In practice, the fixed legal interest rate can be very important when calculating large penalties, compensation, etc. As we have already said, in Spain the maximum legal interest rates are renewed every year, depending on the country`s economic situation. As a result, in 2022, the highest interest rate for commercial default interest remained at 8%. These are related to the failures that are caused between companies, it is usually a lot of money. Therefore, this is usually higher than other market interests. On the other hand, the general interest of money and tax deferral were respectively 3% and 3.75%. The determination of legal interest is carried out annually and falls within the competence of the State, in accordance with the General Law on the State Budget. This implies that it is directly related to the economic situation that the country is going through at the moment. Conversely, the tax administration must also be accountable to its taxpayers if it is in debt. In this case, the calculation is also carried out taking into account the statutory interest. Although the previous case mainly suggests debts between individuals, the use of statutory interest also applies to tax and tax matters. Thus, obligations towards the tax authorities and banks are subject to legal interest, in the latter case on the part of customers.

This is the „default interest”, which amounts to 3.75% according to the fifty-seventh additional provision of the ELP. Legal interest also affects the value of temporary and lifetime pensions that people over 65 receive in exchange for their housing. Legal interest is the amount to be paid for the use of the money during a given period. The main feature of the calculation of statutory interest is that the price is set by law and not by agreement between debtor and creditor. In this sense, it is established as a kind of reparation for the damage caused. Generally, this happens when there is a verbal agreement between the parties, but the debtor does not return the money within the specified time. Legal interests have characteristics that distinguish them from other types of interests. The most important are: Essentially, the vast majority of financial obligations, such as debts and loans, are associated with the obligation to pay an additional amount of money in situations where repayment deadlines are not met. This compensation, known as legal interest, applies to companies and administrations as well as to personal transactions, is governed by the provisions of the Civil Code and is updated annually. In accordance with legal requirements, the legal interest in Spain is renewed every year.

Therefore, this rate will be 3% in 2022, so you should use this figure to calculate statutory interest. You only need to know the amount owed to calculate the fees that will be charged to the defaulting debtor. However, this figure can vary for three, six, nine months or more, depending on the loan repayment period. In these cases, the annual amount is first calculated and multiplied by the number of days divided by 365. If the obligation consists in the payment of a sum of money and the debtor is in default, compensation for damages consists, in the absence of an agreement to the contrary, in the payment of the agreed interest and, failing agreement, in legal interest. In 2022, the maximum legal interest rate is 8%. This rate applies to commercial late payments, i.e. those that occur between companies. All this is provided for in the Civil Code, which explains what conditions 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 interest rates so that the legal framework does the rest. In this way, the law attempts to regulate and compensate part of the damage caused by the breach of duty. All this must be taken into account before lending money to third parties. One of the conditions for the use of legal interest is that it is applied in cases where no interest has been established for non-compliance or illegal collection. The main assumptions for the application of legal interests are as follows: Default interest is a broad term closely related to the legal interest of money. Basically, it is the delay in paying a particular debt that results in the collection of additional interest. This is called default interest because the debtor exceeds the time specified in the agreement. In that sense, the purpose of those interests is to compensate for the damage suffered by the creditor as a result of the default of the other party involved. The economic situation is one of the most decisive variables in determining the legal interest.

Each year, the new value of the money, which will serve as the basis for calculating the debt, is examined and determined. When this happens, the case is brought before a court, so it is a judge who makes the decision according to the requirements of the legal framework. However, it should be borne in mind that no interest on the loan should 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 was fulfilled. Therefore, the debtor will see how the interest accrues until he has paid the debt acquired. However, for default interest to occur, certain conditions must be met. First of all, the deadline set for the payment of the debt must be exceeded, in addition to what is due is money. On the other hand, in the event of a breach, an interest payment must have been agreed and there can be no agreement rejecting this acceptance. All this shows that the two conditions that would generate default interest have not been met. We get the annual amount of statutory interest on the money (because it`s an annual order of magnitude), and with this result we can get the amount we need.

The legal interest rate on money in 2022 is 3.00%. If a person does not fulfill his obligations to the Ministry of Finance, that is, does not pay his debts, he will be punished by the tax administration. The statutory interest serves as the basis for the calculation of the penalty and the subsequent calculation of the penalty that may be applicable to the taxpayer. If we wanted to calculate the legal interest on the money for one year, we would work as follows: € 6,000 (x) 3.00% = 180 euros In this case, the interest corresponds to the legal interest on the money, add 2 percentage points. In addition, there is default interest related to unpaid instalments corresponding to existing non-payment days. This is where the General Law on the State Budget comes in, which sets default interest for each year. In these cases, this is the legal interest rate on money plus 25%, which means another 3.75% by 2022. This applies to Social Security debts and other tax deficits. The maximum rates of this interest vary for general, tax and commercial debt.

The latter are the ones with the most interest, founded in 2022 with a maximum of 8%. There are different types of default interest that cover a large number of areas. The first of these is the legal interest on the money, which occurs when what is due to the third party is not paid on time. Therefore, if no interest rate for non-payment is set, the legal interest rate of the money will be calculated, which is 3% for this year 2022. On the other hand, there is the interest of the procedural defect which arises when a judgment is rendered and which obliges the defendant to pay a sum of money.