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Guide to mutual agreement procedures

Accrual of late-payment interest

Following the amendments introduced by Royal Decree-Law 3/2020 in the Fist Additional Provision of the Consolidated Text of the Non-Resident Income Tax Law, the accrual of late-payment interest while a mutual agreement procedure is under way is no longer excluded by law. Therefore, in mutual agreement procedures initiated on or after 6 February 2020, interest does accrue during the course of such procedures.

Previously, section 6 of the First Additional Provision of the Consolidated Text of the Non-Resident Income Tax Law provided that late-payment interest did not accrue while mutual agreement procedures were under way. Consequently, in the case of mutual agreement procedures initiated prior to 6 February 2020, late-payment interest does not accrue while they are under way.

Royal Decree 1794/2008 has also been amended in that regard by Royal Decree 399/2021, such that section 6 of Article 17 now provides that, in the tax assessment issued to implement the agreement reached, late-payment interest accrued on the debt resulting from that tax assessment will be charged, without excluding the period of the mutual agreement procedure.

The accrual of late-payment interest is regulated under Article 26 of the General Tax Act, without prejudice to the fact that, in the case of mutual agreement procedures initiated before 6 February 2020, late-payment interest does not accrue while such procedures are under way.

Thus, in the case of mutual agreement procedures initiated before 6 February 2020, three different periods must be distinguished in relation to the accrual of late-payment interest:

  1. Up to the request for the mutual agreement procedure: during this period late-payment interest accrues.

  2. From the request for the mutual agreement procedure until the end of the procedure: during this time when the mutual agreement procedure is under way, late-payment interest does not accrue.

  3. From the end of the procedure until payment of the relevant refund is ordered, where applicable: late-payment interest once again accrues in this period.

However, the accrual of late payment interest is not interrupted when the processing of mutual agreement procedures was initiated after 6 February 2020.

The calculation of late-payment interest is always the responsibility of the tax office that implements the agreement reached between the competent authorities.