Taxation in Spain
We invite those who pay taxes on Notes in Spain to share their knowledge on how to accurately calculate, declare, and pay taxes on income earned from Notes with fellow investors.
Among things to share, it is important to specify:
- the tax base (amount on which the tax is calculated)
- Tax rate to be applied
- When the declaration must be submitted
- When the tax must be paid
- Any exemptions that might apply to this type of income
We plan to offer income summary reports that will include the most relevant information to help investors with the taxation process. The reports will be available in early January.
Spanish translation below:
Invitamos a los inversores que pagan impuestos por "Notes" en España a compartir sus conocimientos sobre cómo calcular, declarar y pagar correctamente los impuestos sobre las rentas obtenidas por los "Notes" con otros inversores.
Entre las cosas a compartir, es importante especificar:
- La base imponible (importe sobre el que se calcula el impuesto)
- Tipo impositivo a aplicar
- Cuándo debe presentarse la declaración
- Cuándo debe pagarse el impuesto
- Las exenciones que puedan aplicarse a este tipo de ingresos
Tenemos previsto ofrecer informes de resumen de ingresos que incluirán la información más relevante para ayudar a los inversores en el proceso de tributación. Los informes estarán disponibles a principios de enero.
My advice is that you should pay a Spanish accountant (or better 2-3 to cross check what they say) for consulting.
Having said that, I'm not a lawyer, it's not my job but this is my understanding.
Annual declaration (Renta / Modelo 100) is between April and June.
The tax rate is progressive: 19% for up to €6000 capital gain, 21% for 6000-50000 and 23% over 50000
Tax is paid end of June, with the ability to split in 2 payments (2nd in beginning of november).
I don't know about any exemptions.
My accountant sets the total earned amount under "Otras ganancias patrimoniales a integrar en la base imponible del ahorro". I don't know if that's the correct place, but taxes are paid, so it should just be a matter of having it in a wrong/not the best field.
This is for the annual income, what you should also really pay attention and provide tools for that is the modelo 721 (ex. modelo 720), which requires all investments over €50000 outside Spain to be declared with all details. I don't know the details as it wasn't required with claims (only for the non invested amount). But now that notes have ISIN they'll be required. My understanding is that we'll have to submit (by end of March) a list of all notes with their value, ISIN numbers and all the details for notes that were invested on December 31. For bank balances (including uninvested amounts) they also require the average amount of the last quarter (as well as on Dec 31), but I don't know if it's required for investments.
Again, please consult with 1 or more serious accountants/lawyers in Spain (some don't even know as it's not super common) and provide the tools to do both of these (I'd recommend both consultingdms.com and dig.es as they know what they're doing)0
Los particulares en España pagan sus impuestos a través de dos instrumentos, el Impuesto de la Renta de las Personas Físicas (IRPF) y el Impuesto sobre el Patrimonio (IP).
Las personas físicas tienen obligación de presentar la declaración cada año y se declara por año vencido (las rentas obtenidas en 2022 se pagan en 2023).
Los plazos de presentación de la declaración varían según la modalidad de cumplimentación y presentación de la declaración (internet, confección telefónica y presentación por internet y confección y presentación presencial). En cualquiera de las modalidades, el plazo de presentación de impresos a la Agencia Tributaria termina el 30 de junio de 2023.
Por lo que se refiere al pago, cuando la declaración sale a devolver (importe negativo) el contribuyente no paga sino que recibe dinero por exceso de tributación. Cuando sale a pagar (importe positivo) el contribuyente paga lo que adeuda al fisco de un solo pago o por fraccionamiento una vez que se ha procesado su declaración.
En el caso de las notes hay dos salvedades importantes.
1) Al existir un acuerdo de doble imposición entre Letonia y España, el contribuyente ya ha pagado sus impuestos (el 5% de retención sobre el capital generado) y solamente tendría que declarar en España la existencia de la inversión en Mintos y desgravar lo que ha pagado al fisco letonio.
2) En España existen umbrales mínimos de rentas de capital obtenidas en el extranjero (estados de la UE y del EEE). Si la renta total obtenida en Mintos no alcanza ese umbral el contribuyente no está obligado a declarar la existencia de la inversión y a tributar por ella. No obstante, puede interesarle declararlo para rebajar la carga fiscal por la desgravación al amparo del acuerdo de doble imposición.
Con estas aclaraciones, no existiría un tipo impositivo propiamente dicho que se pueda aplicar.
Lo que habría que hacer es integrar en la base imponible (como renta de capital obtenida en el extranjero (país UE/EEE) la renta total obtenida, los gastos en que se ha incurrido para obtenerla y la acreditación del pago del 5% de impuestos en Letonia). De este modo, no se pagarían impuestos en España por las notes y se desgravarían las comisiones abonadas y los impuestos pagados al Fisco letón.
Para que la tributación de las notes en España funcione de esta manera se necesita un informe de Mintos donde se acredite la renta total obtenida, las comisiones en que se ha incurrido para obtenerla y el justificante del pago de impuestos en Letonia (podría requerirse el concurso de la autoridad fiscal de Letonia)0
@Marc Martell. When you said your accountant sets the total earned amount under "Otras ganancias patrimoniales a integrar en la base imponible del ahorro", were you talking about last year "IRPF"? Because last year there were no Notes in Mintos but claims, and they have an slightly different taxation, not in tax rate, but in the compensation of losses (defaults and selling at a lower price than purchase price) as "ganancias patrimoniales" and "rendimientos del capital mobiliario" cannot be mixed together for loss compensations (they can be mixed together by losing the 75% of the compensation).
"Ganancias patrimoniales a integrar en la base imponible del ahorro" are capital gains from selling at a price higher than the purchase price (except for some assets as bonds) or late interest or penalty fee gains (compensations for late payment or contract breach).
"Rendimientos del capital mobiliario a integrar en la base imponible del ahorro" are loan, deposit, bonds and other debt securities interest and stock dividend and capital gains from maturity, exchange, sale and purchase of bonds and other debt securities.
Filling the wrong box in the tax return is not likely to be fined by the tax agency (but it is possible according to law), but if you mix up the boxes and apply for loss compensation you can get in trouble.
It is very important not to mix capital gains from claims with earnings from Notes in this respect, but for interest is okey.
Also, late interest and penalty fee earnings should not be mixed up with regular interest.
Regular interest and penalty fees should be in the tax return of the year when its payment was schedulet even if it is delayed, while late interest should be in the tax return of the year when it is computed or determined, not when it is paid.
As loans are securized by Notes, I suppose there are no penalty fees or late interest and both together with regular interest are considered as regular interest from the point of the investor taxes.0
ismresp, that's a lot of great knowledge, thank you! Yes, I refer to last year, and previous years as well. I guess they put it wrongly each year 😕
Thankfully I never applied for loss compensation, but it's also true that for the losses they were subtracted from the amount that was added to that field for the earnings, I guess it shouldn't matter for the final tax amount, but probably not the best approach.
Lucja (Mintos) the above would be great for a post and for some automated way to export all the required fields to provide to an accountant in a way they cannot make mistakes0
The claims and notes are assets which you can buy and sell getting profits or losses. By these reason, they receive the same deal as shares or bonds inside spanish tax system.
On the other hand, claims and notes are linked to double taxation agreement between Latvia and Spain. If you pay your taxes in Latvia (even if taxes are 0% or 5%) you must not pay in Spain twice by the same asset.
By this reason, you need recognize the existence of one "renta de capital" got at Latvia (EU/EEE) and not in Spain. You cannot compensate losses in the same vein as spanish assets but you must not pay by latvian assets. In addition, you can reduce getting costs of capital (not losses) in Latvia.0
@Pablo Pelaez Martinez. Right, people who are tax residents in Latvia do not need to pay for Spanish taxes for Spanish loan Notes as the capital gains, including all kinds of interest, are generated in Latvia (not so sure about claims though, if the interest is considered paid by Mintos, or by the loan originator and Mintos only transfers the funds).
But, in the case of an Spanish tax resident, if you read the double taxation agreement between Latvia and Spain it clearly states, in its article 11 , "Interest arising in [Latvia] and paid to a [tax] resident of [Spain] may be taxed in [Spain]" and Spanish tax law states that Spanish tax residents must pay taxes for interest income earned regardless of the country in which is generated with no exemptions.
It also states "However, such interest may also be taxed in [Latvia if it is arisen there] and according to [Latvian laws], but if the beneficial owner of the interest is a [tax] resident of [Spain], the tax so charged shall not exceed 10 per cent of the gross amount of the interest. " and Latvian law says that a 5% tax should be withheld from interest arisen from Notes for individuals that are Spanish tax residents.
So, even if you pay a 5% withholding tax in Latvia, you should still also pay taxes in Spain if you are an Spanish tax resident and taxation rules for Notes are the same as for bonds issued in Spain, having the right to apply for loss compensation only for the part of the taxes paid in Spain.
Article 13 states: "Gains from the alienation (e.g. sale) of any property (e.g. Notes or Claims) other than that referred to in paragraphs 1, 2 and 3 (they refer only to assets related to real estate, owned by multinational companies and transferred between same company establishments, and ships and aircrafts), shall be taxable only in the [State] of which the alienator (e.g. seller) is a resident." So, Spanish tax residents pay taxes only in Spain for the gains from the sale of Notes and Claims at a price higher than their purchase price as if Mintos and loan originators were Spanish companies.
"Article 22 OTHER INCOME 1. Items of income of a resident of [Spain], wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in [Spain]." So, Spanish tax residents pay taxes only in Spain for the gains from penalty fees and late payment interest from Claims as if Mintos and loan originators were an Spanish companies. Notes only would have penalty fees and late payment interest in case of Mintos contract infringement or late payment caused only by Mintos.
As far as I know there is no minimal cap that make you exempt of paying taxes for interest and capital gains from foreign investments in Spain amount below such cap. If someone knows the article of the law that states that, please post it in the forum.
However, you are entitled to apply for a tax deduction equal to the amount withheld by Mintos for paying Latvian taxes. Just bear in mind that, in order to apply to such tax deduction, you would need proof of having paid such Latvian taxes in the form of documents provided by the Latvian Tax authority, legalized by Hague apostille and translated by an official sworn translator to Spanish (total cost around 400€/year). Such documents may be required later by Spanish Tax authority (and it is usually required for tax deductions over 10€) after applying for the tax deduction, and not being able to provide them would result in fines and getting your tax deduction cancelled.
So, if the income tax rate in Spain is 19%, you would pay 5% in Latvia, already withheld by Mintos, and 14% in Spain at your "Declaración de la Renta" as long as you applied correctly for the double taxation reduction to the Spanish Tax Authority.0
@Pablo Pelaez Martinez. According to Latvia-Spain double taxation agreement, if the income tax rate in Spain is 19% for example, you must pay 5% in Latvia, already withheld by Mintos, and 14% in Spain at your "Declaración de la Renta" as long as you applied correctly for the double taxation deduction to the Spanish Tax Authority. In your "Declaración de la Renta", you can compensate your losses with the "14%" of Spanish taxes.
I did not know you cannot compensate for losses in Latvia. Good to know, although I was not planning on filling a Latvian tax return.
Finally, just a comment, sales of bonds and Notes are "Rendimientos del capital mobiliario a integrar en la base imponible del ahorro" while sales of claims and shares are "Ganancias patrimoniales a integrar en la base imponible del ahorro". As both are to "integrar en la base imponible del ahorro" they share the same tax rates, but there have different boxes in modelo 100 because their loss compensations cannot be mixed directly and for other reasons not applicable to Mintos claims and notes.
Edit: I am sorry for repetition, but my previous posts were pendent for approval and last time that happened to me the post was never approved.0
Why my last posts are pending of approval?0
Pablo Pelaez Martinez, can you share with us the article of the Spanish or EU law, the Spanish Tax Authority decision, judicial judgement or oficial webpage or document from an Spanish Tax authority that says that Spanish tax residents do not have to pay taxes in Spain for interest and capital gains for foreign investments in the EU/EEE if they pay taxes elsewhere.
Edit: I am sorry for repetition, but my previous posts were pendent for approval and last time that happend to me the post was never approved.0
We checked again and there are no more posts pending confirmation. Therefore, all your posts should already be visible.
Thank you for your suggestion. We will take it into consideration.0
I insist that Mintos should separate, in the income report for taxes, income from claims from Notes income as their taxation is different between them.
The following is just informative and not legal, tax nor financial advice. I do not assume any kind of responsibility for what is expressed here and in this posts/comments.
Income from Mintos Notes is taxed by IRPF (“Impuesto sobre la Renta de las Personas Físicas”, tax resident individual personal income tax) for non-business income of individuals for all income related with Notes, except gifts and inheritance, for a natural year is declared together with the tax return (“declaración de la Renta”) from the beginning of April to the 30th of June of the next year in “modelo 100”.
There is an exemption to submit “modelo 100” and to pay the resulting taxes if you comply with all the requirements in article 61.2 in RIRPF (https://www.boe.es/buscar/act.php?id=BOE-A-2007-6820#a61). Unless you earn less than 1000 euros per year globally from all kind of sources of non-tax-exempt income including among others, any kind of capital gain, your savings, investments, business, job, retirement pay or unemployment or illness subsidies, it is extremely likely that you have to submit IRPF declaration as income from Mintos Notes is not included in the 1600 euros threshold, as income within that threshold had to be subjected to the Spanish IRPF withholding tax, and Mintos does not withhold such tax.
In case that you do not have the obligation to submit IRPF (which is extremely rare unless you are jobless and someone else pays your bills read previous paragraph) “modelo 100”, you can do it to apply for deductions that can be applicable if the total result of your taxes is negative as it acts as a tax return form. Keep in mind that if you do so you’ll have to declare and pay taxes for all your global income, if the result is positive.
Tax is paid end of June, with the ability to split in 2 payments (2nd in beginning of November).
IRPF tax rate for any income coming from Notes that is not considered a donation (e.g. if sold very cheap) or inheritance (in such cases is subject to gift and inheritance tax, “Impuesto de Sucesiones y Donaciones”) is between 19-26% depending on your global income coming from savings and investments.
Big fortunes have to declare Mintos Notes in the “Impuesto sobre el Patrimonio”. Tax rate differs by region.
There are no tax exemptions for Mintos Notes, but there several tax deductions you can apply for (double taxation, tax base reductions for loss compensation and Mintos secondary market fees).
Some people must declare their foreign investments and balance in foreign accounts in modelo 720. Obligation to fill modelo D-6 has been removed for Mintos Notes recently before their implementation.
The Mintos income report for taxes must include the total sum of the natural year of the following concepts separated from each other and all the amounts must be before taxes (before withholding any tax):
- Mention of the condition of Mintos acting as intermediary for the purchase and sale (Marketplace) of the Notes and as depositary of the uninvested funds.
- Mintos legal name, legal address and tax identification number in Latvia.
- Notes regular interest effectively paid to the investor together with late payment and default interest or penalty fees for delays by the borrowers or the lending company or the SPV.
- Income from rewards from campaigns that Mintos should have paid in the natural year even it has not been paid yet (delayed) according to terms and conditions (the amount pending for payment can be indicated).
- Late payment and default interest or penalty fees for contract infringements or delays by Mintos or the Notes issuer if they have been calculated and communicated to the other party during the natural year (the amount pending for payment can be indicated).
- Capital gains from sales (sale price minus purchase price) of Notes without losses due to sales at discount and without discounting Mintos Secondary Market fees, produced during the natural year in which ownership of the Notes has been transferred, computed from the agreed prices (offer and offer acceptance).
- Mintos Secondary Market fees paid by the investor for selling Notes.
- Losses from sales of Notes (sale price minus purchase price) produced during the natural year in which ownership of the Notes has been transferred.
- Losses from defaults in Notes (redeemed at 0 euros instead of 0.01 euros during the natural year).
- Recovery charges discounted from the redemption payments during the natural year.
- Uninvested funds average balance for the last quarter (sum of the balance of each day at 23:59:59:999 divided by number of days in the quarter) of the year and at 23:59:59:999 on 31st of December (this is for modelo 720). Also, the balance at the moment when Mintos investor account gets cancelled as an independent document with the previously specified identification data of Mintos.
- The sum of the nominal value of all Notes that are current on 31st of December at 23:59:59:999 (this is for modelo 720).
- The total amount of the withheld taxes
Also, it would be very useful for “modelo 720” and “Impuesto sobre el Patrimonio”:
- A table with all Notes that are current on 31st of December at 23:59:59:999 that could be download as a xlsx file (Microsoft Excel spreadsheet).
- A table of the scheduled payments for the Notes joined with the list of all Notes that are current on 31st of December at 23:59:59:999 that could be download as a xlsx file (Microsoft Excel spreadsheet).
- A table of all Notes that have been redeemed or sold by the investor (with the number of Notes redeemed/sold or the value of the Notes as each Note is 0.01€) during the natural year, their redemption/sale price (without discounting Mintos Secondary market fees) that could be download as a xlsx file (Microsoft Excel spreadsheet).
- A table of the scheduled payments for the Notes joined with the list of all Notes that have been redeemed or sold by the investor (with the number of Notes redeemed/sold or the value of the Notes as each Note is 0.01€) during the natural year, their redemption/sale price (without discounting Mintos Secondary market fees) that could be download as a xlsx file (Microsoft Excel spreadsheet).
The fields that the mentioned xlsx file (Microsoft Excel spreadsheet) should have are: ISIN, Mintos Notes issuer (NOT lending company nor SPV) legal name, issuer tax identification number in Latvia, issuer address, issuer city, issuer province, issuer ZIP code, date of issue, interest rate, remaining term (in days), purchase date, number of notes, total nominal value amount, nominal value currency, Outstanding Principal, Outstanding Principal currency, Next payment date, Next payment amount, Received payments amount, Pending Payments amount, In recovery payments amount, Principal Defaulted amount (redeemed at 0,00€), Redemption/Sale date, Redemption/Sale price, Redemption/Sale price currency.
For the tables joined with scheduled payments the following fields should be added: Loan agreement number, Loan amount, loan closing date, loan interest rate, scheduled payment date, scheduled payment principal (to be paid in that scheduled payment), scheduled payment interest (to be paid in that scheduled payment), total (scheduled payment principal + scheduled payment interest), payment received (for that scheduled payment), payment date, status (scheduled, paid, late, Late - Partially paid, Paid after the due date, Loan rebought, …).
If possible, all mentioned data should be in Spanish as the Spanish Tax agency have no obligation to accept documents in other languages.1
Chapter 1.1: What are Notes according to Spanish tax law?
Notes are Asset-Backed Securities (ABS) that in Spanish are also called “Bonos de titulación” where “titulación” means securitization. Accoding to “Resolución Vinculante de Dirección General de Tributos, V0684-07 de 04 de Abril de 2007” (can be obtained from https://petete.tributos.hacienda.gob.es/consultas/?num_consulta=V0684-07) from the Spanish Ministry of Finance regular interest and capital gains from sales, donations, redemption and exchange by other securities of “Bonos de titulación” are “Rendimientos del capital mobiliario a integrar en la base imponible del ahorro” (returns on capital from non-real estate assets to be added to the tax base for savings) for IRPF (individual income tax for [Spanish] tax residents).
Chapter 1.2: How similar are Notes to “bonos y cédulas hipotecarias”?
We can apply an analogy, in respect of direct taxation, between Mintos Notes and some “títulos hipotecarios” (assets based on mortgages), especially with “bonos y cédulas hipotecarias”. Difference between “bonos” and “cédulas” is that “cédulas” have to be backed by all the mortages owned by a bank, while “bonds” could be backed only by a set of them. We must note that both “bonos y cédulas hipotecarias” are based in mortgages and are fully guaranteed by the bank that sold the mortgages to the issuer and the mortgage itself, but that is not the case of Mintos Notes, which are not directly guaranteed the lending company nor by the non-mortgage loans they are based on.
Chapter 1.3: Which are the main differences between Notes and “bonos y cédulas hipotecarias”?
According to their base prospectus, Mintos Notes are only guaranteed by their debtor, the issuer, and only by an amount equal to the payments received by the issuer from the lending company (directly or indirectly) for fulfilling its obligations coming from the assignment agreement between them for the loan claims that indirectly back the corresponding Series of Notes. This also includes the payments made by the lending company in case of loan claim buyback from its buyback guarantee or in case of repurchase also by the lending company.
Chapter 1.4: But then, are not the loan claims the collateral backing Notes”?
Statutes of the issuer and the Notes contract forbids que the issuer to do any business not related with the issuance of bonds and fulfilling its obligations related to the Notes issued.
However, loan claims are not collateral for the issuer debt obligations with Noteholders (owners of Mintos Notes), so other issuer unprivileged creditors might have debt collection higher preference over Noteholders or could have the same preference, considering privileged creditors the ones who have higher debt collection than unprivileged ones such as tax authorities, mortgage or pledge creditors over specific assets.0
Chapter 2: What is the direct taxation of Mintos Notes return on capital if we considered them having the same taxation as “bonos y cédulas hipotecarias”?
Taking into account the “Resolución Vinculante de Dirección General de Tributos, V0684-07 de 04 de Abril de 2007” and the resemblance and differences between Notes and “bonos y cédulas hipotecarias”, we can conclude that Notes taxation is the same as these last ones.
Spanish Tax Agency webpage says that bonds and “cedulas hipotecarias” are taxed as explained bellow (https://sede.agenciatributaria.gob.es/Sede/ayuda/manuales-videos-folletos/manuales-ayuda-presentacion/irpf-2021/7-cumplimentacion-irpf/7_2-rendimientos-capital-mobiliario/7_2_2-ingresos-integros-capital-mobiliario.html and https://sede.agenciatributaria.gob.es/Sede/ayuda/manuales-videos-folletos/manuales-ayuda-presentacion/irpf-2021/7-cumplimentacion-irpf/7_2-rendimientos-capital-mobiliario/7_2_3-rendimientos-capital-mobiliario-integrar-imponible/7_2_3_5-rendimientos-derivados-transmision-otros-financieros.html).
The according to EAF-CGE – Economistas Asesores Financieros from Consejo General de Economistas de España, “Títulos hipotecarios” are taxed as explained bellow, although some rare types of “Títulos hipotecarios” are not taxed as explained here (e.g. “participaciones hipoterarias” or mortgage claims) (https://eaf.economistas.es/cuadro-tipos-impositivos/).
Default interest and penalty fees are taxed exactly the same as late payment interest.
Hence, Spanish tax law would consider interest and late payment interest paid indirectly by borrowers and the lending company through the issuer and Mintos to the Noteholders are regular interest paid directly by the issuer, “Rendimientos del capital mobiliario a integrar en la base imponible del ahorro” and “Intereses de cuentas, depósitos y de activos financieros en general” (Art. 25.2 Ley del Impuesto sobre la Renta de las Personas Físicas, Ley 35/2006, from now on LIRPF. Art. 25.2.a).4º for claims, but for Notes is the first paragraph of Art. 25.2), which the last is the name of the box in “modelo 100” where income from such regular interest should added, unless bonds have been purchased in the context of a business activity (“actividad económica”). This regular interest in Spain is known as “cupón” or “rendimientos explícitos” (explicit returns on capital) (Art. 91 Reglamento del Impuesto sobre la Renta de las Personas Físicas, Real Decreto 439/2007, from now on RIRPF). A “cupón” is each one of the interest payments of bonds. Returns on capital for rewards for campaigns are taxed as interest from bank accounts, so as “Intereses de cuentas, depósitos y de activos financieros en general”.0
Strictly speaking, when redemption payments of Notes take place at the same time as interest and late payment interest payments, the returns are considered implicit returns on capital and “Rendimientos procedentes de la transmisión, amortización o reembolso de otros activos financieros” as notes have a nominal value of 0.01€ (so, the minimal number of Notes you can buy in one go is 5000 Notes) and for each 0.01€ paid of capital a Note has been redeemed. However, distinguishing between fully amortizing, balloon and interest only Notes from bullet ones is not necessary, except for sells in the secondary market, as the resulting tax is the same if you mix up “Intereses de cuentas, depósitos y de activos financieros en general” with “Rendimientos procedentes de la transmisión, amortización o reembolso de otros activos financieros”. This only has to be taken into account for future changes in taxation laws and for sells in the secondary market (art. 91 RIRPF).
The payment of interest and late payment interest of fully amortizing, balloon and interest only Notes simultaneous to its redemption could be considered implicit or explicit applying the rules of art. 91.4 RIRPF for mixed capital returns.
The are no exemptions or deductions for “Intereses de activos financieros en general” coming from Notes. Here, only securities are considered “activos financieros by tax resident individual personal income tax (“Impuesto sobre la Renta de las Personas Físicas, IRPF”) law (Art. 91.1 RIRPF), and not other assets such as loan or loan claims, but in this case, as there is no other more suitable box in “modelo 100” for interest from loans or loan claims, they are added in this box (as modelo 100 “Manuales de ayuda a la presentación”(https://sede.agenciatributaria.gob.es/Sede/ayuda/manuales-videos-folletos/manuales-ayuda-presentacion/irpf-2021/7-cumplimentacion-irpf/7_2-rendimientos-capital-mobiliario/7_2_3-rendimientos-capital-mobiliario-integrar-imponible/7_2_3_1-intereses-cuentas-depositos_.html) for year 2021 states), unless bonds have been purchased in the context of a business activity (“actividad económica”).0
Capital gains (even if they are negative, i.e. losses) coming from sales, donations, redemption and exchange by other securities are “Rendimientos del capital mobiliario a integrar en la base imponible del ahorro” and “Rendimientos procedentes de la transmisión, amortización o reembolso de otros activos financieros” (Art. 25.2.b)), which the last is the name of the box in “modelo 100” where income from such regular interest should added, unless bonds have been purchased in the context of a business activity (“actividad económica”). These capital gains in Spain are known as “rendimientos implícitos” (implicit returns on capital) (Art. 91 RIRPF).
Capital gains are defined as the difference between sale price minus sale costs (directly linked with the sale such as secondary market Mintos fee) and purchase price plus costs (directly linked with the purchase). In case redemption, sale price is the amount paid for that redemption excluding interest or late payment interest.
Only for donations and some sales of Mintos Notes at a price below their market value, the sale price is their market value, and if the capital gains are negative, they are instead zero.
If sale price agreed between the buyer and the seller (offered by the seller and accepted by the buyer) is over their market value, sale price for taxes is the agreed amount.
This market value can be estimated in two ways: 1) applying art. 40 Real Decreto 1629/1991, de 8 de noviembre, por el que se aprueba el Reglamento del Impuesto sobre Sucesiones y Donaciones [RISD] and arts. 13 and 14 Ley 19/1991, de 6 de junio, del Impuesto sobre el Patrimonio, namely adding the nominal value of Notes to the full amount of all the future accrued regular interest paid for the simultaneously redeemed capital for the Notes Series (implicit returns on capital) minus any amount of regular or late payment interest paid to the seller in the future. So, the market value slightly increases with the number of days between Notes originally schedulet interest payments, or between purchase date and the redemption date in the case of bullet Notes. This is the recommended method when the difference with second and the first methods is less than 2000 euros. This method is the one used for filling “Modelo 720” or as tax base for “Impuesto sobre Patrimonio”. 2) Computing a reasonable market value. The last method could be rejected by the Tax Agency office after verification of the submitted declaration and you will be fined (likelihood of such verification increases with the capital gains amount, but random checks exist). But, after appeal of the rejection (and the fine) in front of the Spanish Ministry of Treasure (or in court, but then hiring lawyer is required), the initially declared value can be accepted if it seems more accurate than the one obtained by applying the first method. The report of an expert in the matter hired by the taxpayer can presented as evidence. Appeal of the rejection in front of the Tax Agency is possible, but only recommended if you hire an appraiser/expert (“Tasación Pericial Contradictoria”).
Remember that, according to Mintos terms and conditions, the interest and late payment interest accrued from the offer to the day of sale of the Notes, this last day not included, is paid to the seller and not to the buyer, dividing the next payments after the sale of the Notes received from the borrower between the seller and the buyer accordingly. In all interest estimation methods, this should be taken into account.0
The mentioned reasonable market value could be considered equal to the Mintos primary and secondary markets average sale price of the last quarter of similar Notes from with similar returns (interest rate, late payment interest rate and default rate) and similar risk, or obtained instead from the average Internal Rate of Return of those Notes multiplied by the average loan duration of each series of Notes.
That reasonable market value can be also estimated by computing the Net Present Value of the future payments of the Notes, taking into account the accrued regular interest until the last loan in the Notes Series is repaid, and The Net Present Value would be discounted at an interest rate such as the Internal Rate of Return obtained from the market quotation (better if it is computed from the average quotation price of the last quarter of the previous year to the moment of submission of the last tax declaration or the last quarter if information is available) of public debt instruments with similar maturity period from the lending company country plus 250 points as a medium-high risk compensation (https://guiasjuridicas.wolterskluwer.es/Content/Documento.aspx?params=H4sIAAAAAAAEAMtMSbF1jTAAASNTS0MjtbLUouLM_DxbIwMDS0NDQ3OQQGZapUt-ckhlQaptWmJOcSoAt2y5DzUAAAA=WKE).
This methods for estimation of the market value comes from applying rules for computing the tax base for “Ganancias y pérdidas patrimoniales procedentes de la transmission de elementos patrimoniales” (art. 34 y 35 LIRPF, art. 9.2 Ley 29/1987, de 18 de diciembre, del Impuesto sobre Sucesiones y Donaciones [LISD]).0
Inheritance of Notes does not generate capital gains nor “Rendimientos del capital mobiliario a integrar en la base imponible del ahorro” (Art. 25.6 LIRPF).
Sale of Mintos Notes below the mentioned market value might be considered a donation for the price difference between the market value and the effective sale price. Evidence against that presumption can be given (e.g., documents that prove that Mintos marketplace does not allow to sell to a specific individual and that was not possible to sell without discount for lack of demand at a higher price without an unreasonable delay for the needs of the seller). The likelihood of being considered a donation by tax authority is proportional to the difference between the amount agreed with the buyer and the market value.
When the sale of Mintos Notes is considered instead a donation, the buyer can be subject to gift tax (“Impuesto sobre Sucesiones y Donaciones”, ISD). For the declaration of such for tax residents in Spain according to art. 17 RISD and arts. 8 to 10 LIRPF, a copy of the proof of purchase, final terms and base prospectus of the Notes in addition to their translation into Spanish (Tax Authority might require it’s a sworn translation) have to be given together with the declaration
Evidence against the mentioned presumption, allowing a discount in proportion, might be the partial or total default of the loans (no goods able to be debt collected from the borrower and the lending company), agreement or judgement of total or partial removal of debt due to bankruptcy, or one year has passed since judicial debt collecting has started, all of them certified by a judicial authority, and all of them certified have to be proven to the Spanish tax authority [art. 14.2.k) LIRPF]). As terms and conditions forbids requesting such certifications related with the loan borrower debt, no evidence can be presented to the Spanish tax authority, so no discount motivated by the default of the loans can be applied in the sale price declared in taxes for sales of Notes, with the exception of default of both the borrower and lending company in loan with buyback guarantee.
Redemptions with negative capital gains (due to defaults or recovery charges discounted from the redemption payments) should be proven with a certificate from the issuer that states why Notes are not redeemed in full by their nominal value and can be presumed to be donations in the same way as sales of Mintos Notes at a price below their market value.0
Please be aware that negative ““Rendimientos del capital mobiliario a integrar en la base imponible del ahorro” from the sale, but not from the redemption, of a set of Notes cannot be declared nor deducted if you purchase Notes issued by the same issuer from the 44 that Mintos has (i.e. SIA Mintos Finance No. from 1 to 44, see https://www.mintos.com/en/notes-legal-documents/) and purchases are done during the two months before or after the purchase (counting from the same day of the stating month until the same day of the final month both included), until the Notes that have been purchased during this period are sold or redeemed.(Art. 25.2.b) LIRPF, Art. 8 RIRPF).
You can declare or deduct an amount, computed from the value in euros applying the official exchange rates publish by the European Central Bank, of the negative ““Rendimientos” equal in proportion to the value (equal to purchase price plus purchase costs) of the Notes purchased in that period that have been already sold or redeemed (Art. 25.2.b) LIRPF). Those would be declared in the declaration corresponding to the year when the Notes purchased during that period were sold or redeemed.0
Chapter 3. Losses tax compensation.
Please note that capital gains can be negative resulting in a deduction from taxes paid for any “Rendimientos del capital mobiliario a integrar en la base imponible del ahorro” in the current year or the next 4 years. Alternatively, 25 % of negative “Rendimientos del capital mobiliario a integrar en la base imponible del ahorro” can be deducted from the taxes paid for some “Ganancias patrimoniales a integrar en la base imponible del ahorro” in the current year or the next 4 years losing the right for deduction for the other 75%.
Chapter 4. Tax deductions.
DO NOT fill any of the “Retenciones” box with the taxes withhold by Mintos. This is reserved only for tax withhold from payments by Spanish companies or companies with a permanent establishment in Spain, which is not the case of Mintos.
For both, interest returns and capital gains there are no specific deductions as the only ones available are for expenses and fees for administration and deposit of securities in registered in official security and stock markets account for trading in such markets. Mintos account and marketplace do not qualify. Please read part 2 for general deduction applicable.
However, you are entitled to apply for a tax deduction equal to the amount withheld by Mintos for paying Latvian taxes. Just bear in mind that you would need evidence of having paid such Latvian taxes provided by the Latvian Tax authority, legalized by Hague apostille and translated by an official sworn translator to Spanish (total cost around 400€/year unless you are already registered as taxpayer at Latvian tax agency and you travel every year to Latvia or have someone in there to do the paperwork for you). Evidence may be required later by Spanish Tax authority (and it is usually required for tax deductions over 10€) and not being able to provide them would result in fines and getting your tax deduction cancelled.0
Chapter 5. When is considered the income is obtained according to tax law (“normas de imputación temporal”)?
Regular Interest have the same rules for Notes, bonds and “bonos y cédulas hipotecarias” and loans between friends and family where the lender is a non-business individual. Taxes for regular interest have to be declared in the declaration of the year when the interest can be claimed by creditor in court or outside of court, namely when they agreed and scheduled in the contract (art 14.a) LIRPF), and not when they are paid even if they are being paid late.
However, as later is explained, in case of payment delay from the borrower or the lending company, the scheduled payment date of the Notes gets automatically extended. Hence, regular interest has to be declared in the declaration of the year when the interest has been paid.
Capital gains are declared in the declaration of the year when the transfer of the ownership takes place, which happens after the seller receives the funds in his/her/its Mintos account, according to Mintos terms and conditions.
In the case the Issuer and Mintos and/or the lending company determines in good faith that there is no realistic prospect of collecting the debt coming from a loan, the redemption payment is automatically modified to zero for the corresponding Notes as established in the terms and conditions of the bonds. This is equivalent to a buyback of the Notes by the Issuer at price zero. The negative capital gains are then declared in the declaration of the year when the investor receives the notification of such modification.
Accoding to “Resolución Vinculante de Dirección General de Tributos, V1998-22 del 20/09/2022” (can be obtained from https://petete.tributos.hacienda.gob.es/consultas/?num_consulta=V1998-22) from the Spanish Ministry of Finance, late payment interest are “Ganancias patrimoniales a integrar en la base imponible del ahorro” (capital gains that increase personal patrimony to be added to the tax base for savings). But, the LATE PAYMENT INTEREST FROM NOTES THAT IS SHOWN IN THE MINTOS PLATFORM AND ESTABLISHED IN THE NOTES TERMS AND CONDITION IS NOT REALLY LATE PAYMENT INTEREST ACCORDING TO SPANISH TAX LAW BUT REGULAR INTEREST taxed exactly the same way as regular interest. However, LATE PAYMENT INTEREST FROM CLAIMS IT IS REALLY LATE PAYMENT INTEREST ACCORDING TO SPANISH TAX LAW.
The reason for that is the differences between the terms and conditions of Notes and the assignment agreement of Claims contract.
On one hand, terms and conditions of Notes clearly state that the issuer has no obligation to make any payment to the Noteholders until the corresponding payment is received by the issuer from the lending company. In case of payment delay from the borrower or the lending company, the scheduled payment date of the gets automatically extended as the Noteholder has agreed already in advance to that extension when he/she/it accepted the terms and condition of Notes that appear in the Base Prospectus and in the Final Terms at the moment of the purchase of the Notes.
Furthermore, the payments for Notes cannot be claimed in court until the issuer has not received the corresponding payments from lending company (or other person paying on its behalf). Late payment interest in Spanish Civil law and Spanish Tax law only accrues in case of breach of contract or when the due debt can be claimed in court.
Finally, the noteholders hold no claims or rights over the loans, as the issuer is the real owner of them.
Hence, payments from the issuer are never considered late payments by Spanish tax law, unless for the delay between the reception of the payment by the issuer and the reception of the payment by the Noteholder when exceeds the maximum delay establish in Notes terms and conditions (right now only it says a delay that is reasonable according to the circumstances) and the late payment interest probably is not going to accrue until the Noteholder has claimed the issuer the outstanding amount according to Latvian law and has collected proof valid in court of that claim.0
On the other hand, in Claims, the investor purchases a piece of the right to claim the payment of principal, interest, late payment interest and penalty fees from a loan from the lending company. However, the investor cannot claim such payments in court directly to the borrower or the lending company, because that investor promises not to do so in the assignment agreement (breaking that promise might lead to paying damages to the borrower, the lending company and Mintos) and does not have the necessary documents to file the claim against the loan borrower as the loan contract is in possession of the lending company. But, the lending company and Mintos promises to claim and collect such payments on behalf of the investor acting as fiduciary agents and not in the name of the investor, but in their own name.
Hence, it could be considered that the investor is the real owner of the right to claim the payments from the borrower, so the claimed late payment interest and penalty fees are compensation for the breach of contract of the borrower produced by not paying principal and interest on the date established in the loan contract, and they are “Ganancias patrimoniales a integrar en la base imponible del ahorro”.
The real late payment interest for the issuer and Mintos breaches of contract for excessive delay (or Claims) are considered accrued when it is calculated by the debtor and communicated to the creditor or the other way around or, when there is an agreement between the debtor and creditor on the amount and payment schedule of the late payment interest (“Resolución Vinculante de Dirección General de Tributos, V2429-16 del
Compensations from Mintos for contract infringements or delays by Mintos or the Notes issuer such late payment interest or penalty fees should entered in “Otras ganancias patrimoniales” box of “modelo 100”, but only when such infringements or delays have nothing to do with borrower or lending company payment delays from the loans that back the Notes.
Chapter 6. What is the tax rate for the income coming from Notes?
All income coming from Notes tax by IRPF are sum to the “base imponible del ahorro”. For such tax base the tax rate is 19% for the first 6000 euros, 21% for the next 43,999,99 euros (up to 49.999,99 euros), 23% for the next 149,999.99 euros (up to 199,999.99 euros), and 26% from 200,000 euros.
Gift and inheritance tax rate is different on each region of Spain.0
Chapter 7. What other tax obligations are related with Notes?
If the sum of all the funds in all accounts (bank accounts, deposits, Paypal, crowdlending platforms…) hold by the taxpayer outside Spain holding fiduciary money (euros, dollars, pounds… but not cryptocurrencies as they are in a different category), including the Mintos account holding uninvested funds, is greater than 50,000 euros on the 31st of December, “modelo 720” have to be submitted on the first quarter of the next year (art. 42bis Real Decreto 1065/2007, de 27 de julio, por el que se aprueba el Reglamento General de las actuaciones y los procedimientos de gestión e inspección tributaria y de desarrollo de las normas comunes de los procedimientos de aplicación de los tributos, RD1065/2007 from now on). Accounts where the taxpayer has any sort of power of disposition or where the taxpayer is the beneficiary are also counted. The previous is only declared once, not each year.
If the sum of the value of all the securities, shares, insurance policies and annuities hold by the taxpayer outside Spain is greater than 50,000 euros on the 31st of december, “modelo 720” have to be submitted on the first quarter of the next year (art. 43bis RD1065/2007). These are only declared once, not each year. Assets over which the taxpayer has any sort of power of disposition or where the taxpayer is the beneficiary are also counted. The previous is only declared once, not each year.
For each year that there is an increase in funds greater than 20,000 euros above the 50,000 euros described threshold, or an increase in the sum of assets values or the sum of acquisitions of new values, and the sum of both is greater than 20,000 euros above the 50,000 euros described threshold, all the previous at 31st of December, modelo 720 has to be submitted.
For each year that an already declared account on modelo 720 or its holder or beneficiary status or power of disposition over such account is cancelled or modified (independently of its value) modelo 720 has to be submitted.
For each year that an already declared asset on modelo 720 or its holder or beneficiary status or power of disposition over such asset is cancelled or modified (independently of its value) modelo 720 has to be submitted. This includes sale, donation, inheritance, redemption or maturity that causes change of ownership or the extinction of the asset or the right.
Big fortunes (global patrimony over 700,000 euros excluding the first 300.000 euros of the taxpayer main residence according to IRPF tax laws) have to declare Mintos Notes in the “Impuesto sobre el Patrimonio”. Tax rate differs by region.0
Mintos Notes might be taxed also by Impuesto Temporal de Solidaridad de las Grandes Fortunas (patrimony over 3,000,000 euros) once the respective law gets approved.0
Just bear in mind that you would need evidence of having paid such Latvian taxes provided by the Latvian Tax authority, legalized by Hague apostille and translated by an official sworn translator to Spanish (total cost around 400€/year unless you are already registered as taxpayer at Latvian tax agency and you travel every year to Latvia or have someone in there to do the paperwork for you). Evidence may be required later by Spanish Tax authority (and it is usually required for tax deductions over 10€) and not being able to provide them would result in fines and getting your tax deduction cancelled.
Wait, does that mean that if Mintos withholds more that 10€ we'll have to make sure to have a proof of payment of those taxes and thus pay 400€? That might even be more than the withholded amount, or, in any case it'd be an extra expense. It'd be great if Mintos was able to provide such proof of payment to the Latvian tax authority /cc Lucja (Mintos)0
10€ threshold at which you need to give evidence to the Spanish Tax authority of the taxes paid is not established anywhere. It is the threshold that I use taking into account that debt coming from some direct regional and local taxes is not collected if inferior to 10 euros as it cost more initiating the collection process than the tax collected.
According to law you must provide evidence from the first 0.01 euros.
I searched the in the internet a little bit, and sworn notaries charge 25.34 euros for Hague apostille (https://www.latvijasnotars.lv/).
If the tax certificate by the Latvian tax agency is an electronic document that can be verified online, Spanish Tax Authority might accept it without apostille, but it has the right to reject it if it does not have the apostille as civil servants in the tax office are not required to know how to verify Latvian documents or to trust the webpage where the verification service is (but, they have to know at least how to verify the apostille).
Sworn translation by an approved translator by the Spanish Ministry of foreign affairs would cost between 20 to 50 euros. Spanish Tax Agency might accept documents in English, or a translation made by the taxpayer, but it has the right to refuse them.
If the Latvian Tax Agency issues the tax certificate in bilingual (Latvian/Spanish), sworn translation is no longer necessary, but I am not sure if this is possible.
The other around 350 euros is an estimate to pay someone to do the paperwork for you, as the corresponding applications need to be written in Latvian, probably presented in person or pick up in person, or require a postal address in Latvia. Also it accounts for courier expenses. It would include also a tax consultant for enrolling you as a Latvian tax payer and applying for the tax certificate.
Maybe once you are enrolled you can apply for an electronic tax certificate online and download it, and maybe is possible to apply for an electronic apostille online (but I have no idea if that is possible in Latvia. At least, it is possible in Spain. One day it is going to be possible for sure). That would save you at least 300 to 350 euros per year.
We hope Latvia advances in the eIDas project, so you can enroll in the Latvian Tax Agency with your DNIe, or even better, an agreement for effective and automated exchange of tax information between Latvia and Spain is fully implemented.
Right now, there are agreements in place, but they only exchange income and bank account information, not information about the taxes paid in each country.0
Just to make it clear. Evidence of having paid Latvian taxes is only necesary IF YOU APPLY for double taxation tax deductions WHICH IS NOT MANDATORY.
If you do not apply for such deductions, no evidence is required. If you cannot provide such evidence, just do not fill the "modelo 100" box for double taxation deduction with more than 10 euros (alhought law says than you should leave box empty in that case).
If you apply for 10 euros or less is very unlikely that you'll get a fine, but it is still possible.0
I have again posts pending for approval.0
Just to make it clear. Evidence of having paid Latvian taxes is only necesary IF YOU APPLY for double taxation tax deductions WHICH IS NOT MANDATORY.
It's not mandatory, but not doing that would mean having 5% withhold, and then paying the normal Spanish taxation, so that'd be an extra 5% lost in taxes, which isn't that nice (and reason why I think Mintos should provide all the documentation needed)0
It's not mandatory, but not doing that would mean having 5% withhold, and then paying the normal Spanish taxation, so that'd be an extra 5% lost in taxes, which isn't that nice (and reason why I think Mintos should provide all the documentation needed)
Exactly. But, if tax agencies do not cooperate, costs of hague apostille and sworn translation ("traducción jurada" by an approved professional translator by the Spanish "Ministerio de Asuntos Exteriores") and courier costs would be unavoidable. Furthermore, if the paperwork cannot be done entirely online or by post, it is likely that Mintos refuses to have an employee dedicated to that or to hire a company to do it as cost of doing so per investor would be too much.0
This the document we need. It must be filled, signed and stamped by the company or entity that has withheld the tax (Mintos Marketplace? or the issuer?) before submitting to the Latvian SRS/VID:
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