Loans between individuals or covert donation?

Many times we can inquire ourselves whether the loan we have been making is a loan or even, on the contrary, we could be making the covert donation without knowing this. As you know in case of being a monetary gift, a father gives cash to his son with no intention of having the child come back it, he must spend the Donation Tax. The next is explained in a very crystal clear way

Undercover loan or donation?

cash

This following comment can also be taken from Legal News and reproduce it below for the interest:

You have to be cautious when making credit between family members and satisfy the established requirements since when it is not done correctly you are able to consider that you are facing the covert donation. This is the situation that has been resolved by the Common sense of the Superior Court associated with Justice of the Principality associated with Asturias of July twenty-seven, 2004. The assumption actually is that a father provides an amount of money to their son for the purchase of the apartment the son presuming in the public deed the particular intention to return it.

In the ruling, it really is considered that the relationship among father and son as well as the economic situation of the same must be taken into account, since after the related verification it has been shown the past due installments of the mortgage have not been returned because the son has no equity or even sufficient income to meet the particular payment.

Monthly obligations were made from an account

money

Likewise, the Tax Management has verified that there is a total simulation of the mortgage agreement between individuals because the monthly payments were made from a merchant account of which the holders had been the parents.

The particular Chamber concludes that however would initially be simply no objection to what is the amount of the loan contract among family members to acquire the chronic residence, however afterwards it offers become clear that the only purpose was to avoid restraining. to the Donation Tax.

Thus it turns out in this instance that the Administration has shown there has been a loan simulation that will conceals a donation which as such it must be taxed which therefore we are not dealing with any loan.

It is clear that financial loans between individuals are allowed, offered they are done well. The prior sanction did not come from financing between individuals, but since it is a covert donation.

In case there is any kind of doubt, the Civil Program code talks about loans between people, including family members.

Civil Code Blog Store Book IV: Title XIV. Bail

Whenever dealing with the issue of bail provides, in article 1824:

“Except from the supply of the preceding paragraph the situation of loan made to your family child. “

They can lend their own cash, not that of others, that are of legal age, do not have debts or negative stability on a credit card

They can lend their own money, not that of others, who are of legal age, have no debts or negative balance on a credit card

Cash can be lent to businesses and freelancers, but since the amount of paperwork is better, it is left for “ advanced users”.

It is recommended to ask for properties that will serve as bail. The possession of the property can be confirmed by requesting a simple notice of the property in the Property or home Registry

Taxes data Name, ID, tackle of both parties
Payment method (preferably simply by transfer to checking account)
Interest rate (preferably fixed) It must be less than 25% by law, and lower than the marketplace to capture the borrower.
Clauses for your debtor to bear the cost of marketing communications in case of delay
The contract must be authorized with both parties present, plus checking the DNI before the notary.
The particular creditor or lender should declare the income because personal income tax. In the case of financial loans to companies, in addition , you have to pay the quarterly VAT and make the annual VAT summary. And if the mortgage is to a self-employed individual, you must also retain the personal tax (15 or 7%) plus later settle it towards the Treasury.
When the debtor does not pay plus there is no choice but in order to initiate the claim, the methods indicated by law must be adopted

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