Transfer money to a friend & taxes ?
Transfer money to a friend & taxes ?
I'm planning to lend some money to one of my friends, around 6,000 Euro. Can I transfer them to his account normally or will it bring some issues with tax authorities ? I heard that if the transfer amount is over 3000 Euro, banks consider them as a gift and flag for taxes. Is it true ?
Re: Transfer money to a friend & taxes ?
You shouldn't have any problems, just make sure that you have credible repayment plan and written loan agreement. Remember declare the income in taxation, if you charge interest.joy1234 wrote:I'm planning to lend some money to one of my friends, around 6,000 Euro. Can I transfer them to his account normally or will it bring some issues with tax authorities ? I heard that if the transfer amount is over 3000 Euro, banks consider them as a gift and flag for taxes. Is it true ?
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Re: Transfer money to a friend & taxes ?
If the person receiving the money is a Finnish resident (for tax purposes) then he/she might have to explain that it is a loan rather than a gift. So, yes, I agree it would be a very good idea to have something in writing - signed by you both - that outlines the basic terms and conditions even if it is an interest-free loan. You should probably include a statement referring to the time frame of the loan repayments.
Re: Transfer money to a friend & taxes ?
Copy from :http://www.vero.fi/en-US/Individuals/Gifts
Loans may be agreed as being without interest. However, as for their repayments, there must be a payment plan and you must be able to prove that you made the repayments. It is also required that the loan amount and the planned repayments must be realistic – i.e. in an acceptable proportion to your financial standing. For example, if you agree with your lender to repay a loan in the form of getting tax-exempt gifts repeatedly from them with three-year intervals, the tax authorities may regard the scheme as a gift subject to gift tax.
Loans may be agreed as being without interest. However, as for their repayments, there must be a payment plan and you must be able to prove that you made the repayments. It is also required that the loan amount and the planned repayments must be realistic – i.e. in an acceptable proportion to your financial standing. For example, if you agree with your lender to repay a loan in the form of getting tax-exempt gifts repeatedly from them with three-year intervals, the tax authorities may regard the scheme as a gift subject to gift tax.
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