If a company grants a loan to the founder and the loan repayment period expires, the company is obliged to pay a 15% tax.
Why this rule matters
This mechanism was introduced to prevent the concealed payment of dividends or earnings to the founder — through a formally granted loan that will never be repaid.
If the company formally “lends” to the founder, and the deadline passes without repayment, the tax authority considers it a concealed payment of income, so it is taxed at the rate of 15%.
Practical advice for companies
- Clearly define the repayment period in the loan agreement
- Calculate market interest on the borrowed amount (or treat the below-market rate as a benefit)
- Monitor the repayment deadline and collect on time or officially extend the agreement
- Avoid multi-year loans without a real repayment plan — a tax inspector will treat them with suspicion
Loans between related legal entities
In addition to loans to the founder, similar treatment applies to loans between related legal entities (the same group, parent and subsidiaries). Pay attention to transfer pricing rules and market interest.
Are you granting a loan to the founder or a related party? Contact Finance Plus — we will analyse the tax consequences and prepare documentation that will withstand a tax inspection.
