P2P, like all crowdfunding activities, benefits from a legal framework aimed at securing its development. This legal framework is mainly based on the 2014 ordinance on crowdfunding and the 2016 decree on securities and loans offered under crowdfunding.
These texts enact a set of prudential rules and obligations with which lenders, borrowers and P2P platforms must comply.
What are the regulations for peer to peer lenders?
For private lenders, the rules mainly concern the thresholds of the amounts that can be granted in the context of a P2P loan, as well as the fiscal obligations or formalities to be respected.
The amount thresholds that can be loaned in P2P
The thresholds for individual lenders have been raised with the entry into force of the decree of October 28, 2016 relating to crowdfunding, which modifies the 2014 ordinance and implements the minibons.
Since this reform, a private lender can now grant a maximum of € 2,000 per project, for a loan with interest. However, this threshold increases to € 5,000 per project, when the loan is granted without interest.
P2P tax obligations of the lender
The loan between individuals is subject to declarative tax obligations. Thus, the lender who grants one or more loans during the same year is required to make a declaration to the tax authorities. In particular, when the unit or combined amount of the loans is equal to or greater than € 760.
What are the regulations for Peer to Peer borrowers?
The regulations set thresholds for the amounts that borrowers can be granted in the context of crowdfunding. Note that they vary depending on the status of the platform or intermediary you are using.
The borrowing threshold is a maximum of 1 million euros if you use a crowdfunding platform with the status of Participatory Financing Intermediary (IFP). On the other hand, a borrower can be granted up to 2.5 million euros if he refers to a platform having the status of CIP (Participatory Investment Advisor).
From a tax standpoint, the borrower is also required to declare the loan subscribed and the interest paid to the lender. The loan will be deductible from its taxable assets if it is subject to ISF.
What are the regulations for platforms?
It varies depending on the status. Depending on whether it specializes in Crowdlending exclusively or Crowdfunding equity, the site must obtain the approval required for the type of financing offered from the competent regulatory authorities.
These include the Financial Markets Authority (AMF) and the Prudential Control and Resolution Authority (ACPR). The legal framework relating to crowdfunding sets up 3 distinct statutes for crowdfunding platforms which can exercise as:
- Crowdfunding intermediary (IFP)
- Crowdfunding advisor (CIP)
- Investment service provider (PSI).
In all cases, P2P platforms are bound by obligations:
- Transparency on the selection of projects and loan characteristics
- Information for lenders on the risks they run.