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Practical manual for Income Tax 2023.

2. Special case: Floor clauses

Scope of non-subjection

The refund, derived from agreements entered with financial institutions, in cash or through other compensation measures, together with their corresponding compensatory interest, of the amounts previously paid to those in the form of interest for the application of limiting interest rates on loans (the so-called "floor clause") will not be included in the tax base of this ##1## IRPF ##1##.

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 the refund of amounts previously paid by the taxpayer for the application of clauses limiting interest rates on loans, together with their corresponding compensatory interest, derived from the or compliance with sentences or arbitration awards that declare the nullity of the same, are not included in the taxable base of ##1## IRPF ##1##.

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 these amounts are returned in cash, the taxpayer will lose the right to the deductions made in relation to them, and will have to add to the state and regional net quota, accrued in the year in which the agreement with the financial institution was signed or in the year of the judgment or arbitration award, exclusively the amounts unduly deducted in previous years in the terms provided for in article 59 of the Personal Income Tax Regulations , 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 settlement had not prescribed, 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 the IRPF .

c. The amounts that, due to the application of floor clauses, would have been paid by the taxpayer in 2023 and with respect to which before the end of the deadline for filing the self-assessment of IRPF for said year an agreement is reached for their return with the financial institution or is a consequence of a court ruling or arbitration award, will not form part of the deduction base for investment in habitual housing or of any regional deduction, nor will they be considered a deductible expense.

Note: For the purposes of any appropriate adjustments, please note 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).