Investing in a small or medium-sized business and letting both parties benefit is perfectly possible. Not only companies but also private individuals can invest in businesses. There are various options that make investing in companies fiscally attractive. We are happy to list them for you.
Win-win loan
The win-win loan is a subordinated loan with a term of between five and ten years and various repayment options: monthly, every three or six months, annually or in one instalment at the end. In addition, early repayment is possible. As an investor you can borrow a maximum of €75,000. The company may borrow up to €300,000.
An additional condition for the borrower is that they are an SME or self-employed person established in the Flemish Region on the date on which the loan itself is taken out. If the borrower is self-employed, the lender may not be the husband, wife or legal cohabitant. The lender may not be an employee of the borrower either. Company directors who directly or indirectly perform their function as company director in that company are also excluded from this measure.
Tax Shelter for business start-ups
The Tax Shelter is an investment in new shares of a business start-up or via a crowdfunding platform. This measure is only valid for an investment in a start-up business or for a capital increase within four years of establishment. Investors can invest a maximum of €100,000 per taxable period. And the start-up company can raise a total of €250,000.
Flemish Friends’ Share (Vlaams Vriendenaandeel)
The Flemish Friends’ Share is also known as the Win-Win Capital. In principle, it is a combination of the previous two options, the win-win loan and the Tax Shelter. This arrangement includes a cash contribution for new registered shares. This is a mandatory contribution in cash and must be fully paid up. The company cannot raise more than €300,000 in capital and the capital may not be used to pay dividends, purchase shares or grant loans.
The tax credit of 2.5% that is granted on this is always refundable but not transferable. This means that it is also granted if there is insufficient tax on which to charge the credit.
Everyone an investor
“Ordinary” loans often involve companies that provide money. In contrast, the win-win loan, the friends’ share or the Tax Shelter focus on start-up companies and private individuals. Investors can therefore be friends, acquaintances or family.
Benefit for all parties
The company therefore gets the opportunity to raise its (start-up) capital and start its business, but the investor also benefits. He not only contributes to a healthy and favourable entrepreneurial environment, but also receives an annual tax credit of 2.5% on the outstanding capital with the win-win loan (a subordinated loan) and the Friends’ Share (a capital contribution). In addition to the 2.5% tax credit, you can also get back 30% of the amount owed via a one-off tax credit if the borrower is unable to repay the loan. The Tax Shelter for business start-ups grants tax relief of 30 or 45%.
There are nothing but advantages for both private individuals and entrepreneurs. Curious about how to invest as a private individual or entrepreneur and which option suits you best? Then contact our experts https://bofidi.eu/en/contact/