How do you have to tax interest on personal loans?

Why you have to pay tax on interest on personal loans

The legislator prescribes that interest income must be taxed. This definition includes all interest income, regardless of how it arose. So also fall interest charges from private loans subject to tax liability:

1. The interest that you earn from granting private loans must be taxed with the flat tax.
2. Should you get a private one credit If you have awarded through an official body, this company automatically deducts the withholding tax before your interest income is paid out to you.
3. If, on the other hand, you receive the interest as a cash payment, then you have to declare the interest income yourself in your next tax return.

How taxation works

You have to pay both the interest income received and the final withholding tax paid Tax office indicate. This is due to the following reasons:

1. The final withholding tax has a tax rate of 25%. If your personal tax rate was below this 25%, then you would receive a tax refund.
2. Furthermore, it is possible that all interest income that you receive from various institutions and private individuals does not exceed the savings lump sum. In this case, you do not have to pay any taxes.
3. If you have a certificate of withholding tax deducted and your interest income is below the saver lump sum, you should submit the certificate with your next tax return. You would then get the final withholding tax reimbursed by the tax office.
4. If you receive the interest in cash and your interest income is above the saver lump sum, then you have to pay tax on the interest from private loans. To do this, state the interest received on your next tax return.