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What is the tax treatment of loan is granted by parents in child

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A common question and concern is whether there is and what is the tax treatment of loan case from father to son…..

The FAQ

Can the father to lend a sum of money to the child for it to make a house purchase or for another purpose; Is there a prohibition; Issue arises publican stamp enforcement or likely to be put on parental benefit;

The answer

I. Since the current provisions, not the loan agreement prohibited (oral or written) between parents and children or vice versa, although this is not common in practice (SS. see related articles of AK. 1507, 1508).

Nevertheless, despite the fact that parents usually make parental benefits to their children and not loan contracts, Nevertheless, this act of the loan agreement as already mentioned is not expressly prohibited, so initially not a problem arises.

besides, They should never ignore the facts and circumstances of each case, nor repudiated collectively all such debt cases on the grounds that they have been clothed with the "mantle" of avoidance.

The competent control bodies initially and if the taxpayer objections the D.E.D. and the country's courts then entrusted to take a decision relatively, so we can not anticipate anything outset.

Each case must be examined with unbridled professionalism and thorough study of the facts.

II. i. Generally imposing stamp duty on loans

If the loan agreement drawn up in writing sent to the Member proportional stamp duty (SS. between individuals stamp duty is 3,6%), while relevant to the contract that receipt is not subject to any stamp duty (cf.. No. 25 paragraph 2 of N. 2873/2000).

However, if the contract is not concluded in writing subject to proportional duty is drawn up in writing settle or related to the contract written proof (ID NO: 13 par.1v 7 ID NO: 15 par.1v). On this subject see also below those reported on in the judgment of D.E.D. 259/2019.

■ Note (from Case D.E.D. 259/2019, we provide an important rationale relates in some way to the question, especially if you are not prepared loan agreement):

«[…] Because, loan agreement is the coincidence of the two persons will by which each agreed by both parties (lender) to transfer to the other party (borrower) the property money or other fungible things, the borrower is not required to reimburse the lender things of the same quality and quantity (AK. 361 & 806).

Because, in the article 13 Fri.. 1a set of KNTCH that "in stamp duty any contract subject, any object, concluded either directly, or by public agonism, or any contract or payment related to the contract proof, as long as writing and compiled either by public, either by private in any type of coordinate document "while article 15 Paragraph 1 of the same Code states that "any contract, any object, concluded either directly or by tendering between traders, between a trader and a trading company of all kinds, between commercial companies of all kinds, relating solely exerted by these marketing or any contract or payment related to the contract proof, as long as shall be in writing or by public or private in any type of coordinates document ".

Because, Loans are subject to stamp duty, depending on the status of Contracting, accordance with the provisions of Articles 13 and 15 the KTX respectively.

More specifically, according to the article 12 the KTX "on the contracts and documents, the named Article 13, the fee shall be 3% the value of the loan '

as further, if the loan agreement drawn up in writing and submitted to the relevant proportional stamp duty, relative to this contract receipt not subject to any stamp duty (No. 25 paragraph 2 of N. 2873/2000).

But as long as the contract is not concluded in writing subject to proportional duty is drawn up in writing settle or related to the contract written proof (ID NO: 13 par.1v 7 ID NO: 15 par.1v).

Because, Stamp Duties Code does not define the concept of "document", to implement the provisions of the Stamp Act, the documents relating to relevant provisions will necessarily benefit from the application of the legislation (ar.169 et seq. SDA & articles 432 and on. the Code). So as documents, to implement the provisions of the Stamp Act, They will be considered as ordinary issued or issued private documents, and cons fiction (fiction of law) considered documents, namely, the traders books and all kinds mechanical and electronic images. (Interpretation of provisions of the Code of Stamp Duties, Panagiotis Repas, Sakkoulas versions, p. 87).

Because, according to Article 169 of Law. 2717/1999 (K.D.D.) the definition of document given:

«1. Are public documents which have been prepared by a public body.

2. Guesthouses are all documents that are not public

3. They considered also documents, against discrimination in the preceding paragraphs: a) books whose observance is required by the applicable provisions and
b) photographic or cinematographic representations and any other display, and the fonolipsies "

Because, Articles 432 and on. the Code of Civil Procedure. determined the meaning and probative value of "document".

According to the article 444 the Code of Civil Procedure.

«1. Private documents and considered a) books that merchants and professionals abide by the commercial law or other provisions, b) books that lawyers, notaries, bailiffs, doctors, pharmacists and midwives abide by the provisions in force, c) photographic or cinematographic representations, fonolipsies any other mechanical display.

2. mechanical display, within the meaning of paragraph 1, is any medium used by a computer or peripheral computer memory, electronically, magnetic or otherwise, for registration, Save, production or reproduction of data, that can not be read directly, as well as any magnetic, electronic or other material that any information entered, picture, symbol or sound, alone or in combination, if the means and these materials are appropriate or intended to prove facts that have legal significance. "

Because, the concept of the document is determined and the Penal Code, in the article 13 Fri.. c ', according to which "any written document is intended or appropriate to show which has legal significance like any item intended to prove such a fact.

Document and any means used by computer peripheral or computer memory, electronically, magnetic or otherwise, for registration, Save, production or reproduction of data, that can not be read directly, as well as any magnetic, electronic or other material that any information entered, picture, symbol or sound, alone or in combination, as long as the means and these materials are appropriate or intended to prove facts that have legal significance '

It follows that, in fiction, the putative private documents, which constitute modern forms of written transaction, other 'heard', namely, understanding of their content is by hearing (B.C. tapes), other "seen", ie, understanding of their content is the visual (photos, movies etc.) and other "read», because they are charting written text, by mechanical or electronic means (B.C. fax, phototype, computer etc.) (Interpretation of provisions of the Code of Stamp Duties, Panagiotis Repas, Sakkoulas versions, p. 97).

Because, booklet bank assimilated private document, produce full proof of what state (5553/2006 EFATH, 95/2005 AP).

Because, the savings passbook, which issues and delivers to the applicant the banking corporation and which depicted, by H / Y of, both the initial deposit, and subsequent deposits or withdrawals that he signed and kept in the bank file and in memory of the / Y.

The passbook, on proof, treated as private document, within the meaning of the Code 444 No. 3 and a full proof, under article 448 Fri.. 2 CCP, for many events and things indicate with mechanical display, only permitted in rebuttal against the records of truth (6812/2003 EfAth). […]».

■ Labeling: Apart from the above decision of the Dispute Resolution Directorate there are some others that came to a different conclusion [SS. indicatively D.E.D. (Athens) 155/2019, the D.E.D. (Athens) 2473/2018 and D.E.D. (Athens) 1975/2016 ] with thoughtfully among other things, like the following:

«[…] As for making loans to stamp duty requires the existence of a document or record in the books of traders (COE 2047/1978).

Should not, not written document by the establishment or repayment, or there shall be recorded in books traders, not applicable stamp duty payment, even where the omission was made deliberately to avoid payment of the relevant fee (COE 1514/1956, COE 578/1957) […]"Or elsewhere

«[…] only the fact of transferring money from one account to another, can not prove that the cause of these movements was existing loan agreement.

Tax Authority, which bears the burden of proof, does not invoke another essential element (record books or documents), from which it derives the conclusion of such a contract, to meet the conditions required by law to set off on this stamp […]».

The different positions of decision D.E.D. admittedly create concern because, as is known this is the penultimate Address prop taxpayer before reaching the courtroom.

■ Remark: Because the positions of D.E.D. expressed through the decisions may vary over time and in order to have a uniform addressing this problem that on the one hand, will clear the way, secondly, will help to consolidate the climate of security for citizens, Management of AAD. should proceed directly to the preparation and instruction notification with clear guidance on the issue that we are studying today.

ii. How stamp value, Others.

a. How performance.

According to article 3 Fri.. 1 Code Stamp, analog stamp duty collected (from 1.1.2001) entirely by proof of payment of the Treasury, regardless of the amount of duty levied analog (cf.. and Article 25 Fri.. 4 N. 2873/2000).

b. issue of the proof of payment Time.

The payment receipt must be issued not later than within five (5) days from the date of the document signified (article 3 Fri.. 1 K.T.CH.). The five-day period starts from the next drafting of the document and ends with the expiry of the whole of the last day if the last day is, statutory, official holiday, namely, non-working, with the lapse of the whole of the next business (articles 241 and 242 civil Code, Ministry. Economics. S.. 5042/1957, S.. 6107/385/Paul. 185/1980, Installations. 11/1981).

As non-working days are Sundays and holidays, laid down by law.

Conversely, half holiday are considered working days (G.A.K. 46404/1980, Ministry. Economics. S.. 6107/385/Paul. 185/1980, Installations. 11/1981).

also, after the introduction, to from 29.12.1980 Act with (GG 299 A'), the five-day week of public services, as non-working days are on Saturdays.

The Act was ratified by the first article of Law. 1157/1981 (GG 126 A').

So, if established lending contract Monday, the proof of payment of stamp duty may be issued, without consequences fine, until Monday next week, and this, because the days Saturday and Sunday are days off, namely, Non-working days.

The proof of payment can be issued before the training document (cf.. Ministry. Economics. T. 3279/1958, L.. 1515/104/1984).

c. Elements of the proof of payment. The proof of payment must necessarily mention the essential elements of the document signified (article 3 Fri.. 1 K.T.CH.).

Such elements are the name of the debtor, paid by the end, or in the case of contracts the names of the Contracting, the type of contract (loan, assignment, debt underwriting, Others), the amount that, Others.

The proof of payment attached to the body of the document signified.

On the body, it, document or rather feet that indicated by any of those parties or the case of a notarial deed drawn up by a notary it, the number and date of the proof of payment of tax office. (cf.. article 3 Fri.. 1 K.T.CH.)[1].

[1] Note that, the proof of payment must always be issued in the names of the parties and under any circumstances in the name of the notary draw up a contract, and this because the notary is party, but the simple verifier concluded between those, who heard of, as parties. This is of great practical importance, because if born subject to reimbursement of stamp duty, the return order must be issued in the name of that, who in proof of payment allegedly made the payment to the Treasury. If, consequently, the proof of payment issued in the name of the notary, if returned paid stamp duty, the relative order of return will be issued in the name of the notary and not in the name of the Contracting, who are the real beneficiaries (cf.. and P. Reppa, Stamp tax, Athena, 2010).

III. conclusions

In any case where a taxpayer relies on loans to reduce or coverage implied cost, Others, the tax authority in the first instance you should examine the possible virtualization loan, ie to investigate if the lender was able to grant the loan, the time taking the loan amount and any other facts which are left to auditing by the head of the competent tax office.

namely, They are fulfilled a number of conditions in order to avoid any differences of interpretation of the circumvention of provisions1 Tax Administration.

At this point we must note that, may in this case be raised in the future by the tax administration issue under Article 38 of Law. 4174/2013 especially on "technical arrangement", since there is clearly a greater tax benefit if the loan agreement selected in relation to parental benefit the funds (SS. on the issue of parental sum provision and taxation, see related article on the node: "The parental benefits and money donations. Analysis, interpretation, Items cover, examples ").

But this is a matter that will prove control.

also, on the issue of the imposition or not stamp duty to verbally loans between individuals, We consider how to clarify the landscape by decision of AAD. to no longer be in doubt.

In our view, if the loan balance between parent and child selected, It must necessarily refer to the loan contract agreement, the purpose of the loan and also be entered and statutory interest -You could be interest-free and, But possibly the tax administration would have another "weapon" in typesetting any virtuality that daneiou- and the way, but the exact time of redemption.

Concluding, we believe that the parties concerned prior to any action you must first get the consent of the tax consultant, but also a legal advisor in order to avoid possible negative effects from wrong maneuvers in the future.

====================================================

[1] If there lending, They should be completed accordingly and the tax returns of parent and child.

For the father, the loan amount is presumption and will be indicated in code. 759-760 Form E1.

For the child, the loan amount will be indicated in code. 781-782 Form E1 during the year was the conclusion, while the paid installments of the loan in the fiscal year, They are entered in code. 727-728 Form E1.

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