Interest on late payment in PIT

Temporary imputation and qualification in the PIT of the interests of late payment received.


After estimating a request for rectification of the self-assessment of the Income Tax of Natural Persons, and in execution thereof, the Tax Administration has proceeded to pay the consultant, along with undue income, the accrued default interests.

The interests received by the taxpayer have different qualifications, depending on their remuneration or compensation nature.

The remuneration interests constitute the consideration, either of the delivery of a capital that must be repaid in the future, or of the deferment in the payment, granted by the creditor or agreed by the parties. These interests will be taxed as income from movable capital, except when, according to article 25 of the Spanish PIT Law, they should be classified as returns of business or professional activity.

The compensatory interests are intended to compensate the creditor for damages arising from the breach of an obligation or the delay in its correct compliance. These interests, due to their compensatory nature, cannot be classified as income from movable capital, which brings us to the realm of capital gains.

The legal determination of the concept of capital gains and losses is set out in article 33.1 of the Spanish PIT Law and moreover, as provided in article 25 of the same law, the late payment interests received by the consultant must be taxed as equity gains, insofar as they involve the incorporation of money into the taxpayer's assets - not qualifiable as income - that results in the existence of a capital gain.

By not proceeding this equity gain from a transmission, its quantification will correspond to the amount of interests received, so that the fees of the lawyers involved in the judicial procedure for claiming the amounts cannot be reduced from this amount.

Article 14.1 c) of the Spanish PIT Law refers to the temporary imputation of capital gains, establishing as a general rule that “they will be charged to the tax period in which the heritage alteration takes place”.

The heritage alteration corresponding to the interests subject to consultation is understood to be produced when they are recognized, that is, when their payment is quantified and agreed. This circumstance, in this case, has occurred in 2019, with the agreement by which the request for rectification of the 2014 PIT self-assessment takes place. Therefore, the temporary allocation to the 2019 tax period is appropriate.

The interests referred should be integrated (whatever period they cover) into the taxable base of savings, pursuant to article 49.1, b) of the Spanish PIT Law.


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Tags: PIT, late payment interests, rectification, self-assessment