Do I need to declare interest received on a loan?

I lent my friend €7,000 and he paid it back with interest. Do I need to declare anything?

If the additional amount paid was agreed interest on a private loan, then it is likely declarable as taxable investment income in France.

In this case, the amount of interest received should be declared in the 2042, section two, box 2TR (as for bank interest).

However, if this was simply an informal repayment where a friend voluntarily added a small extra sum as a gesture of thanks rather than under a true loan agreement involving interest, the situation may be less clear-cut.

As a reminder, in France it is strongly advised that any significant loans should be formalised by a contract, and in law, a loan of more than €1,500 between two people can only be proved with a written contract.

You may already have done this, but it is worth pointing out also that the existence of private loans above €5,000 in the course of a tax year (in one or several amounts) is also meant to be declared to the French tax authorities via form 2062.

This can be done by the borrower, or otherwise by the lender and is done at the same time as making your income declaration for the year, but selecting form 2062 as an annexe form.

This declaration relates to loans made during the year, including ones that were repaid in the course of the same year.

For each loan you should indicate the amount, intended length of loan, amount and frequency of reimbursements and any interest rate (which should not be more than around 8.5% or it becomes viewed as illegal ‘usury’).