The percentage corresponding to the statutory interest on the money is determined by the Law on the General State Budget, which theoretically has to be approved annually. Does this mean that statutory interest rates on money change every year? Not exactly. This regulation may maintain the same rate that would have been clear the previous year. In fact, that hasn`t changed since 2016. If we wanted to calculate the legal interest on money for one year, we would work as follows: € 6,000 (x) 3.00% = 180 euros As we said in the first paragraph, the legal interest on money is an annual reference. If the loan had been for a period of one year, we would have to apply the legal interest of the current year to that amount, and we will receive the amount to be repaid. Conceptually, it has the same advantage as statutory interest on money. So what`s the difference? Default interest should be remunerated for credit agreements, loans, etc. But in case of non-existence, the legal interest of the money is used.
It could then be said that the latter is the minimum required to compensate for possible delays. The benchmark established by the law defines that the legal interest on money will be 3% in 2022. This is a figure that applies to cases where the term of a debt is one year, that is, the debtor must pay within one year from the date on which he received the loan if he does not want to default. Thus, a person who does not subscribe to a one-year loan must pay an additional 3% of the total debt, for example, 150 euros if the debt is 5,000 euros. However, this amount shall be increased or reduced proportionately if the period is greater than or less than one year. For example, if someone owes 5,000 euros and does not respect a deadline of six months, or 180 days, what it must results from the calculation of the legal interest of 3% multiplied by 180 and divided by 365 (the days of the year), with which he owes almost 74 euros. The legal monetary interest rate will remain at 3.00% until December 31, 2021. So far, we have seen that the legal interest in money is used as a subsidiary legal set-off for cases where default between creditor and debtor was not foreseen, but only between individuals. Legal interest on money is a type of compensation for breaches of obligations (debts, loans, etc.) if the parties had not provided for such compensation. It is established by the Civil Code and regulated and updated annually in the General Law on the State Budget (hereinafter referred to as the Budget Law). Article 1108 of the Civil Code provides that debtors in default must pay the “payment of agreed interest and, in the absence of agreement, in the legal interest” as damages.
The benchmark, which is calculated as a percentage, is dynamic and is modified according to the state of the country`s economy. The funny thing is that although it is the Civil Code that defines the legal interest, its renewal depends on the General State Finance Law (PGE), which it must update before the first day of the year. In principle, the vast majority of financial obligations, such as debts and loans, are associated with the obligation to pay an additional amount 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 the general finance law applicable in 2021, the legal monetary interest rate was 3%. In the same regulation published by the BOE for the year 2022, this amount is maintained. Therefore, the legal monetary interest rate in 2022 is 3%. How does this affect us in a real case? If you have your own business or are self-employed, we recommend that you take out legal protection insurance to advise you on how to carry out your work. Ask for a free quote and let yourself be surprised by everything you can get with our legal protection insurance. Legal interest on money is compensation or set-off if someone is late in repaying a debt, such as a loan. Normally, credit agreements mark this type of set-off.
In the event that it has not been marked previously, the parties will be guided by the legal interest of the money. Law 11/2020, of 30 December, on the general state budget, sets THREE PERCENT (3%) of statutory interest on money for 2021 and seventy-five percent (3.75%) for THREE. As I said, it is a percentage applied to outstanding amounts (debts). Let`s say they lend me 2,000 euros that I should return in a year. And at the end of this period, I did not return them, so I am denounced and condemned to return the loan + agreed interest + legal interest on the money. How can I get this latest data? 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. €2,000 * 3 / 100 = 60 (this would be the legal interest on the money applicable in the example given). 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. 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%. For various reasons, they do not return the money, and we have to go to court to get it back. We receive a favorable judgment, which expresses the obligation of the debtor to return, as well as the refund, which adds the legal interest on the money. Let`s say we lend €6,000 to a friend without agreeing on lucrative interest or default interest (in case of late repayment of capital). The return period is 6 months and starts in January 2022 and ends in June of the same year. Well, they should return our 6,000 euros plus 88.76 euros. according to the legal interest on the money requested for 6 months. This translates into a total of €6,088.76. During the same period, default interest is 3.75% in accordance with Article 26.6 of Law 58/2003, of 17 December, on General Tax. Let`s see how much the defaulting debtor should return to us and how it should be calculated.