{"id":4791,"date":"2019-06-23T16:47:20","date_gmt":"2019-06-23T15:47:20","guid":{"rendered":"https:\/\/msztax.pl\/what-is-the-safe-interest-rate-on-a-shareholder-loan\/"},"modified":"2020-12-14T12:53:26","modified_gmt":"2020-12-14T11:53:26","slug":"what-is-the-safe-interest-rate-on-a-shareholder-loan","status":"publish","type":"post","link":"https:\/\/msztax.pl\/en\/what-is-the-safe-interest-rate-on-a-shareholder-loan\/","title":{"rendered":"What is the safe interest rate on a shareholder loan?"},"content":{"rendered":"

One of the tax changes from 2019 is the introduction of \u201csafe\u201d interest rates on loans from related parties. If a loan meets specific conditions, tax authorities will not challenge the settlement rules adopted. What are these conditions and what is the \u201csafe\u201d interest rate on a shareholder loan?<\/strong><\/p>\n

Loan interest rate \u2013 only at arm\u2019s length!<\/strong><\/h2>\n

Tax regulations require all contracts and transactions with related parties to be concluded at arm\u2019s length. Arm\u2019s length terms are terms on which an independent contractor would enter into a transaction with us.<\/p>\n

NOTE:<\/strong> If a shareholder grants a loan to the company, the interest rate should be at arm\u2019s length. It should therefore, de facto, be as determined by a bank granting a loan.<\/p><\/blockquote>\n

If the terms of a given contract deviate from the arm\u2019s length terms, tax authorities may verify the market relevance of the interest rate applied and challenge the expenses. For tax authorities, an interest rate may be determined at any level as long as it is an arm\u2019s length rate.<\/p>\n

How to determine arm\u2019s length terms for a loan?<\/strong><\/h2>\n

How is that interest rate determined in practice? Several selected banks are asked for quotes and these are used as a basis to determine the interest rate to be included in the agreement with the shareholder. Official industry-specific analyses or indicators of the Central Statistical Office of Poland are frequently used as well.<\/p>\n

However, the interest rates and other terms of loans are often challenged by tax authorities.<\/p>\n

Safe interest rate<\/strong><\/h2>\n

1 January 2019 marks the introduction of provisions regulating the tax interest rate not to be challenged by tax authorities. It is the so-called safe harbour principle, which guarantees that tax authorities do not challenge adopted interest rules.<\/p>\n

What is the safe interest?<\/strong><\/h2>\n

For loans granted after 1 January 2019, such \u201csafe\u201d interest is calculated according to the formula: Index + 2%<\/strong>.<\/p>\n

The index is:<\/p>\n