Characteristics and conditions of the non-interest bearing loan between relatives and family members.

We often hear talk of a non-interest bearing loan between private individuals, spouses and relatives, which is called this (non-interest bearing) because it does not involve debt increase interest (see also Social lending). It is, therefore, a loan that is made by very close family members or acquaintances (for example partners in companies Srl). But what do you need to know in order not to incur violations of the law and carry out this non-interest bearing loan without having to worry about the Inland Revenue? Here’s what to do.

Occasional delivery and always in writing

Occasional delivery and always in writing

In order not to incur violations of the laws on the matter (especially money laundering and loan sharking), the first thing to know is that a non-interest bearing loan between private individuals or family members must have a purely occasional and sporadic character, since all the movements made on the current account are always traces and constant movements of large sums of money could give rise to investigations (see also bills of exchange between private individuals).

Another thing to know is that these types of loans must always be in writing, with a regular contract or with the so-called “letter for non-interest bearing loan”, that is, a private writing. In fact, these documents allow the Inland Revenue to verify that certain sums received do not derive from illegal acts but precisely from a loan made by a family member. In addition, they also help to move the debt collection actions in case it should not be returned.

What information to include in a contract or private writing

What information to include in a contract or private writing

In a non-interest bearing loan between private individuals or relatives, a written contract or a private writing allow to protect both who must receive the money and who is providing it, since inside it is necessary to indicate different information.

First of all, the personal data of whoever grants and who receives the loan must be reported (therefore name and surname, tax code, date of birth). Secondly, the deadlines to be respected for the refund of the sum, the reason and any penalties to be applied if the sum is not returned on time, must be indicated. It is then necessary to sign every single page of the contract from both parties (who lends and who receives the sum) and a signature at the bottom of the document. Finally, it should not be forgotten that this type of contract is always to be drawn up in duplicate, and it is also important to have the pages dated in an unimaginable way, preferably from a post office.

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