I don't know the tax implications but you must be certain you won't fall out if she cannot repay you. You should consider the worst case scenario before you loan it.
You can give your sister a once off gift up to €50k and she would not have to pay any Capital Acquisition Tax on it.
So if the amount is less than €50k, then there are no tax implications.
I would think that an interest-free loan , repayable at her discretion would be aruably a gift. So if you give her a loan of €150k, it could be argued that the €100k is a gift and she would have to pay 25% CAT on it.
My gut feeling is that the Revenue would take a practical view of any such issue as long as it was not being done to evade tax. If you lent her money and she repays you, I don't think that the Revenue would worry too much about it. Especially in these tough business times.
I am assuming that she is a sole trader. If she operates through a company, it's a bit more complicated. You should be looking for security from the company e.g. a charge on the debts, so that you would get paid ahead of other creditors.
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Thanks Brendan. The loan would be for €100k and she is a sole trader. I don't see how it can be classed as a gift if it is going to be repayed and I'm aware of the gift threshold you mentioned. Naturally though I want to avoid any tax liability if possible so to ensure that the money is not classed as a gift would I be better to charge her a nominal interest rate such as maybe 0.5% per annum ?
. Make sure that you are not keeping a dead business alive for a few more painful months.
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