SPAIN Law and Practice Contributed by: Miguel Cases, Toni Barios, Joaquín Fabré and David Navarro, Cases & Lacambra
3.10 Usury Laws Spanish Law of 23 July 1908, on the nullity of usuri- ous loan agreements, regulates the nullity of financing agreements when these are considered usurious. According to such law, a loan agreement shall be null and void if: • it includes an interest rate significantly higher than the normal interest rate for money (as periodically published by the Bank of Spain); • it is manifestly disproportionate to the circumstanc- es of the case or under such conditions as to make the interest rate ludicrous; • it has been accepted by the borrower due to their distressed situation, inexperience or limited mental faculties; or • it is assumed that a greater amount has been received than that delivered, whatever its amount and circumstances may be. The waiver of the debtor’s own jurisdiction made by the debtor in these types of agreements shall also be null and void. The consequence of the declaration of a loan agree- ment as usurious is that the agreement will be null and void and the debtor will only be obliged to repay the principal amount of the financing. However, this should be considered on a case-by-case basis. Other specific Spanish regulations shall be taken into account when determining the interest rate of a loan in certain circumstances. For instance, Spanish Law 5/2019, dated 15 March, regulating real estate credit agreements establishes that, in the case of loans secured by mortgages or other security rights over real estate for residential use or whose purpose is to acquire or preserve property rights over land or real estate built or to be built: • the default interest shall be the ordinary interest rate plus 3%; • default interests can only accrue over the principal due and pending payment and cannot be capital- ised; • the ordinary interest rate of a loan cannot be modi- fied during the term of the loan to the detriment of
the borrower, except in case of mutual agreement; and • in case of variable interest rates, it will not be pos- sible to set a downward limit. Spanish Law 5/2019 only applies in cases where the lender is a natural or legal person carrying out such lending activity in a professional manner, when the borrower or guarantor of the financing is a natural person. 3.11 Disclosure Requirements Legal and natural persons domiciled in Spain that carry out transactions with non-residents in Spain which involve, among others, collections, payments and/or foreign transfer of funds, shall inform the Bank of Spain of such transactions. The periodicity of such information varies depending on the volume of trans- actions made. • Monthly, if the volume of transactions during the previous year is equal to or higher than EUR300 million. • Quarterly, if the volume of transactions during the previous year is equal to or higher than EUR100 million and lower than EUR300 million. • Annually, if the volume of transactions during the previous year is lower than EUR100 million. If the volume is lower than EUR1 million, such declara- tion will only be made at the express request of the Bank of Spain. Interest paid to resident individuals and companies is generally subject to withholding tax at 19%. How- ever, interest payments made to qualifying lenders (ie, Spanish banks or a Spanish securitisation fund) are exempt from withholding tax. Spanish-sourced interest payments to non-resident individuals or companies (without a permanent estab- lishment in Spain) are prima facie subject to withhold- ing tax at 19%. However, under the provisions of the different tax treaties signed between Spain and other 4. Tax 4.1 Withholding Tax
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