Loan between legal entities is interest-free: a sample contract, tax consequences

Thanks to the interest-free loan, many companies get the opportunity to solve the accumulated problems. The transaction can involve both individuals and legal entities. Questions with individuals almost does not arise. But for the latter are not idle issues of taxation. In the article we will consider a loan between legal entities without interest: how it is formalized, what risks it carries with it, and what are the possibilities to minimize them.

The concept of

From the very beginning it should be borne in mind that with the transaction one must be extremely cautious. If everything is done correctly, then the tax consequences can be avoided. We will analyze the contract of interest-free loan from the point of view of tax legislation. After all, problems may arise from this side.

An interest-free loan, turning into a simple language, means borrowing money without interest. Naturally, for the borrower this is a very profitable transaction. After all, banks will never provide such a service. But others, both physical and legal persons, can do this.

Features

A loan between legal entities, interest-free is a fairly common transaction. They are used by companies that are in partnership or friendly relations. There are even special organizations involved in issuing loans. The transaction must be accompanied by the conclusion of a contract, and it can be either unilateral or bilateral. In addition, it is possible to involve another party in order to guarantee a return of funds to the lender. As such, an official organization can be allowed.

The contract clearly specifies the period for issuing the loan, as well as the amount. It must be assuredly certified by a notary. In spite of the fact that the terms of repayment are clearly prescribed there, the borrower can always return the money earlier than the set time.

It should be clearly recognized that such a transaction can not be of a regular nature, otherwise it will not be possible to avoid special attention and vigilance on the part of the tax authorities. A loan between legal entities is non-interest-bearing only for non-entrepreneurial purposes. Otherwise, it is subject to taxation.

If the organization goes too often to such transactions, the inspectors can come to the conclusion that in this way they try to evade taxes and conduct illegal banking activities.

The loan between legal entities is non-interest-bearing: what do you need to pay attention to?

When concluding a deal, the lender should be especially careful. The first way by which you can protect yourself is to set a clear deadline when money should be returned, and also to determine the negative consequences if the funds are not given. When the deadline for repayment of a debt comes to the borrower, they write a claim letter, which reminds them what they expect in case of non-payment. Without special knowledge, it is better to consult a specialist so that the document is correctly compiled.

The contract of interest-free loan must necessarily contain the chapter "Responsibility of the parties". Then the lender provides a guarantee of a refund. Thus, it should describe in detail what the borrower expects in the event of breach of contractual obligations. There must also be a penalty for each day of late payment.

In fact, there are many ways for a creditor how to secure itself. Responsibility can include financial consequences for the debtor, fines and so on.

In this article, we offer you a sample of what an interest-free loan agreement looks like between legal entities. The form contains general points obligatory for this kind of documents.

Execution of the contract

When concluding a contract it is assumed that the parties trust each other. It should be noted that this is not a financial service and does not entail profit. If this is not done, then the lender will have to pay the tax, since by default the existence of interest in the document is provided.

In the Civil Code, the loan is devoted to Chapter 42 "Loan and credit". According to him, interest is governed by the terms of the contract. However, in order to be considered a loan without interest, you should directly indicate this. Otherwise, it is understood that the contract implies their payment, which will be calculated at the refinancing rate.

Consider separately the tax legislation on this issue.

Income Taxes

In relation to income tax, according to the code, it is considered that the object is the profit that the organization received - the taxpayer. It means those incomes that are reduced by the amount of expenses. Revenues can be from the sale of goods and services, property rights or be non-operating. At the same time, incomes received under loan and loan agreements, or due to repayment of these borrowings, should not be taken into account.

At the same time, in the tax code, income is also understood as economic benefit, expressed in kind or in cash, which is taken into account when possible and is defined in the chapters on personal income tax and corporate income tax. But when an interest-free loan contract is concluded between legal entities, taxation - what it should be - is not established, since there is no procedure for determining and assessing material benefits.

According to the Ministry of Finance, the borrower has no tax consequences as a result of an interest-free loan. Arbitration practice confirms, in turn, that an organization that issues an interest-free loan also does not have income that is taxable.

VAT

The Tax Code clearly defines the operations that are subject to this type of tax. Among them:

• The sale of goods and services (as well as works);
• Transfer them for their own needs (expenses to deduction are not accepted);
• Construction and installation works for their own needs;
• Import of goods to the Russian customs.

In addition, an article is also envisaged where operations are established that are not subject to taxation on this tax. The list includes an interest-free loan issued in cash. It turns out that this operation is not subject to VAT.

Taxation

It would seem that almost everything is on the side of organizations. However, in the tax service, a loan without interest still raises questions.

The department distinguishes loans between third parties and interdependent. In one case, the risks arise from the lending party, because the costs of paying interest on the loan agreement, where the money is directed to a loan, are not recognized. In another - the lender also risks because of the appearance of non-operating income.

Taxes build their attitude to interest-free loans, based on a number of letters from the Ministry of Finance, according to which the norms of the Tax Code, contained in paragraph 1 of Article 105.3, apply to transactions. It says that revenues are determined on the basis of interest that could be received if the contract was concluded between external organizations, and not interdependent.

At the same time, the judicial practice at the moment is ambiguous in its opinion on this issue. Often, decisions are made in favor of creditors. But even if the court sometimes agrees with the tax authorities about the need to calculate the income from the lending party, the methodology of this calculation remains unclear.

Conclusion

Is an interest-free loan possible between legal entities? Yes, it is possible. Is the lender tax-exempt? May be. But what is undeniable is that such transactions should be carried out under the supervision of specialists in order to avoid annoying mistakes leading to the need to pay for virtual income.

To do this, a contract must be properly drawn up, under which an interest-free loan between legal entities is drawn up, bookkeeping transactions in this situation must also be literate and professional.