How does P2P investment tax work in European countries?

Are P2P investors equal when it comes to taxing their income? To answer the question, assessed the European legislative landscape.

The national legislations of European countries generally have a unified approach to the taxation on returns from the P2P lending. Most citizens need to declare their income from P2P investments, even if it is reinvested and not withdrawn. P2P platforms, in turn, usually provide investors with the ability to generate tax reports and send information to the tax authorities of their countries of residence.

At the same time, however, the income of P2P investors in European countries is taxed differently.

One of the highest taxes on capital income is set in Finland - 34% on capital over 30 thousand euros. A 30% rate applies in Belgium, Sweden and Cyprus. In the latter case, P2P investments are considered passive income and are subject to a one-time special defense contribution.

In some countries, the tax depends on the amount of the investor's income. Thus, in Latvia it varies from 20 to 31%, in Spain from 19 to 23%. In the UK, when calculating the rate, the category of the taxpayer is also important. However, a key national feature is the IFISA system, which allows P2P investors to lend up to £20,000 tax-free in a tax year, regardless of the level of profits made. The amount can be applied exclusively to P2P investments, or divided between all assets.

The standard rate of 15% is taxed on income from P2P investments in the Czech Republic and Lithuania.

In Bulgaria, the base tax rate looks the most attractive for P2P investors. All profits received (interest, secondary market transactions, bonuses) are subject to 10% income tax. At the same time, when declaring in electronic form, the full payment of all tax and the absence of old obligations, a 5% discount is applied. Perhaps this is one of the reasons for the high activity of Bulgarian investors in the European arena, which has been repeatedly stated by analysts. 

While some platforms automatically collect tax on transactions, does not withhold any taxes from the investor. Subsequently, the investor's income is subject to taxation in accordance with the laws of his country. However, the platform provides investors with account statements that can be made on the site in standard or extended form for selected periods.

Attention! The information provided is for informational purposes only, without claiming exclusive legal correctness. It is based on information from open sources and may change over time. For detailed information on the issue, please contact professional tax consultants in the country of interest to you.

Robocash d.o.o (“Robocash”) is a company registered in the Republic of Croatia under registration No. 081224371, with legal address at Petračiceva 4, Zagreb, Croatia, 10110.

Robocash is not regulated under any financial services license. When you invest on Robocash, you buy claim rights for loan receivables and investments in loan receivables are subject to risks. We advise diversifying investments and carefully evaluating the risks.