Loan from a foreigner
Loan from a foreigner
Question:
Hello!
I have taken a loan from a foreigner in the amount of BGN 9,900. I understand from ZDDFL art. 50 paragraph 1 item 5 that the foreigner does not have the obligation to declare it if I do not return the loan the same year. The question is, do I, as a Bulgarian citizen, have to declare the loan if I do not return it the same year?
In order for no interest to be owed, should the loan agreement itself state that it is interest-free, or can it state that the amount is for servicing, that is, the word loan should not be mentioned at all?
We don't want it to be a loan, but a contract for the service of a sum of money. We would not like it to be a donation, because donations, outside of relatives, are taxed at 5%.
From an accounting point of view, what contract would you advise us to do?
If the loan amount is larger (for example, 10,000 euros), is there any way to pay in cash, since even if it is broken down into loans of 7,000-8,000 BGN each, when the total amount under contracts with the same countries exceeds BGN 10,000, it must be deposited by bank transfer.
Thanks in advance!
Answer:
Hello,
You have an obligation to declare received and/or granted loans in the current year, if the amount of the outstanding part of the loan exceeds BGN 10,000. If the loan is returned in the same calendar year in which it was received - it is not declared. In your case, since the amount is lower than BGN 10,000, you have no obligation to declare this fact.
We are not lawyers, but in our opinion, cash cannot be the subject of a service contract. It is a contract to provide some thing. Once you receive money from a bank, that money can be a donation, loan or income. The only option to not have to pay tax is if the money is a donation from a direct relative - children, parents, grandparents, great-grandparents or spouse, or you get a loan. Everything else is declared in one way or another and the corresponding tax is paid.
There is no such thing as an interest-free loan. Is there a loan and there is interest. If there is no interest, it is not a loan, but some other payment is covered. In order for this payment to be recognized as a loan, there must also be accrued interest.
Regarding the limit for returning the loan in cash - if the loan is larger than BGN 10,000, you cannot return it in cash. The option is to make separate loan agreements, each of which is for an amount lower than BGN 10,000. Accordingly, the transfers for the received loans must be separate. In this case, you can return each loan separately in cash.
We would like to draw your attention to the fact that during a possible inspection, you will have to present both contracts for the relevant loans, which also include the interest you owe to the person who provided it to you. It would also follow that person to declare that he received the interest due to him when these loans are paid back in cash.
We hope we have been helpful!
Greetings!
