8.9.2. Increase in the net tax rate due to loss of the right to certain deductions from previous years

When, in tax periods subsequent to the period of application, the right to the deductions made is lost, in whole or in part, the taxpayer will be obliged to add to the state net quota and to the autonomous or complementary net quota accrued in the year in which the requirements were not met, the amounts unduly deducted, plus the corresponding late payment interest.

The following possibilities must be distinguished in the refund of deductions:

• General deductions from the quota corresponding to the years 1996 and earlier.

  In these years, the current system of regional financing, established by Law 14/1996, was not in force, and therefore the amount of the undue deductions, together with the late payment interest, will be added in full to the state's net share.

• General deductions from the quota corresponding to the years 1997 to 2016.

  The following must be distinguished:

  1. General deductions from the quota corresponding to the years 1997 to 2001.

     85% of the improperly made deductions will be added to the state net quota, together with late payment interest, and the remaining 15% will be added to the autonomous or complementary net quota, plus the corresponding interest, since those were the participation percentages in force in those years.

  2. General deductions from the quota corresponding to the years 2002 to 2008.

     67% of the improperly made deductions will be added to the state net quota, together with late payment interest, and the remaining 33% will be added to the regional or complementary net quota, plus the corresponding late payment interest.

  3. General deductions from the tax rate for the years 2009 to 2016.

     50% of the improperly made deductions will be added to the state net quota, together with late payment interest, and the remaining 50% will be added to the regional or complementary net quota, plus the corresponding late payment interest.

  4. Deductions for investment in primary residence from 2002 to 2012.

     The amount of the state portion of the undue deduction (plus late payment interest) will be applied to increase the state net quota and the amount of the regional portion (plus late payment interest) will be applied to increase the regional or complementary quota.

• Regional deductions from the quota corresponding to the years 1998 to 2016.

  All deductions improperly made, together with late payment interest, will be added to the net regional or complementary rate.

  As of January 1 2013, the deduction for the purchase of a home has been eliminated. However, a transitional deduction regime has been established for investment in a primary residence (DT 18)

  Regarding taxpayers who had deposited amounts in housing account prior to January 1, 2013:

  • They will not be able to apply the transitional scheme for the deduction for housing after 1 January 2013.

  • They will not lose the deductions from previous financial years, which, in order to be consolidated, continue to be linked to the fulfilment of all property-purchase savings account requirements that were in force when the deductions were made.

  Special assumption : Amounts received from the repayment of interest rate limitation clauses on loans (floor clause) that had formed part of the basis for the deduction for investment in habitual housing or of deductions established by the Autonomous Community in previous years (Additional Provision forty-fifth of the Personal Income Tax Law)

The return, in cash or through other compensation measures, of amounts previously paid to financial institutions as interest for the application of interest rate limitation clauses on loans (the so-called floor clause), together with their corresponding compensatory interest, derived from agreements entered into with financial institutions as well as from compliance with judgments or arbitration awards, will not be included in the personal income tax base.

However, when such amounts previously paid by the taxpayer subject to the refund 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 assumptions must be distinguished for the purposes of their tax treatment:

1. If the return of these amounts occurs in cash:

   • The taxpayer will lose the right to the deductions made in relation to them, and must add to the state and regional net quota, accrued in the year in which the agreement was signed with the financial institution or in which the latter proceeded to the refund in execution or compliance with a court ruling or arbitration award, exclusively the amounts improperly 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.

COMPLETION

• AMOUNT OF UNDUE DEDUCTIONS

  The amount of deductions made in previous years will be recorded when the right to the deduction has been lost in 2016 as a result of failure to comply with any of the requirements established for its application.

  For general deductions from 1997 to 2016, you must distinguish the part corresponding to the state section and the regional section of the deduction according to the rules cited in the previous section.

• DELAY INTERESTS

  The program, when filling in the dates, years and amounts, calculates the late payment interest at the rate of 3.75, which is the rate applicable in the 2017 financial year.

  The amount of late payment interest corresponding to the deductions improperly made that have been included in the previous section will be recorded, distinguishing between those corresponding to the state section and the regional section of the deduction.

  The program also includes an option to calculate interest through a data capture window, which collects the following information:

  • " End Date" (Date for calculation purposes": the date on which the 2017 tax return will be submitted will be indicated.

  • "Exercise": You must indicate the fiscal year corresponding to the declaration in which the deduction was applied, the requirements for which were not met in 2017.

  • "Amount": The amount of the deduction improperly made will be indicated.

  • "To Enter/To Return": indicate the result of the declaration in which the deduction was made ("I" or "D").

  • "Start date":

    1. Declarations to be entered: If the declaration was to be paid, the program itself reflects the start date for the calculation of interest, which will be the expiration date of the declaration period for the fiscal year in question.

    2. Returns to be returned: If the declaration in which the deduction was made was a refund, the date on which the refund was obtained must be indicated in this section.

    In the particular case where the amount of the refund received is less than the amount of the deduction being restored, the latter must be broken down into two parts:

    1. On the one hand, up to the amount of the refund, indicating as the start date the date on which the refund was obtained.

    2. And on the other hand, the excess of the undue deduction over the amount of the refund, indicating as the start date the expiration of the declaration period for the fiscal year in question:

       STATEMENT	EXPIRY
       Exercise 1997	22-06-98
       Exercise 1998	21-06-99
       Fiscal year 1999	20-06-00
       Fiscal year 2000	20-06-01
       Fiscal year 2001	01-07-02
       Fiscal year 2002	06-30-03
       Fiscal year 2003	01-07-04
       Fiscal year 2004	06-30-05
       Fiscal year 2005	06-30-06
       Fiscal year 2006	02-07-07
       Fiscal year 2007	06-30-08
       Fiscal year 2008	06-30-09
       Fiscal year 2009	06-30-10
       Fiscal year 2010	30-06-11
       Fiscal year 2011	02-07-12
       Fiscal year 2012	01-07-13
       Fiscal year 2013	30-06-14
       Fiscal year 2014	30-06-15
       2015 financial year	30-06-16
       Fiscal year 2016	06-30-17

       ( NOTE: the program reflects the due date of the declaration period if "I" is selected in the "To Pay/To Return" section).

       IMPORTANT: If the increase in the net rate is motivated by the loss of the right to deductions for investment in habitual housing, both state and regional, due to the occurrence of the circumstances provided for in Additional Provision 45 of the Tax Law, you must mark with an X the boxes enabled for this purpose. (Loss of deductions due to the return of floor clauses)

       By checking this box, the program will not calculate late payment interest.