Check whether all loan agreements with related parties have a defined interest rate of 3.95 % for the year 2023.
Why this matters
Loans between related parties must comply with the arm’s length principle — which means the interest rate must be in line with market conditions.
If the interest is not at market level — the Tax Administration may:
- Adjust taxable profit
- Claim tax liability on the difference
- Claim default interest
What to check
- Whether the loan agreement contains a defined interest rate
- Whether the rate is in accordance with the publication of the Tax Authorities for that year (3.95 % for 2023)
- Whether there is TP documentation for loans above the prescribed thresholds
Do you need a review of loan agreements with related parties? Contact Finance Plus.
