Late-payment interest charged by the tax authorities is deductible
For some years the tax authorities and the courts have upheld as a general rule that late-payment interest was not deductible for corporate income tax purposes before the current Corporate Income Tax Law (Law 27/2014, of November 27, 20109) whereas it was deductible after that law came into force. The National Appellate Court has now come to the opposite conclusion.
In a judgment delivered on October 8, 2020, the National Appellate Court held that late-payment interest charged to the taxpayer as a result of an audit was deductible for corporate income tax purposes while the Revised Corporate Income Tax Law approved by Legislative Royal Decree 4/2004, of March 5, 2004 (TRLIS) was in force.
In its opinion, the letter of the TRLIS is no different from the letter of the law currently in force, in relation to which the Directorate General for Taxes (DGT) has already allowed the ability to deduct that item.
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