The Advocate General of the Court of Justice of the European Union considers that the personal income tax clause does not fall outside the scope of consumer protection legislation and that it is for the national courts to carry out appropriate checks on the transparency of such legislation.
The Advocate General of the Court of Justice of the European Union (CJEU) has presented his conclusions, prior to the pronouncement of that Court in the form of a judgment, following several preliminary questions raised by the Juzgado de Primera Instancia No 38 of Barcelona, in relation to the personal income tax index, on which many mortgages in Spain are referenced.
Contrary to the criterion upheld by the Spanish Supreme Court in its judgment 669/2017 of 14 December, in which it established the criterion that the inclusion of the personal income tax clause in variable interest loans does not imply a lack of transparency and, therefore, prevents the consumer from claiming the predisposition of the personal income tax index by the financial entity, the Advocate General of the TJEU concludes:
- The contractual clause establishing the rate of interest linked to personal income tax is not excluded from the scope of Council Directive 93/13/EEC of 5 April 1993 (directive on unfair terms in consumer contracts).
- The contractual clause that sets an interest rate taking as a reference value a legal reference index such as the reference index for mortgage loans of savings banks (IRPH Cajas), must be transparent, which means that the financial institution must provide the consumer with sufficient information: (i) to enable the consumer to make a prudent and fully informed choice regarding the method of calculating the interest rate and its components and (ii) regarding the past performance of the chosen reference index.
Finally, it states: “it is for the national court, when checking the transparency of the clause in question, to verify, taking into account all the circumstances surrounding the conclusion of the contract, on the one hand, whether the contract transparently sets out the method of calculating the interest rate, so that the consumer is in a position to assess, on the basis of precise and intelligible criteria, the economic consequences for him. Furthermore, whether this contract complies with all the information obligations laid down in national law’
Therefore, the Advocate General corrects the position adopted by the Supreme Court, understanding that it is possible that the clause containing the aforementioned personal income tax index may be abusive and, therefore, null and void if it does not pass the transparency control.
It remains to be seen whether the European Court will follow the opinion of the Advocate General in a judgment that is expected to be issued between the end of 2019 and the beginning of 2020 and whether this will require a correction of the position adopted by the Spanish courts and tribunals.
Our firm is made up of expert professionals who will give you due advice on the viability, opportunity and convenience of presenting the corresponding claim against the financial entity, either in an out-of-court manner or by presenting the appropriate legal action.