Loans to Family Members: Be Aware of the Tax Implications!
If you lend or borrow a significant amount of money from a family member or friend, it is essential to understand the tax obligations involved. In fact, if the loan amount exceeds a certain threshold, you must report it to the tax authorities when filing your tax return.
Reporting requirements vary depending on the amount of the loan granted. According to the French government’s website, if the loan amount is less than 5,000 euros, no report is required. However, if the amount exceeds 5,000 euros—whether in a single payment or across multiple loans throughout the year—you must complete Form 2062 and submit it to your tax office, unless the borrower handles it themselves. This process is free of charge.
Form 2062 must be filed along with your tax return using the “Supplementary Returns” section of the online filing system. If you have agreed to receive interest, you must report the interest you received on your annual tax return.
Regardless of the loan amount, it is recommended to secure the transaction by drawing up an acknowledgment of debt, drafting a private agreement, or consulting a notary.
From the borrower's perspective, the reporting requirements are similar to those of the lender. No declaration is required if the amount borrowed is less than 5,000 euros. However, if the amount exceeds this threshold, the borrower must complete Form 2062 and submit it to the tax authorities.
The borrower must also include the loan agreement with their tax return. To establish a definitive date for the contract, they may choose to register it with the appropriate tax authority. This optional procedure costs 125 euros.
