The loan between legal entities interest-free: sample contract, tax implications

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2018-03-27 14:57:14

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Thanks to an interest-free loan, many companies get the opportunity to solve the accumulated problems. In the transaction can participate physical and legal persons. Issues with individuals is almost not there. But for the last is not idle are the issues of taxation. In this article we will look at the loan between legal entities interest-free: how it is made, what risks brings, and what are the possibilities to reduce them to a minimum.

agreement free loan

Concept

From the outset, it should be borne in mind that the transaction you need to be extremely careful. If everything is done correctly, then the tax consequences will be avoided. Let us contract an interest-free loan from the point of view of tax legislation. After all, this side can cause problems.

An interest-free loan turning into simple language, means the lending of money without interest. Of course, for the borrower it is a very lucrative deal. After all, banks such services they never provide. But others, both individuals and legal entities, it can be done.

Features

The Loan between legal entities interest-free is a fairly common deal. They use companies that are in partnership or friendship. There are even special organizations issuing loans. Transaction must be accompanied by a contract, and it may be unilateral and bilateral. In addition, it allowed the involvement of another party in order to guarantee the return of funds to the lender. As such, eligible to be an official organization.

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The contract clearly stipulated the terms of issue of the loan and the amount. It should be notarized. Despite the fact that there are clearly prescribed repayment period, the borrower can always return the money before the stipulated time.

You Need to clearly realize that such a deal may not be regular, otherwise you will not be able to avoid special attention and vigilance on the part of tax authorities. The loan between legal entities interest-free is given only for non-entrepreneurial purposes. Otherwise, it is taxable.

loan without interest

If the organization is too often in such transactions, the Inspectorate can come to the conclusion that it is an attempt to evade taxes and engage in illegal banking activities.

The Loan between legal entities interest-free: what you need to pay attention?

By Signing the deal, the lender should be especially careful. The first way by which you can protect yourself is to set a clear deadline for when they should be returned the money, but also to determine the negative consequences if the money will not be given. When the deadline of debt repayment the borrower write a letter of claim, where recall that awaited him in case of nonpayment. Not possessing special knowledge, it is better to consult a specialist so that the document was competently prepared.

The Contract is an interest-free loan should have the Chapter "responsible parties”. Then the lender provides money back guarantee. Thus, it should describe in detail what awaits the borrower in violation of contractual obligations. It also has to be provided and the penalty for each day of delay in payment.

In fact, for the lender there are many ways to protect yourself. Responsibility may include financial consequences for the debtor, fines, etc.

In this article we offer you a sample of what it looks like an interest-free loan agreement between legal entities. The form contains common items that are mandatory for such documents. the loan between legal entities interest-free

The contract

At the conclusion of the contract assumes that the parties trust each other. You should write that this is not a service of a financial nature and does not entail profit. If this is not done, then the lender will have to pay the tax, since the default interest in the document.

In the Civil code the loan Chapter 42 "Loan and credit”. According to him, the interest be governed by the terms of the contract. However, in order to be considered a loan without interest, it is right to point that out. Otherwise, it is implied that the contract involves payment, which will be calculated at the refinancing rate.

Consider separately the tax laws regarding this issue.

interest-free loan between legal entities transactions

Income Tax

In respect of income tax, under the code, it is considered that the object is a profit received by the organization — the taxpayer. Under it refers to those income, which reduced the costs. Income may be from sales of goods and services, rights of property nature or be non-operating. However, this does not take into account the income received under the loan agreements and loan or in repayment of these borrowings.

At the same time, the tax code under the revenue and understand the economic benefits, expressed innatural or monetary form, which is taken into account when possible and defined in the chapters on personal income tax and tax on profit of organizations. But when is a contract an interest-free loan between legal entities, taxation - what it should be - not installed, because there is no procedure for the identification and evaluation of tangible benefits.

According to the Ministry of Finance, the borrower has no tax consequences resulting from an interest-free loan. Arbitration practice confirms, in turn, that organization that gives interest-free loan also does not appear to be the taxable income.

the interest-free loan agreement between legal entities form

VAT

The Tax code clearly defined operations, which are subject to this tax. Among them:

  • Sales of goods and services (and contractors);
  • Transfer them to their own needs (costs to be deducted are not accepted);
  • Construction and installation works for their needs;
  • The importation of goods into Russian customs.

In addition, provides and article, where there are operations that are not subject to this tax. The list includes an interest-free loan, issued in the form of money. It turns out that this operation is not subject to VAT.

Tax

It would Seem that almost all on the side of organizations. However, in the tax service loan without interest is still causing issues.

The Agency distinguish loans between third parties and interdependent. In one case the risks arise from giving a loan, due to the fact that expenses for payment of percent on the loan agreement, where the money is directed to the issue of the loan are not recognised. In another also runs the risk of the lender due to the emergence of non-operating income.

the interest-free loan agreement between legal entities taxation

The Tax authorities are building their attitude towards interest-free loans, based on the number of letters of the Ministry of Finance, according to which transactions applies to the provision of the Tax code, as contained in paragraph 1 of article 105.3. It States that the incomes shall be defined on the basis of the interest that would be received if the contract was concluded between third parties, and not inter-dependent.

At the same time, the jurisprudence on this point is ambiguous in his opinion on this issue. Often make decisions in favor of creditors. But even if the court sometimes agrees with the tax authorities about the need the income from giving a loan hand, it remains unclear the methodology for this calculation.

Conclusion

is it possible the interest-free loan between legal entities

If Possible the interest-free loan between legal entities? Yes, it is possible. If the creditor is exempt from paying taxes? Maybe. But what is undeniable is the fact that such transactions must be carried out under the supervision of experts to avoid costly mistakes, leading to the need to pay virtual income.

This must be a correctly written contract, which is issued interest-free loan between legal entities, posting of accounting in this situation also needs to be competent and professional.


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Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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