What tax on a private loan?

An alternative to bank loans are not only products offered by non-bank companies, but also private loans. When we ask for help from relatives, we rarely think about any formalities. However, it is worth remembering that such transactions are also subject to appropriate legal regulations.

When does it apply and what is the tax on a private loan ? What changes were introduced in 2019? Let’s see!

Private loan – what is it?

Private loan - what is it?

When financial problems arise in our lives, we often ask for help from our relatives. No wonder, in the end, they are people that we trust. In addition, in many cases they do not require us to pay for the money you have borrowed. Typically, transactions carried out in a family or friendly atmosphere do not resemble official meetings with a client’s advisor or even submitting an online application on the websites of non-bank institutions.

As a result, not many of us realize that from a legal perspective, they are perceived as a private loan subject to specific regulations contained in the Civil Code. By definition, these are all operations consisting in the transfer of a specific amount to the borrower by a natural person or institution that does not conduct activities of financial intermediation for a definite or indefinite period.

Very often receiving money from family or friends, we do not specify a specific date of their return. Mutual trust allows you to transfer your capital free of charge with the conviction that eventually he will come back to us. Imagine a situation when someone in our immediate environment urgently needs a loan to repair the car.

Having the right funds, and realizing that it is necessary for the proper functioning of the whole family, we will not hesitate even for a moment. Who at the moment thinks about the obligations resulting from carrying out such a transaction? Let us answer this question ourselves.

Other forms of private loans

Private loans are also known as transactions belonging to the phenomenon of social lending. They consist in transferring money directly between two physical entities without the participation of any financial institutions. The offer may seem attractive, especially for people who can not find the right credit at a bank or a non-bank company.

However, we must be aware that they are not subject to the Consumer Credit Act, which allows the potential creditor to manipulate freely the amount of fees and the consequences of delays. Signing the contract means that you agree to all provisions contained therein. Therefore, each point should be well analyzed so that you do not be surprised about the costs later.

Many people confuse this form of financial support with non-bank online loans. Therefore, it is worth emphasizing the differences between them. Offers made available by loan companies are subject to strict legal regulations. The amendment to the anti-usury law has introduced appropriate restrictions both on non-interest costs of liabilities and delays in repayment.

All additional fees may amount to a maximum of 25% of the borrowed sum and 30% of this amount on an annual basis. However, interest for delay can not exceed twice the value of those defined as statutory, i.e. 14%. If the offer does not fall within the limits set by the Act, we should immediately resign.

Providing private investors to adjust any costs to the consumer’s ability usually means a nice bad start. It is better to make a lower value of financing in non-bank companies than to risk being a victim of unethical practices of a lender providing social lending support.

What is a private loan tax?

According to the Act on tax on civil law transactions of September 9, 2000, the operations of borrowing money or goods are also subject to tax. For transactions executed before January 1, 2019, it is 2%, while contracts concluded after this date are subject to a new rate of 0.5%.

The basis for determining the specific PCC tax amount, which is the value of the loan, remained unchanged. If its total amount is unknown and the money is delivered in installments, then we have to take into account the costs for each payment of money.

The duty towards the Tax Office includes contracts concluded with both private investors and people from the immediate environment. There are, however, some exceptions. When can we be exempt from having to pay tax?

Exemption from PCC tax

According to Article 9 § 10 c. Of the Civil Code, we can be exempted from PCC tax when both parties of the contract belong to the first tax group and the amount borrowed does not exceed the set limits. This means that tax is not subject to loans from: spouses, descendants, ascendants, son-in-law, daughter-in-law, in-laws, stepchild, siblings, stepfather and stepmother.

As we have already mentioned, the second condition concerns the value of the transferred capital, which can not be higher than PLN 9,637. This limit includes not only the current commitment, but also any financial support from the last 5 years granted by the same person. There is also a possibility of full exemption from PCC tax if the contract was concluded between the parents-in-law, son-in-law or daughter-in-law.

However, in such a situation we are obliged to submit an appropriate PCC-3 declaration within 14 days from signing the loan agreement and submitting a document confirming the receipt of money to an individual bank account.

A loan from friends or investors

The PCC tax from January 1, 2019, amounting to 0.5% of the value of money received, includes contracts between friends, non-relatives and so-called social loans. However, as you know, there will be an exception to each rule. This is also the case here. For contracts concluded before the new calendar year, the following conditions shall apply:

If the total amount of aid granted by one lender in periods of three years from January 1, 2009 did not exceed PLN 5,000, then we do not have to worry about paying the tax under one additional condition.

The total amount of loans granted by various entities can not be higher than PLN 25,000 in periods of three years from January 1, 2009.

It is worth noting, however, that as of 01/01/2019, further changes have taken place. They provide exemption from the tax liability only in situations where the value of the loan granted is lower than PLN 1,000.

How do I pay a private loan tax?

We have already explained the changes that took effect as of 1 January 2019. However, how to pay a private loan tax? The borrower is obliged to submit an appropriate e-declaration without a prior call within 14 days from the date of the loan agreement.

Remember that a document must provide everyone! Regardless of whether we are exempt from duties towards the tax office or not. If we do not complete the formalities, and then during the inspection, the Tax Office will record irregularities in the declaration or its absence, the PCC-3 tax rate will increase to 20%.

So let us remember that a private loan is also associated with formalities, such as the conclusion of a contract and tax collection. This will allow us to avoid additional costs and nerves.

If you do not have time to complete additional formalities related to the private loan tax, use the Aasa offer. All you have to do is apply and the rest will be done for you!