of the European Union (CJEU) on floor clauses?
Neither the ruling by the CJEU, nor that of Spain’s Supreme Court, says that floor clauses are null and void; what the CJEU has said is that the clauses it has analysed were not marketed transparently enough. The CJEU ruling imposes “full retroactivity”, i.e. all the way back to the signing of the mortgage, not just until May 2013, as Spain’s Supreme Court had ruled, since the CJEU considers any such time limit incompatible with Community law.
The Spanish courts will continue to analyse the claims they receive on an individual basis, so that in cases analogous to those ruled on by the Supreme Court and the CJEU they will rule as these latter have indicated.
2. How is Bankia affected?
Although Bankia mortgages with floor clauses are very few in number and have not been taken to the European Court, Bankia intends to respect the ruling, in line with our positioning, and will accept applications from customers who claim a refund and whose situation is similar, i.e., where the floor clause was marketed without the customer having the necessary information to be able to realise and understand what floor clauses entail.
3. What are the implications of the Royal Decree on floor clauses issued by the Spanish government?
On Saturday, 21 January, the Spanish government published Royal Decree-Law 1/2017 (RDL 1/2017) on urgent consumer protection measures in relation to floor clauses, which is aimed at establishing measures to enable the refunding of amounts unlawfully paid by consumers to credit institutions under floor clauses in mortgage contracts.
4. Is this procedure free of charge for the customer?
This procedure for submitting out-of-court claims is free of charge and has no cost for the customer. The customer is not required to incur any legal costs.
5. How long will this refund process be available?
From the moment an application is received, Bankia has three months in which to respond. However, the Royal Decree-Law does not specify any time limit for submitting applications.
6. Will I receive notification from Bankia?
In order to provide as much information as possible, Bankia has sent a general letter to all personal customers, informing them of the start of a procedure to resolve any applications submitted under RDL 1/2017 quickly and free of charge.
7. Where can I put in an application?
If you are already a Bankia customer, go to your usual branch, where your account manager will advise you. In any case, applications may be submitted at any Bankia branch.
8. What documents will I have to sign?
To start this process, all you have to do is show your ID card and sign the refund application form.
If a refund is warranted, you will be given a statement of the amount to be refunded, showing the distribution by year. If you agree with the calculations and the amount to be refunded, you will sign the statement to acknowledge receipt. Finally, the “Settlement Agreement” will have to be signed by all the holders of the mortgage.
9. Can a customer file a claim in court once an application has been submitted under this RDL 1/2017 procedure?
The out-of-court procedure is voluntary for customers but obligatory for the Bank. RDL 1/2017 provides that once an out-of-court refund application has been submitted, if the customer files a claim in court before the out-of-court procedure has been resolved, the court claim will be suspended until the procedure has been resolved.
If a customer submits a claim and does not agree with the amount of the refund offered by Bankia, the customer may take whatever legal action he or she considers appropriate, in the criminal or administrative courts.
10. Can I avail myself of this procedure if I have already filed a claim in court for the same reason?
If a claim is already in progress in a court of law when RDL 1/2017 comes into force, the parties may agree to request that the court claim be suspended, so that an out-of-court procedure may be started.
Bankia will not oppose the suspension of the court claim, as the out-of-court procedure is faster and more beneficial to you. If you do not agree with the resolution of the out-of-court procedure, you may request that the claim proceeding be resumed in court.
11. Bankia has already refunded interest to me, but only up to May 2013. Am I entitled to a refund from the start of the loan?
In this case, you may submit an application under this process and it will be given due consideration. If you are entitled to a further refund, you will be informed of the amount that is to be refunded, except in cases where there is a prior court ruling.
12. In the past I reached an agreement with my branch for a review of the rate floor in my loan in which I waived the right to any further claim in the future. Can I submit an application under this procedure?
In this case, you may submit an application under this process and it will be given due consideration. If you are entitled to a further refund, you will be informed of the amount that is to be refunded and, if you agree, be paid that amount.
13. If an agreement is reached under this procedure, must the payment always be in cash?
You may choose between two ways of receiving the refund:
Payment into your account (as a rule, the account associated with the loan). Amortisation of the loan, reducing your instalments. In the latter case you will be given an additional document showing the new amortisation schedule and no prepayment fee will be charged.
14. How long will it take for the requested amount to be paid?
Once you have signed the agreement, the repayment will be immediate, in the actual branch.
15. How are amounts received from Bankia as refunds of interest paid under floor clauses treated for tax purposes?
Neither the amount received as a refund of interest paid under floor clauses nor the compensatory interest received needs to be included in taxable income in your personal income tax return.
However, an additional tax payment will have to be made in cases where the amount of the refunded interest was previously deducted from taxable income as an investment in the taxpayer’s main home or under tax relief established by Spain’s Autonomous Communities, or was treated as a tax-deductible expense of real estate capital or of an economic activity.
16. What additional tax payment must I make if I included the interest paid under the floor clause in the deduction from taxable income for home purchase in my personal income tax return for previous years?
You must calculate the amount of tax not paid in previous years because of the deduction and include it in the gross tax payable for the year in which the refund is received.
In principle, the personal income tax return form will provide fields for you to enter the amounts received and so correct the amount of tax paid in previous financial years. Any such amounts paid in order to correct previous years’ tax payments will not be subject to penalty interest.
17. Should the total amount received (refunded interest plus any compensatory interest) be included in the additional tax payment?
No, only the amount received as a refund for interest paid under the floor clause must be included. The compensatory interest will have no tax effects.
18. What if I opt to receive the refund in the form of a reduction of loan principal?
In this case, there is no additional tax to be paid, always provided the interest was not deducted from taxable income in previous years. In that case, you must file complementary tax returns as if you had received the amounts in cash.
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