In practice, the fixed interest rate can be very important in the calculation of significant penalties, compensations, etc. In 2022, the maximum legal interest is 8%. This rate is applied in the case of commercial late payments, i.e. those that occur between companies. Article 1108 of the Civil Code provides that defaulting debtors must pay the «payment of agreed interest and, in the absence of an agreement in the legal interest», as damages. The reference, which is calculated as a percentage, is dynamic and modified according to the state of the country`s economy. What is strange is that although it is the Civil Code that defines the legal interest, the renewal depends on the Law on the General State Budget (PGE), which it must update before the first day of the year. Legal interest does not only apply to loans between individuals, but goes far beyond natural persons. This includes everything from payments to employees of a company, pensions, temporary interest and late payment. It is thus a fairly broad legal framework aimed at punishing those who do not comply with their financial obligations. For this reason, it is necessary to make the parameters of transactions very clear in order to avoid reaching these cases.
All this is delimited in the Civil Code, which explains what are the conditions that govern legal interests. In fact, it is quite easy to use this mechanism when a non-payment situation occurs. The key is not to negotiate an interest rate so that the legal framework takes care of the rest. In this way, the law aims to regulate and compensate part of the damage caused by the breach of the obligation. All this must be taken into account before the money is lent to third parties. However, in order for default interest to be collected, certain conditions must be met. First of all, the deadline set for the payment of the debt must have expired, in addition to what is due is money. On the other hand, in the event of default, an interest payment must have been agreed and there can be no agreement that rejects this acceptance. All this shows that both set conditions that were not met, which would generate the collection of default interest. «From the time it is pronounced at first instance, any judgment or order ordering the payment of an amount of liquid funds shall determine, in favour of the creditor, the constitution of an annual interest equal to that of the legal interest on the currency, increased by two points, or equivalent to that corresponding to that which corresponds by mutual agreement of the parties or to a special provision of the law.» There are several standard interest rates that cover a large number of areas. The first of these is the legal interest in the money that arises when what is due to the third party is not paid within the time limit. Thus, if no interest rate is set for non-payment, the legal interest on money in the amount of 3% will be charged for this year 2022.
On the other hand, there is the interest of a late procedure, which occurs when a judgment is rendered that obliges the defendant to pay a sum of money. The economic situation is one of the most decisive variables in determining the legal interest. Each year, the new value of the money is reviewed and determined, which will serve as the basis for calculating the debt. The maximum rates of these interest rates vary for general, tax and commercial debt. The latter are the most interesting, since they were set up in 2022 with a maximum of 8%. Commercial default interest is that which is applied in commercial transactions when a payment plan has been agreed and some of the conditions are not paid by the agreed date. This sanction is set by the Ministry of the Economy every six months, taking into account the financing provided by the European Central Bank. Specifically, it is calculated by adding eight percentage points to the interest rate applied by the European Central Bank to the last main refinancing operation in the last six months. In the second half of 2020, the Ministry of Economic Affairs will maintain the legal default interest rate applicable to commercial operations at 8.00%. Finally, if the debt is subject to the Law on Late Payment, you must take into account that the debtor may be required to pay all costs related to the procedures that are carried out to demand payment: procedural fees, legal advice, burofax or telephone calls. Legal interests are those that apply to late payments between individuals, including with companies, with the tax administration, with the public administration in general or vice versa.
The first condition is that there is no default interest that has already been agreed between the parties. In the case of transactions between companies or individuals, default interest usually appears in the contract signed between the parties, and this is the amount that must be paid as a penalty. If such a clause has not been included, the legal interest on the money and the amount of unpaid loan payments will be incurred. When this happens, the case is brought before a court, so it is a judge who makes the decision based on what the legal framework prescribes. However, it must be taken into account that no interest on the loan must have been agreed in the contract. In addition, statutory interest is calculated from the date on which the amount should have been paid until the obligation is fulfilled. Therefore, the debtor will see that the interest will accrue to him until he settles the acquired debt. The reference of what debtors have to pay in the specific areas, tax and tax is calculated as a percentage, is dynamic and modified according to the state of the country`s economy. Legal interests have characteristics that distinguish them from other types of interests.
The most important are: This interest represents an amount that must be paid to the creditor in the same way as damages, in which an outstanding debt is held. Although the above case mainly indicates debts between individuals, the use of legal interest also applies to the tax and tax field. For example, obligations to the tax administration and banks, in the latter case on the part of customers, are subject to legal interest. This is the so-called «default interest», which amounts to 3.75% according to the fifty-seventh additional provision of the EMP. Legal interest also affects the value of temporary and lifetime pensions that people over the age of 65 receive in exchange for their homes. «The compensation for late payment shall be imposed ex officio by the judicial authority and shall consist of the payment of annual interest equal to the statutory interest on the currency in force at the time of maturity, increased by 50 per 100; This interest is considered to be earned for days without the need for a legal claim. However, two years after the debt has expired, the annual interest may not be less than 20 per 100. The legal interest of the currency is determined each year by the Law on the General State Budget, taking into account the economic situation and expectations. The legal interest on the money is the interest rate used as a reference in lending operations when the amount of compensation or the percentage of compensation for late payments has not been previously determined between the borrower and the creditor.
Article 1108 of the Civil Code reflects legal interests as follows: one of the conditions of use of the legal interest is that it be applied in cases where no interest has been established for non-compliance or abusive confiscation. The main cases of application of legal interest are: its operation is really very simpleImplementation of the amount you need to calculate interest, choose the date from which the term begins to count, choose the date on which you need to calculate accrued interest, and finally choose one of the two methods of calculation (legal interest or judicial interest). The first calculator to perform historical calculations since 1940. In addition to lending operations, for which there has been no prior agreement between the parties in this regard, this type of legal interest on money is used in other procedures: legal interests are determined by the General Law on State Budgets.