Under normal circumstances, it is legal for individuals to borrow money from companies. When a company borrows money from an individual, it generally needs to meet the conditions in the company's articles of association and obtain the consent of the shareholders' meeting or the shareholders' meeting. However, the Supreme People's Court's "Reply on How to Confirm the Effectiveness of Lending between Citizens and Enterprises" clearly stipulates several situations that should be recognized as invalid lending:
1. Enterprises illegally raise funds from employees in the name of lending;
2. Enterprises illegally raise funds from the society in the name of borrowing;
3. Enterprises issue loans to the public in the name of lending;
4. Other acts in violation of laws and administrative regulations. The above provisions are invalid in several cases, all of which are enterprises suspected of illegally raising funds and issuing loans. For general loan cases, the court will protect the legitimate rights and interests of creditors and debtors and limit usury in accordance with the principles of voluntariness, mutual benefit, fairness and legality.
The loan relationship between individuals and enterprises is legal and effective if the agreed interest rate is within 24% of the bank's similar loan interest rate. There is no behavior prohibited by law and it should be protected by law.
Interest income obtained by individuals from paid loans to companies shall be subject to value-added tax in accordance with the loan business in Financial Services. The applicable levy rate is 3%, and the tax payable = interest income excluding tax ×3%. Individuals can issue invoices to the company on behalf of the tax authorities.
legal ground
People's Republic of China (PRC) Civil Code
Article 667 A loan contract is a contract in which the borrower borrows money from the lender, repays the loan at maturity and pays interest.
Article 668 A loan contract shall be in written form, unless otherwise agreed between natural persons. The contents of a loan contract generally include terms such as loan type, currency, purpose, amount, interest rate, term and repayment method.
Provisions of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases Article 1 The term "private lending" as mentioned in these Provisions refers to the financing behavior between natural persons, legal persons and unincorporated organizations. These provisions shall not apply to financial institutions and their branches engaged in loan business established with the approval of the financial supervision department, as well as disputes arising from loans and other related financial businesses.