BackThe issue of appeal focuses on determining whether, in the context of Personal Income Tax (IRPF), late payment interest, whether resulting from a liquidation in a process of verification of income related to the economic activity of an individual or those generated by the suspension of the execution of a contested administrative act, can be considered deductible expenses for tax purposes. The Supreme Court Ruling dated February 8, 2021, appeal number 3071/2019, established that, in Corporate Income Tax (IS), late payment interest, regardless of its origin in settlements derived from verification processes or as suspensive interest, are considered tax deductible expenses due to their legal nature.
This put an end to the dispute regarding the deductibility of tax late payment interest in the IS and affirmed that they are subject to the deduction limits established in article 16 of the IS Law. The Chamber considers that, in the case of Personal Income Tax and when the taxpayer carries out an economic activity, late payment interest, both that generated by a settlement in a taxable income verification process and that originated by the suspension of the execution of a contested administrative act, can be considered tax-deductible expenses. This interest is governed by the deduction limits established in Article 16 of the Income Tax Law, which are also applicable to Personal Income Tax.
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