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Practical manual for Income Tax 2021.

2. Special case: Floor clauses

Scope of non-subjection

It will not be included in the tax base of this PIT The repayment, derived from agreements entered into with financial institutions, in cash or through other compensation measures, together with the corresponding compensatory interest, of the amounts previously paid to them in the form of interest for the application of loan interest rate limitation clauses (the so-called "floor clause").

Note: The declaration of non-taxation takes effect from 21 January 2017 and is applicable to previous years that have not prescribed.

Likewise, it must be taken into account that they are not included in the tax base of the PIT The return of amounts previously paid by the taxpayer due to the application of loan interest rate limitation clauses, together with the corresponding compensatory interest, arising from the execution or compliance with judgments or arbitration awards that declare them null and void.

Tax treatment of amounts previously paid by the taxpayer subject to the refund

Amounts previously paid by the taxpayer subject to the refund arising from agreements entered into with financial institutions or from judgments or arbitration awards will have the following tax treatment:

a. When such amounts had formed part, in previous years, of the basis for the deduction for investment in habitual housing or of deductions established by the Autonomous Community, the following cases must be distinguished:

  • If the return of these amounts is made in cash, the taxpayer will lose the right to the deductions made in relation to them, and must add to the state and autonomous community net quota, accrued in the year in which the agreement with the financial institution was signed or in the year in which the judgment or arbitral award was issued, exclusively the amounts unduly deducted in previous years in the terms provided for in article 59 of the Regulation of the PIT, without including late payment interest.

    Such regularization will only be carried out with respect to the years in which the Administration's right to determine the tax debt through the appropriate liquidation has not expired.

  • If the repayment of these amounts occurs through offsetting a portion of the capital pending amortization, the above addition will not apply to the portion of the amounts that are directly allocated by the financial institution, following the agreement with the affected taxpayer, to reduce the principal of the loan, that is, the deductions previously made corresponding to these amounts will not have to be regularized.

    The reduction of the principal of the loan will not give rise to the right to apply the deduction for investment in primary residence or any other regional deduction.

b. When such amounts previously paid by the taxpayer subject to the refund had been considered deductible expenses in previous years for which the right of the Administration to determine the tax debt through the appropriate liquidation had not expired, such consideration will be lost, and a complementary self-assessment corresponding to such years must be carried out, without penalty, late payment interest, or any surcharge within the period between the date of the agreement and the end of the next period for filing self-assessments for this Tax.

c. The amounts that, due to the application of floor clauses, would have been paid by the taxpayer in 2021 and regarding which before the deadline for filing the self-assessment of the PIT For this exercise, an agreement is reached with the financial institution to return them or it is the result of a court ruling or arbitration award, they will not form part of the deduction base for investment in a primary residence or any regional deduction, nor will they be considered a deductible expense.

Note: For the purposes of any appropriate adjustments, it should be noted that while in the event of an agreement with the financial institution, the adjustment is computed from the date on which it is signed, in the event of a judgment or arbitration award, the adjustment must be computed from the date of these (the finality of the judgment, if applicable).