Interest-free loan

Interest-free loan from a partner and taxable income in the Corporate Income Tax (CIT)  

Partner financing of a company can take various forms, from increasing share capital, through additional payments, to loans. In practice, the choice of a specific solution often depends on business needs, the speed of action, and the partners’ expectations regarding the potential return of funds. 

It’s worth remembering, however, that each form of financing (including gratuitous financing) has different tax consequences. This is confirmed by one of the latest individual tax rulings issued by the Director of the National Tax Information Office on May 27, 2026 (reference number 0111-KDIB2-1.4010.154.2026.1.AS) concerning an interest-free loan granted to a company by its shareholder. 

What was the case about? 

The applicant was a limited liability company, subject to corporate income tax in Poland under general rules. The company entered into a loan agreement with an individual who was its partner and held 50% of the shares. 

The loan was for cash and interest-free. The agreement provided for a one-time repayment of the principal by September 2033. By the time the application was submitted, the company had not made any repayments on the loan. 

The company assumed that the absence of interest meant it received a gratuitous benefit. Consequently, it concluded that it should recognize taxable income in the amount of the hypothetical interest it would have had to pay if the loan had been subject to market interest. 

Question for the authority 

The company asked whether the correct approach was to recognize income from an interest-free loan at the market interest rate that would be payable on such financing. 

The second crucial element of the question was the timing of revenue recognition. The company wanted to confirm that revenue should be recognized on the last day of each tax year in which the loan agreement is in effect, and not only upon repayment of the principal. 

The position of the Director of KIS 

The KIS director confirmed the company’s position. 

The authority found that an interest-free loan from a shareholder constitutes a gratuitous benefit for the company. The company benefits from capital without incurring the costs it would otherwise incur if it obtained financing on market terms. 

The value of the revenue should correspond to the interest the company would have paid if the loan had been at market interest. In other words, the revenue is not the loan amount itself, but the economic benefit resulting from not having to pay interest. 

The authority also addressed the timing of revenue recognition. It indicated that since the company uses capital continuously and the loan agreement was concluded for a period longer than one year, revenue from the gratuitous benefit should be recognized periodically – on the last day of each tax year falling within the term of the agreement. 

It is important to note that deferring the repayment of the principal until 2033 does not mean deferring the taxation of the benefit. The company receives the benefit already during the period of using the interest-free financing, not only upon repayment of the loan. 

Why is this important? 

The interpretation reminds us that an interest-free loan from a shareholder may generate real tax consequences for the company, even though the company does not pay interest and does not incur any costs related to the capital obtained. 

In practice, this means that a company benefiting from free financing may be required to annually determine the value of hypothetical market interest and recognize taxable income from it. This may be the case, but is not always necessary, as not every free benefit (including loans) will trigger obligations under the regulations on free benefits.  

The interpretation also confirms that a shareholder’s choice of financing method should be preceded by a tax analysis. If a shareholder does not expect remuneration for providing the funds, a loan may not always be the most tax-neutral solution. Other forms of capital injection, such as additional payments or share capital increases, may be alternatives, although each requires a separate legal and tax assessment. 

Practical conclusions 

The absence of interest does not mean the absence of tax consequences. In the case of an interest-free loan from a shareholder, the company may be required to recognize taxable income in the Corporate Income Tax (CIT) annually until the principal amount received is repaid. 

It is therefore worth verifying: 

• whether loans granted to the company by shareholders bear interest; 
• whether the interest rate corresponds to market conditions;
• whether the company should recognise revenue in the case of interest-free loans, and if so, whether it has recognised and recognises revenue from the gratuitous provision; 
• how the value of notional interest is determined; 
• whether revenue is recognized at the appropriate time, particularly for multi-year loans.

And in the case of a free guarantee from a partner, is the situation the same? 

We invite you to contact our experts.