Interest-Free Inter-Company Loans: When Can Interest Be Claimed?

Quick answer: It depends on the timing. If the loan contract does not agree on interest, the lender may not claim interest during the loan term. But when the borrower defaults (fails to repay past due), the lender may claim interest on the overdue principal — calculated at 50% of the statutory interest cap (i.e., up to 10%/year on the overdue amount), under Article 468 of the Civil Code 2015.

Legal Basis

• Article 468 of the Civil Code 2015 — interest rates.

Distinguishing Two Types of “Interest”

• Interest within term: arises only when the parties have agreed; no agreement = interest-free loan, no claim allowed;
• Late-payment interest (on overdue principal): arises by law when the borrower fails to pay on time — no prior agreement needed;
• How late-payment interest is calculated: overdue principal × 50% of the interest cap (20%/year) × the default period.

Interest Rate Cap

• Agreed interest must not exceed 20%/year of the loan amount;
• Any excess agreement: the excess part is ineffective;
• Lending at 05 times or more the cap (from 100%/year) with illicit gains may constitute the crime of usurious lending.

Notes for Lending Enterprises

• Frequent lending may be deemed financial business — a license is required;
• Inter-enterprise loan contracts should be in writing, stating the interest rate (or interest-free) and the term;
• When claiming late-payment interest: send a written debt collection notice and keep delivery evidence.

If you need to determine the appropriate approach for your specific situation, you should consult a lawyer first to have your dossier reviewed and receive advice on handling options.

For prompt consultation, please contact our lawyers at 0966.475.966.

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