Both a business loan and a business gift are forms of private loans. After all, you do not involve a bank, but you mutually agree on the conditions.
When entering into a business loan or donation, always draw up a contract. This is handy for yourself and you can submit it to the tax authorities on request. In this you note the following:
- How much you borrow;
- The purpose of the loan;
- The interest rate;
- The duration;
- The payment schedule;
- Whether the loan can be repaid immediately;
- Whether repayment can be made early;
- How you stand financially as a borrower (use this handy checklist).
If you can receive an amount that you do not have to repay (in full), or for which interest is lower than on the market, this is referred to as a business gift. As soon as you borrow money and pay the lowest interest on it that you would pay with a commercial party, or more, we talk about a business loan. The line between a business loan or donation is therefore the lowest interest that you could get on the market.
A business loan: how does that work?
If there is someone in your area who would like to borrow you at the lowest market rate or more money, this is popularly called an Aunt Agaath loan. The donor does not have to be your family. Providing a loan to a starting entrepreneur is also called venture capital. However, the tax benefits for this scheme expired in 2013. However, it can still be attractive to provide a business loan because the interest that is paid is considerably higher than the interest on a savings account. The donor must state the interest paid with the income tax return. You can deduct the interest paid from your profit.
Another form of business lending is crowdfunding. Acquaintances, friends and strangers can lend you together (or only) the amount you need.
A business gift, how does that work?
If you have received a business gift, you may have to pay tax on it. This must be done if the amount exceeds 2,092 euros. For example, if you get an interest-free loan, you would have to pay gift tax if the interest that you would have to pay on the market for this loan would be more than 2,092 euros. Your (foster) parents may donate 5,229 euros tax-free. This amount is per person per year. A couple may make such a donation once. Your parents may, even if they are divorced, jointly grant you a maximum of 5,229 euros tax-free.
If you receive more than this amount, you must pay gift tax. The rate of the gift tax is 10 to 40 percent. How much tax you pay depends on the value of the donation and your relationship with the donor. Lower rates apply to (foster) children, other relatives, cohabitants and partners. You can use the calculation tool on the website of the tax authorities to calculate how much you pay. The gift tax is a lot higher than the market interest rate. So carefully investigate whether it is beneficial for you and the giver to get an interest-free loan, for example. It is probably better to take out a business loan and get a discount on the gift tax threshold.