Loans from a Private Individual/ Friend Inquiry

Hi Forum folks, 

I am Swiss-based and planning to take a loan from a friend (who also lives in Switzerland). We plan to draw up a contract with clear terms, which should make the whole borrowing straight forward. However, I want to confirm if there will be any tax I will be liable for if I'm borrowing this money? I read that if I get a personal loan, I can include it as a loan / liability in my next tax declaration and in fact lower the payment of my taxes, but I just wanted to confirm given that this will be a personal arrangement. 

Thanks, 

K

It's very straightforward.

• You as the borrower can deduct the interest you pay for the loan from your taxable income.
• Your friend as the lender must declare the interest earned from the loan as taxable income.

It's a good thing that you are creating a loan agreement. Your friend should also give you an annual statement showing the remaining debt and the amount of interest paid over the past tax year. You can give this to the tax office as proof.