Pursuant to tax authorities interest-free loans granted to companies are subject to taxation with the income tax, since they constitute a free-of-charge performance, the essence of which is the possibility to use the lender’s capital, without the need for the borrower to bear any burden. The value of the received interest-free loan is determined by the level of the sum of the interest which the debtor would have to pay if the loan were not interest-free (i.a. the judgment of the Voivodship Administrative Court in Łódź, I SA/Łd 323/10).

It means that the borrower has to pay the tax on possible interest which the borrower would have to pay in  case of a loan in the same amount from a bank. In practice, tax authorities determine the borrower’s revenue on the basis of the mean amount of interest charged by several banks.

Contact person: Małgorzata Lewandowska, mlw@pnplaw.pl