The main difference between a loan and a cash donation is that in the first case there is an obligation to repay the amount borrowed. But, what happens if the loan matures, it is not repaid? This is common when the loan is granted by a relative . The Treasury has understood that in these cases the loan can be forgiven, which would be taxed in the Inheritance and Donations Tax (ISyD).
WHAT HAPPENS IF I DON’T PAY BACK A LOAN ON THE DUE DAY?
A priori, the only consequence of not returning a loan, within the agreed maturity periods, is that the possibility is opened for the lender, to claim judicially or extrajudicially the return of the amount loaned.
However, in the tax area, there are several doubts that have been resolved by a recent ruling by the Superior Court of Justice (TSJ) of the Community of Madrid.
DO NOT CLAIM THE LOAN RETURN, CAN IT BE CONSIDERED AS A DEBT FORGIVENESS?
Every loan contract includes an expiration date, in which the loan must be paid back. As has been said, the lender has the option of claiming the loan back, even going through the courts. But what if you don’t? What if it takes months, or several years, to claim payment?
In the case recently resolved by the Madrid Supreme Court , the Treasury considered that the failure to claim a loan is equivalent to its forgiveness. Therefore, once a loan has expired, and a reasonable period of time has elapsed without claiming the debt by the lender, the debt forgiveness should be considered to have occurred, and the lien in the Inheritance and Gift Tax should be considered.
However, the TSJ disagrees with said interpretation, and affirms that a debt cannot be construed as forgiven for the mere fact of not being claimed on the same day of maturity. On the contrary, the expiration of a debt without payment, the only thing that determines, without more, is the birth of action to claim it.
It is therefore necessary to ask oneself when the forgiveness of the loan can be understood due to the failure to claim the debt.