Discount
Discount (or Damnum , a discount ) is in finance , a discount from the face value as determined by a lending or the emission of a security may be agreed upon or the amount by which the price of a bank note or a coin is below the nominal value. The opposite of the discount is the premium .
General
If there is a discount for financial products , there is always a nominal value. In the case of interest-bearing financial products, the discount influences their return or the effective interest rate .
Securities and types
In the case of bonds , it is customary in the market for issuers to either charge a front-end load (premium) or withhold a discount, i.e. a front-end fee. Both of these lead to a reduction in income either for the issuer (discount) or for the investor (premium) during the term of the investment . Shares and GmbH shares, however, may not be issued with a discount in accordance with Section 9 AktG and Section 5 Paragraph 3 Clause 3 GmbHG.
In foreign cash ( varieties ) buy banks below the official exchange rate (discount) or sell above the exchange rate (premium). In contrast to the central banks , who buy and sell sorts at the official exchange rate, when buying and selling through credit institutions there is a surcharge or discount on the official exchange rate , which is based on the procurement, administration and insurance costs. This discount is usually between 2 and 4 percent of the nominal value of the varieties. Usually, however, the discount is referred to as the bid rate and the premium is referred to as the ask rate .
loan
The discount is given either as a percentage of the loan amount including the discount, e.g. B. "9% discount" or as a payment amount or payment rate, z. B. "91% disbursement rate", ie of 100 euros loan amount only 91 euros loan amount are paid out in both cases, which are made available to the borrower . But he has to pay interest and repay a total of 100 euros.
The reason for a discount on a loan is the agreement of a lower nominal interest rate , because the discount counts as interest paid in advance . This keeps the monthly payment in installments low - during the period for which the discount was paid in advance. Because the discount is not paid out, a higher loan amount must be taken out, interest paid and repaid than a loan without a discount.
The relatively complicated calculation of the "reduced" nominal interest rate to be paid because of the discount is only possible with a complex iteration process, which is precisely defined in the Price Indication Ordinance (PAngV). Customers who are not trained in financial mathematics can usually not check these calculations. With its effective interest rate calculation, the PAngV aims to ensure that two loan variants can be compared with each other if the effective annual interest rate for the same residual debt has been determined at the end of the comparison period using a uniform calculation method .
The procedure prescribed in the PAngV assumes that the entire loan amount including the discount will be paid out in full at the beginning of the loan period and that the loan will already be repaid one month after it has been paid out. This is practically not the case with mortgage loans granted for the construction of a new house - in contrast to the purchase of land, finished buildings or rescheduling.
Legal bases
As part of the freedom of contract , the contracting parties to a credit agreement can also use the option of pricing and differentiation. A discount that leads to a reduction in nominal interest rates is part of interest under civil law , as it has developed into a calculation factor for calculating interest rates in banking practice. The agreed discount is viewed by case law as a term-dependent compensation for a lower nominal interest rate. The interpretation of the contract shows that the discount is to be regarded as an integral part of the interest calculation.
The designation chosen in the loan agreement as “interest” or “costs” is not decisive, but rather the distinction on the one hand between term-dependent interest and on the other hand all other term-independent loan costs. Whether fees are to be classified as term-dependent interest or as non-term-dependent costs must be determined in the individual case by way of interpretation. Of § 492 para. 2 BGB will not be described only in the contract as interest rates, but also other interest-related payments recognized unless they have term-linked character. The BGH has already decided this expressly for the case of an agreed discount. This also applies to a processing fee, even if this is designed as a term-dependent remuneration with an interest-like character. In terms of tax law, the BFH also bases its disagio on the interest rate concept of civil law.
Discount for early repayment
Whether credit institutes are obliged to reimburse the proportionate unused discount depends largely on the reason for which the loan agreement was prematurely terminated.
- If the contract ends because the borrower makes use of a right of termination according to Section 286 (3) BGB or Section 489 BGB or both parties agree that the borrower will terminate the contract effectively, the legal reason for the unused discount no longer applies. Then the borrower is entitled to an enrichment claim under Section 812 (1) BGB for reimbursement of the pro rata discount. The BGH had already decided such cases several times. The banks concerned were sentenced to reimbursement of the proportionate unused discount.
- If a loan agreement with a fixed term is terminated prematurely by the lending bank terminating the loan without notice for an important reason because the borrower has culpably failed to meet his obligations, the bank is entitled to compensation for the damage it suffers as a result of the early termination of the contract ( § 249 BGB). When calculating the damage, the unused discount is a dependent invoice item. Since the discount due and retained when the loan was paid out would have been used up in full without the termination without notice, the proportional discount as part of the legally protected interest rate expectation must in principle remain with the bank in full. An exception, from the point of view of the equalization of benefits, comes into consideration in the - not very frequent - cases in which the bank can reinvest the loan repaid early because of the increased interest rate at an interest rate that exceeds the effective contractual interest rate.
Tax issues
Accounting
According to Section 250 (3) of the German Commercial Code ( HGB) , accounting companies have the option of capitalizing the discount if there is a difference between the repayment and issue amount of a liability or bond. A discount is to be treated under tax law in Germany according to § 5 Paragraph 5 Clause 1 No. 1 EStG as money procurement costs in the tax balance sheet as prepaid expenses, as far as the term of the loan extends beyond the balance sheet date (capitalization obligation). The right to choose under commercial law can be exercised independently of the tax obligation. The dissolution is carried out proportionally over the total term of the underlying loan, using the interest rate method or the straight-line depreciation method.
Advertising expenses
The agreement of discounts in credit agreements only makes sense if the amount of the discount can be deducted from tax as income- related expenses in the year of disbursement and if the (tax) framework conditions are met; In the case of real estate financing, this is only the case for rented properties. A customary discount is fully deductible ( Section 11 (2) sentence 4 EStG). A discount of up to a maximum of 5% of the loan amount with an interest rate fixed period of at least 5 years is generally regarded by the tax authorities as customary in the market. If a higher discount amount is paid, the tax authorities are of the opinion that the excess should not be taken into account immediately as income-related expenses, but rather spread over the fixed interest period or the term of the loan for tax purposes. The Federal Fiscal Court, however, has decided that, even if a higher discount is agreed, it can be assumed that the entire amount is customary in the market if the loan agreement was concluded with a commercial bank as with third parties.
numismatics
The discount represents the discount on the face value of a coin if this is stated too high compared to its fine weight .
Card payment
For card payments Discount is the amount the "acquirer" in paying off the debt subtracting the contracting company from this requirement as a fee. This discount ("merchant fee") has been reduced to 0.2% for debit cards and 0.3% for credit cards since 2015 by Regulation (EU) 2015/751 of the European Parliament and the Council of April 29, 2015 on interchange fees for card-based payment transactions. of sales revenue .
See also
- Discount scale
- Cash flow
- Agio and disagio , scientific joke
Web links
Individual evidence
- ↑ Helmut Kahnt / Bernd Knorr, Old Dimensions, Coins and Weights. Ein Lexikon , Bibliographisches Institut, Leipzig 1986, licensed edition Mannheim / Vienna / Zurich, 1987, p. 383; ISBN 3-411-02148-9
- ↑ BGH NJW 1990, 2250 , 2251
- ↑ BGHZ 133, 355
- ↑ BGHZ 111, 287 , 288
- ↑ BGH WM 2000, 1243 , 1244 f .; BGHZ 111, 287, 291
- ↑ BGHZ 111, 287, 288 and BGH WM 1995, 1617
- ↑ BGH WM 2000, 1243, 1244 f.
- ↑ BFHE 86, 32 , BStBl. Part III 1966, 375
- ↑ BGHZ 111, 287 ff .; BGH WM 1993, 2003 ff.
- ↑ BGH WM 1994, 1163 , 1164
- ↑ BGH ZIP 1996, 1895
- ↑ BGH ZIP 1996, 1895
- ↑ BMF letter of March 12, 2010, Az .: IV C 6 -S 2133/09/10001, BStBl. 2010 I, p. 239
- ↑ BFH, judgment of March 8, 2016, Az .: IX R 38/14
- ↑ Münzen-Lexikon.de, Article Disagio
