Interest Default Research Articles

Research on Income Taxation of Default Interest: Comment on the Supreme Administrative Court Judgment No. 112 in 2021

Research on Income Taxation of Default Interest: Comment on the Supreme Administrative Court Judgment No. 112 in 2021

Some issued of human rights restriction under conditions of martial law (via the prism of the need approach) and methods of their overcoming

The purpose of this article is a detailed analysis of the grounds for the restriction of fundamental human rights under conditions of martial law and distinguishing the methods of overcoming the issues of human rights restriction.
 For the reduction of the events of personal information leakage, the mentioned publication of private information should be conducted in the interests of national security (right restriction), considering the understanding of the exercise of the legitimate interest of the state. Therefore, while publishing information, which has the content of private information, about an individual, a state should refer to the legal possibility which has an external expression form, is protected by the law and is ensured by it, and is directed on the realization of the interest of national security.
 Regarding the restriction of the right of an individual to the freedom of thought and expression, to free expression of views and beliefs, it is necessary to refer to the fact, that a view, thought, word, or belief of an individual can contain data, posing a threat to the national security of Ukraine (when an individual expresses it for another individual or a number of individuals). In such a situation, it relates to the arousal of the legally protected interest of the state. The state develops a legal motivation which is relatively defined within standards or may not have an external form of expression at all, and therefore needs to be proved and its implementation fixed through judicial bodies.
 For certain restrictions of the rights of an individual (for example, restriction of the right to freedom of personal philosophy and religion) a complex interest “default interest here with the purpose of further preservation of the interests of the society and state”,, is an important method of overcoming the issues related to its fixation and realization.
 The restriction of the right to freedom of association in political parties and public organisations may be achieved through establishing of legal and protected by the law interest only in relation to the consequences of actions (acts or failure to acts), which threaten national security and public order, and in other situations, established by part 1 of article 36 of the Constitution of Ukraine.

Правовые последствия неисполнения мирового соглашения, утвержденного арбитражным судом

The author points at the risks of the failure to comply with the settlement agreement, so the research has been made to analyse the consequences of those risks being brought into effect, with due regard to the current court practice. The legal consequences are usually the penalties, and it was arguable to include them in settlement agreements until recently. The author adheres to the view that parties are free to include any civil penalties in their settlement agreement, particularly because of the legal approach which was formed earlier and is still widely applied by arbitrazh courts: the settlement agreement must be the ultimate termination of the dispute. The article covers the possibilities to employ such sanctions as forfeit, default interest and recovery of damages, and also astreinte. In this context the author considers as well the issue of the limits upon the modification of the procedure and the method of the enforcement of the respective court ruling. In addition there is a need to facilitate the option of defining in court proceedings the due amount if the settlement agreement is to be enforced in case of partial fulfilment on a voluntary basis.

Default Interest in the Event of Late Payment of Taxes

In this article, the author comments on the proportionality requirement in relation to default interest applied when a tax debt is not (timely) paid, and on interest issues in case of cross-border tax recovery and international consultations in tax disputes. Default interest has both a compensatory function and a punitive nature. The distinction between both aspects means that account must be taken of the specific circumstances of each individual situation in which default interest is applied. International recovery assistance should ensure transparency regarding the default interest applied. Moreover, it is important that the combined application of default interest and administrative penalties in the applicant state and the requested state does not lead to a disproportionate effect on the tax debtor. In respect of mutual agreement procedures to resolve double taxation, it is noted that legislation should take greater account of the default interest imposed on the tax debtor.

Advances in Financial Leasing Mechanism Designs

Financial leasing contracts usually include specific clauses for early termination of the agreement in the event that the lessee defaults. The lessor might, therefore, not immediately ask for termination of the financial lease agreement in order to take advantage of the increment in fees accrued due to the default interest. The analysis presented in this work aims to find the conditions determining the optimal time to rescind the contract, when the arrears’ interest rate is higher than the outstanding fees’ interest rate established in the contract and when the return of alternative investments is deterministic. In this paper, we study the optimal time for advanced termination of a leasing contract to maximize the wealth of the lessor against the natural expiry of the contract. We prove that the optimal time can be found through the intersection of the instantaneous force of interest of a lessor’s credit at a certain date and the instantaneous force of interest of the opportunity cost of capital, or at the initial date or maturity date. To this end, we provide a detailed list of cases in which it is appropriate to terminate the contract or not. The problem is formulated in the case where the opportunity cost follows deterministic and semi-deterministic dynamics.

TİCARET ŞİRKETLERİNDE SERMAYE BORCUNUN İFASI TALEPLİ DAVALARIN DAVA ŞARTI ARABULUCULUK AÇISINDAN DEĞERLENDİRİLMESİ

6325 s. Hukuk Uyuşmazlıkları Arabuluculuk Kanunu hükümlerine göre, özel hukuk temelli olan ve tarafların üzerinde serbestçe tasarruf edebildikleri iş ve işlemlerden doğan uyuşmazlıklar arabuluculuk müessesesinin çalıştırılması suretiyle bir çözüme kavuşturulabilir. Kanunun 18A maddesine göre ise, ilgili kanunlarda arabulucuya başvurulmuş olması dava şartı olarak kabul edilmiş ise arabuluculuk sürecine başvurulması zorunludur. 6102 s. Türk Ticaret Kanunu’na eklenen 5A maddesi gereğince, Türk Ticaret Kanunu’nun 4 üncü maddesinde ve diğer kanunlarda belirtilen ticari davalardan, konusu bir miktar paranın ödenmesi olan alacak ve tazminat talepleri hakkında dava açılmadan önce arabulucuya başvurulmuş olması dava şartıdır. Türk Ticaret Kanunu’nun 127, 128, 129 ve 482 nci maddelerinde, şahıs veya sermaye şirketlerinde, taahhüt edilen sermayenin getirilmemesi halinde, şirket veya şirket ortakları, borcun ifasını, temerrüt faizinin ödenmesini, varsa zararın tazmin edilmesini, kararlaştırılmış ise cezai şartın ödenmesini ve son olarak - sermaye şirketlerinde - ıskat müessesesinin çalıştırılmasını talep edebilirler. Sermayenin getirilmemesi sonucu ileri sürülen bu talepler neticesinde ortaya çıkan uyuşmazlıkların, dava şartı arabuluculuk kapsamı içerisinde olup olmadığının tartışılması gerekmektedir.

Obligation for EU Institutions to Pay Default Interest on Repaid Fines: Case C-301/19 P Printeos

In Printeos, on 21 January 2021, the Court of Justice (‘the Court’) confirmed on appeal the General Court’s ruling that the Commission, after the annulment of its Article 101 TFEU decision against Printeos by a previous final judgment of the General Court, should have also repaid default interest on the amount of the fine. The Court also upheld Printeos’ cross-appeal by awarding it compound interest from the date on which the action was brought before the General Court. In a decision of 10 December 2014 (‘the 2014 decision’), the Commission imposed on Printeos a fine of EUR 4,729,000 for its participation in a cartel from 2003 to 2008 on the market of European stock/catalogue and special printed envelopes. After having brought an action for annulment of the 2014 decision before the General Court on 20 February 2015, Printeos proceeded with the provisional payment of its fine...

Management by Interest Theory

This paper explored the originality of the management by interest theory as an organizational management theory. The management by interest theory aims to provide strategic insights to understanding the dynamics involved in the operations of interest in executing organizations’ affairs by management. The study engaged a descriptive narrative methodology in exploring the concept of organizational interest, organizational member’s interest, stakeholders’ interest, dominant interest, management role, and postulations of the assumption of the management by interest theory. The study posits that the management by interest theory connotes the default interest that presently defines an organization's protocol of engagement in its present and future activities. In conclusion, the management by interest theory is relevant in explaining and understanding management exploration of interest and the interplay of organizations’ engagement protocol in today’s organizations.

RECOVERY OF DAMAGE CAUSED BY LATE PERFORMANCE OF OBLIGATIONS RESULTING FROM INTERNATIONAL COMMERCIAL CONTRACTS

This article analyses the different approaches in comparative law, arbitral practice and in doctrine regarding the institution of interest on late performance (default interest) allocated to compensate for the damage arising from the late performance of contractual obligations, known by most legal systems and instruments of uniform law. Despite the trend of harmonization of regulations in this area, national legislations enshrine different solutions regarding some aspects of this institution. Consequently, the national and international tribunals give various decisions, depending on the legal regulations and the international commercial customs that they consider applicable in the case, the jurisprudence in this field being different.

Changes to the regulation and the declaration of unfair terms in mortgage agreements: an event study approach to the Spanish Banking Industry

This paper investigates how the European Union and Spanish changes to the regulation and the declaration of some unfair terms in mortgage loan agreements have affected the valuation of the Spanish banking industry. This paper has a dual legal and economic focus, and could consequently be of interest not only to financial institutions but also to the administrator of justice, which oversees the correct functioning of the financial system and the protection of consumer rights, in this case, mortgage holders. The empirical analysis was carried out using a sample of Spanish companies composed of 11 financial institutions that are listed, or have been listed, on the Madrid stock exchange and 24 non-financial companies listed on the IBEX-35 index. The period analysed was from December 2009 to March 2019. One of the main conclusions was the observation that, in general, the abnormal negative returns of financial institutions are greater when dealing with a decision from the Court of Justice of the European Union rather than from the Spanish Supreme Court. The events referred to as unfair terms that have had the most impact as a whole on the returns of shareholders were, because of their impact of the valuation of financial institutions, in order of importance, those relating to default interest charges, followed by rounding up, and, in last place, the unfair terms of floor clauses, mortgage constitution expenses and multi-currency loans.

Closed-Form Solution for Defaultable Bond Options under a Two-Factor Gaussian Model for Risky Rates Modeling

In this article, the authors provide a closed-form solution for defaultable bond options under a two-factor Gaussian model for risky rates. The key feature of the proposed stochastic model is the introduction of two stochastic dynamics to address the behavior of both risk-free interest rates and credit spreads where the two sources of risk are correlated. Moreover, the model can match exactly the term structure of defaultable interest rates. In order to model credit-sensitive bonds, the authors assume an intensity-based reduced-form framework where the approach based on the recovery of market value is considered and where the recovery rate is one of the model’s input. Under this framework, the authors derive closed formulas for the price of European options having as their underlying both defaultable zero-coupon bonds and coupon-bearing bonds, which the authors assume are approximately log-normally distributed. Moreover, the options are assumed to be knocked out upon a default event of the bond, with zero value to the option holder. An empirical analysis is performed to illustrate the calibration process of the proposed model using financial market data to price call and put options across different credit ratings and different levels of the loss given default. TOPICS:Factor-based models, derivatives, options Key Findings • An option pricing model that considers the dynamic of risky rates under a two-factor Gaussian model where risky rates are the sum of risk-free rates and credit spreads is proposed. This distributional hypothesis is consistent with negative interest rates and benefits from analytical tractability. • Under this framework, closed formulas for the price of European options having both defaultable zero-coupon bonds and coupon-bearing bonds as their underlying are derived under an approximately log-normal distribution assumption. • A detailed two-step calibration procedure is provided. The first step estimates the parameters of the one-factor Hull-White model for the risk-free rates and the second step estimates the parameters of the model’s credit component under a grid of correlation values.

Kamata kao posledica dužničke docnje

The author first tries to define the concept of debt arrears, and after that its consequences. The author dedicates further presentation to interest, its historical origin and definition of its basic types through the analysis of the laws by which it is regulated, and with special emphasis on the Law on default interest. The author tries to point out the legal gaps in the laws, analyse the existing solutions in practice, but also offers some new solutions that could be useful in the application of the institute of interest. Also, the institute of default interest will be analysed within our legal system through a calculation that extends from the appearance of the law that regulated default interest until today.

Printeos: Obligation to Pay Default Interest When Repaying a Fine after Annulment

Abstract The General Court ruled that, in case of annulment of a cartel decision based on an inadequate statement of reasons, in addition to repaying the fine amount received, the Commission must pay default interests at the ECB refinancing rate increased by 3.5 percentage points since the date on which the applicant unduly made provisional payment of the fine in accordance with the principle of restitutio in integrum.

About Interests as a Secondary Obligations With a Special Review to Default Interests // O kamatama kao sporednim obligacijama sa posebnim osvrtom na zatezne kamate

The paper presents the general notion, legal nature, assumptions, significance and types of interest with reference to default interest rates as a special type of secondary obligations and the moment of their creation.

A double obstacle model for pricing bi-leg defaultable interest rate swaps

Two mathematical models under so-called intensity and structure frameworks to pricing a double defaultable interest rate swap are established. The default could happen or jump to a high probability in both fixed and floating parties on the predetermined boundaries. The models lead to a new and interesting mathematical problem. As the intensity approaches infinity in designated regions, the solutions of the intensity models converge to a solution of a structure-type model which is an initial value problem of a partial differential equation coupled with two obstacles problem in their restricted regions. According to the value of the fixed rate, three cases are discussed. The free boundary that determines the swap rate and the free boundaries that determine the earlier termination of the contract (due to counterparty’s default) are analysed.

Haben Verzugszinsen Entgeltcharakter?

A recent Supreme Court ruling raises doubts about the legal nature of default interest, also calling into doubt whether contract clauses on default interest should be subject to review under s. 879 para. 3 of the Austrian Civil Code, which provides that clauses relating to ancillary obligations contained in general terms and conditions or contract templates are void if they grossly disadvantage one of the contracting parties. The essay discusses the Supreme Court’s arguments with a view to helping to clarify the issue.

Case law note: The CJEU Confirms that the Amount of Interest Normally Payable Under National Law on Overpaid VAT Cannot Be Reduced

On 28 February 2018 the Court of Justice of the European Union (hereafter ‘CJEU’) ruled in the Nidera BV case (C-387/16) (CJEU, 28 Feb. 2018, Case C-387/16, Nidera BV, ECLI:EU:C:2018:121.) that Article 183 of the VAT Directive, read in the light of the principle of fiscal neutrality, must be interpreted as precluding a reduction in the amount of interest normally payable under national law on overpaid VAT which was not refunded in due time for reasons connected to circumstances not attributable to the taxable person, such as the high amount of that interest when compared with the amount of overpaid VAT, the period of time during which the overpayment was not refunded and the underlying reasons for this, as well as the losses actually incurred by the taxable person. In previous case it already became clear that overpaid tax must be refunded to the taxable person concerned within a reasonable period. If not, the taxable person must be compensated in the form of default interest. (Opinion AG, 28 Feb. 2018, Case C-387/16, Nidera BV, ECLI:EU: C:2017:740, paragraph 1.)

Modelling Credit Risk in the Jump Threshold Framework

ABSTRACTThe jump threshold framework for credit risk modelling developed by Garreau and Kercheval enjoys the advantages of both structural- and reduced-form models. In their article, the focus is on multidimensional default dependence, under the assumptions that stock prices follow an exponential Lévy process (i.i.d. log returns) and that interest rates and stock volatility are constant. Explicit formulas for default time distributions and basket credit default swap (CDS) prices are obtained when the default threshold is deterministic, but only in terms of expectations when the default threshold is stochastic. In this article, we restrict attention to the one-dimensional, single-name case in order to obtain explicit closed-form solutions for the default time distribution when the default threshold, interest rate and volatility are all stochastic. When the interest rate and volatility processes are affine diffusions and the stochastic default threshold is properly chosen, we provide explicit formulas for the default time distribution, prices of defaultable bonds and CDS premia. The main idea is to make use of the Duffie–Pan–Singleton method of evaluating expectations of exponential integrals of affine diffusions.

A copula approach to credit valuation adjustment for swaps under wrong-way risk

This paper deals with the credit valuation adjustment (CVA) of interest rate swap (IRS) contracts in the presence of an adverse dependence between the default time and interest rates: so-called wrong-way risk (WWR). It compares the upper Frechet bound approach introduced in a 2013 paper by Umberto Cherubini with a new semi-analytical IRS–CVA formula that we are proposing as a modification of Cherubini’s approach. The approaches are compared via a numerical study, in which we find that our semianalytical formula (the modified approach) provides more precise IRS–CVA valuation results.

Asymmetric Defaultable Interest Rate Swap Valuation and Bilateral Credit Value Adjustment

The unilateral defaultable claim valuation problems have been studied extensively, but the valuation of a bilateral contingent claim with asymmetric credit qualities is still lacking convincing mechanism. This paper presents an analytical model for valuing contingent claims, e.g., interest rate swaps, subject to default by both counterparties. The default-free interest rates are modeled by the Market Models, while the default time is modeled by the reduced-form model as the first jump of a time-inhomogeneous Poisson process. All quantities modeled are market-observable. The closed-form solution gives us a better understanding of the impact of the credit asymmetry on swap value, credit value adjustment, swap rate and swap spread.