Practical Legal Notes - July 2025

1.- Tax flash: how is a trust taxed?

Attached (HERE) link to a video of the Fiscal Flash of the Notarial Association of Catalonia, where the notary of Barcelona Mrs. Elena Cantos comments on the informative consultation 206/2025 of the General Directorate of Taxes and Legal Services of the Generalitat of Catalonia, which deals with a will that includes a clause by virtue of which some shares of a mercantile company are attributed to the daughter of the testator, but with the particularity that said daughter must transfer a part of the same (specifically 20%) to the grandchildren of the testator free of charge, when they reach the age of majority.

The question arises as to how this case is taxed and whether it can be considered a trust. The DG does not pronounce on whether we are dealing with a trust or not (being a legal issue outside its competence) but, on the basis that it can be considered a trust, it recalls the content of art. 54 of the ISD Regulation, from which it is concluded that the beneficiary must liquidate the full domain of the assets subject of the trust for the ISD and, when these assets pass to the trustees, these will have to liquidate again the full domain of the assets subject of the trust for the ISD and, at that moment, the trustee (or his heirs) has the possibility of claiming the ISD refund for the value of the bare property.

Thus, the daughter will have to liquidate the ISD of those shares for the full domain, and when the shares pass to the grandchildren, they will have to do the same, but at that moment, the daughter (or her heirs) will be able to make the claim for the aforementioned refund.

2.- Public loans are launched to facilitate access to housing for young people in Catalonia.

Attached (HERE) link to the website of the Institut Català de Finances where the so-called "Emancipation Loan" is launched, by virtue of which, if you are between 18 and 35 years old and want to buy your first home, the "ICF Habitatge Emancipació loan" allows you to finance the down payment up to 20% of the purchase price, with a limit of 50,000 €.

In order to have access to these loans, a series of requirements must be met, such as:

• Be between 18 and 35 years old.
• Purchase of the applicant's first home to be used as a primary residence.
• Not exceeding certain gross income thresholds (for example, a single person, 80,963.31 euros / year).
• No significant debts or defaults with banks.
• The property to be purchased must be in Catalonia, have a current certificate of occupancy and not be previously classified as a VPO.

The particularity of the loan is that the debtor will not have to pay it back until the mortgage with the bank is paid off. After this period, a period of 5 years will be available to repay the entire loan in monthly installments, with an interest rate of 0%.

However, as a negative aspect, it should be pointed out that, in order to increase the supply of affordable housing in Catalonia, the housing acquired through this method will become permanently subsidized housing (VPO) at a limited price.

3.- The problematic concept of large holder and its tax effects in Catalonia.

Attached (HERE) link to Webinot 78 of the Notarial Association of Catalonia, where the Notary of Reus Mr. Emilio Mezquita García-Granero analyzes in depth the controversial concept of large holder and the challenges posed by its definition in the notarial practice and in the taxation of the operations that are formalized in the notarial offices.

Also attached (HERE) Resolution 3/2025, of the General Directorate of Taxes and Gaming of the Generalitat de Cataluña, which offers interpretative guidelines in relation to the ITP and the application in Catalonia of the 20% tax rate in onerous property transfers of dwellings when the acquirer is an individual or legal entity that is considered a large holder, or a complete building of dwellings is transferred. In the Resolution, for example, as interesting aspects, the following can be highlighted:

• The calculation of large-holding dwellings will not be taken into consideration when a usufruct or occupancy right is held (whether of full ownership or bare ownership).
• If the taxpayer owns less than 100% of one or more properties, the taxpayer will be considered a large holder if the sum of the surface areas of all the properties where he/she owns some % is greater than 1,500 square meters.
• In the case of individuals, their primary residence is excluded from the calculation.
• In the case of a complete sale of a building, a building will be considered to be a building if it has 2 or more independent dwellings, whether or not the horizontal division has been made (thus excluding the transfer of single-family dwellings). Likewise, the 20% tax will only be applied to the surface of the building that has residential use, as well as to the common elements, but not to the proportional part that is qualified for other uses (premises, warehouses, parking lots, etc.).

Also, on this subject, please find attached (HERE) fiscal circular number 5/2025 of the Notarial Association of Catalonia, which provides more interpretative criteria on this matter.

4.- Unilateral cancellation of resolutory condition. It is only possible if it has been so agreed and the agreement is strictly complied with.

Attached (HERE) Resolution of the General Directorate of Legal Security and Public Faith of May 27, 2025 (BOE of June 25, 2025), in which the General Directorate resolves a case related to a deed of cancellation of a resolutory condition with the following conditions:

• The deed of sale is formalized, where part of the price is deferred in the future, with a schedule of several payments, the last one being due on 12/31/2024.
• A resolutory condition is constituted as a guarantee of the deferred price, which may be cancelled, as agreed, unilaterally by the buyer, when payment of the amounts due is evidenced.
• The buyer makes the payments (but the last one is made after the deadline by means of a transfer dated 03/01/2025) and on this basis, grants the deed of cancellation of the resolutory condition which is presented for registration.

Once this deed was presented to the Land Registry, the Registrar qualified it negatively, considering that since the deferred payment had been made beyond the deadline agreed between the parties, the agreed condition for the buyer to be able to unilaterally cancel the resolutory condition was not fulfilled, so that the express consent of the seller will be necessary in order to register the intended cancellation.

Upon appeal, the General Directorate confirms the qualification note, considering that, since the only thing that was expressly agreed as an event of unilateral cancellation was the payment of the deferred price as a deadline of 31/12/2024, and the payment has been made later, it is not appropriate to resort to this unilateral means, The only way to cancel the resolutory condition is to resort to the general rules, i.e., the express consent of the holder of the resolutory condition or a final judicial decision, or the expiration of the cases of legal expiration that for the cases of resolutory conditions that are not in guarantee of the deferred price.

5.- Assignment of short term rental registration number in the Land Registry and limitations of the community statutes. Aspects to take into account

Attached (HERE) Resolution of the General Directorate of Legal Security and Public Faith of June 19, 2025 (BOE of July 9, 2025), in which the General Directorate resolves a case related to an application for the assignment of a short term rental registration number to a registered property.

As is known, since the entry into force (July 1, 2025) of Royal Decree 1312/2024 (HERE it can be consulted) all lessors of short term properties are obliged to obtain a registration number at the Land Registry in order to be able to offer their services through the online platforms.

In this specific case, the interested party requests the assignment of this Registry number, which is denied by the Registrar, since the bylaws of the community of owners establish that "the sixty-six apartments existing in the building will be destined exclusively to housing, without being able therefore to install in any of them, nor in part of the same industries, commerce nor, in short, to exercise any activity or profession its owner or any person that could occupy it".

After the corresponding appeal, the General Directorate confirms the qualification note, establishing that, in these cases, it is necessary to differentiate between the administrative authorization to exercise an activity of short-term tourist use, and the civil plan, because even with this authorization, if the community of owners prohibits this use, it will not be possible to assign the registration number required by the new rule to be able to advertise the property on online platforms for tourist rentals.

This resolution serves as a reminder of the entry into force of this new regulation and, also, to see the importance of examining in detail the civil aspects that may influence the development of an economic activity on a property.

6.- Tips to choose the right name for your new company to avoid problems

Attached (HERE) curious Resolution of the General Directorate of Legal Security and Public Faith of June 12, 2025 (BOE of July 3, 2025), in which the General Directorate resolves an appeal against the refusal of the Central Mercantile Registrar II to reserve certain company names.

Of all the names applied for, the ones that are of interest here are the refusal of the names "EVM, SL" and "EVM Hub, SL", which was based on the existence of identity or quasi coincidence with others already registered or reserved (such as "EVM Group, SL" or "VMP Hub, SL").

After the corresponding appeal was filed, the Directorate General issued an interesting resolution, in which it reviews the requirements that must be met by the corporate names that are intended to be reserved for the incorporation of a new company (or change of name, of course), focusing its attention on the concept of identity (Art. 408 of the Regulations of the Mercantile Registry and the Order of December 30, 1991, on the Central Mercantile Registry) and, in particular, on the generic terms or expressions devoid of differentiating virtuality that, added to an already existing name, do not allow its differentiation (and therefore should not be admitted).

For this purpose, please find attached HERE a help guide from the Central Mercantile Registry where a list of these generic terms is included.

In the specific case, the word "Group" or "Group" is included in the list of generic terms (so that the requested denomination cannot be admitted).

In contrast, the Directorate General considers that a different conclusion must be reached with respect to the name "EVM Hub, SL", since a term ("Hub") is added that is not included in the aforementioned list and must be considered sufficiently differentiating to avoid incurring in the prohibition of identity of names.

Interesting resolution that reminds us and provides us with interesting resources to choose well the name of our future company and not have problems with it.

7.- In the near future, it is possible that the transfer of shares may have to be recorded in the Mercantile Registry.

Attached (HERE) link to the State Plan to Combat Corruption, recently approved by the Government, which, among other measures, includes the possibility of making it mandatory in the near future:

• To register in the Mercantile Registry all transfers of corporate shares.
• To electronically deposit the membership book in the Commercial Registry on an annual basis.
• Also, to link the effectiveness against third parties of the transferability of the shares to their registration in the registry.

At present, Spanish mercantile legislation does not require the registration in the Mercantile Registry of the ownership of the shares of limited liability companies, so that the future reform that is planned may have a great impact on the mercantile traffic in our country. To closely follow the legislative evolution of the proposed measure.

8.- New tax measures on ITP, AJD and Inheritance and Gift Taxes

Attached (HERE) link to Tax Circular 4/2025 of the Notarial Association of Catalonia, where the main tax changes in Catalonia that come into force as of June 27, 2025, by Decree Law 5/2025, are analyzed. Specifically:

• New escalation of the ITP from 10% to 13% (for amounts over 1.5M euros).
• Aggravated rates of 20% for large holders and transfers of entire buildings.
• New reduced rates for the purchase of primary residences for young people under 35 years of age, large families, people with disabilities, single-parent families and victims of gender violence.
• New TPO bonuses for non-profit housing cooperatives, or in the transfer of office buildings for their transformation into VPOs.
• The AJD tax rate for notarial documents in which the VAT exemption has been waived is increased to 3.5%.
• 100% AJD rebate for young people up to 35 years of age in the purchase of a primary residence (if they meet a series of requirements).
• Abrogation of the tax credit for the transfer of real estate in the case of real estate companies.
• In the ISD, the term for the acquisition of the home is extended from 3 to 6 months in the case of donations of money from relatives for the acquisition of the home.

9.- In the near future, deeds will be a little more expensive to cover the costs of the new electronic deeds.

Reference is made to the Note issued by the General Council of Notaries, in relation to Order HAC/305/2025, of March 27 (HERE you can consult it, and to which we already made a reference in a previous newsletter), which establishes the system of collection of the amount of the stamp of the folios of the matrix and of the authorized copy in electronic support.

This Order, although already in force, is pending the implementation of the technical IT aspects of the same for its effective implementation.

As soon as this happens, its deployment will mean an increase in the cost of public documents, since the notary's office will have to collect the amount of the "electronic stamp" as a supplement.

As soon as the computer system to be developed by the FNMT is completed, it will be communicated to the public so that they are aware of it.

10.- Be careful when entering notarial indexes. Common mistakes to avoid

Attached (HERE) informative note of the Board of Directors of the Notarial Association of Catalonia, in relation to certain deficiencies in information and remission of documents in the Single Index, which affect the work of the Tax Agency of Catalonia. Thus, in particular, it is recalled:

• Submission of simple copies: Notaries are obliged to submit to the ATC a simple copy of the deeds containing ITP and AJD taxable events within a maximum period of 10 days from the formalization of the document through the telematic tool available for this purpose.
• Transactions subject to VAT with reverse charge: Numerous recording errors have been detected in these transactions, remembering that it is necessary to point out that these are "subject to VAT" transactions.
• Protocol number: It is very important to report the protocol number correctly, as a high percentage of errors have been detected in this field.