How P2P Lending Is Taxed in Europe (2026 Guide)

If you’re investing in P2P lending platforms like Mintos, PeerBerry, or any of the other platforms I recommend, you need to understand how your profits will be taxed. This is a general rule for all your investments — always consider the tax impact before investing, as it directly affects your net return.

I’ve been investing in P2P lending since 2015 and have dealt with the tax side of things every year, filing in Spain where I’m a tax resident. The landscape has changed significantly since I first wrote this guide in 2018, with new withholding tax rules, the ECSP regulation, and several country-level tax reforms. This updated guide reflects the current situation as of 2026.

Disclaimer: This is general information based on my research and experience, not professional tax advice. Tax laws change frequently. Always consult a qualified tax advisor in your country of residence.

What Counts as Taxable Income from P2P Lending

Before diving into rates and rules, it’s important to understand what exactly is taxable:

Taxable:

• Interest payments received from borrowers (the main taxable event)
• Late fees and penalty interest collected
• Secondary market gains (selling a loan for more than the outstanding principal)
• Bonuses and cashback from platforms (sign-up bonuses, referral rewards)

Not taxable:

• Principal repayments (that’s just your own money coming back)
• Deposits into platform accounts

A critical point many investors miss: interest is taxable in the year it’s earned, even if you reinvest it. The fact that you didn’t withdraw the money doesn’t matter — it’s still income.

How European Countries Tax P2P Income

European countries follow one of two general approaches:

1. Flat capital/savings tax: Spain, Germany, Italy, France, Portugal — P2P interest is taxed at a fixed rate, separate from your employment income.
2. Progressive income tax: UK, Ireland, Denmark — P2P interest gets added to your overall income and taxed at your marginal rate.

Here’s a quick overview of the effective tax rates across major European countries:

Let’s dig into the details for each country.

Spain (Where I File)

Since I file my taxes in Spain, I’ll cover this one in detail.

P2P lending income is classified as rendimiento del capital mobiliario (income from movable capital), the same category as bank deposit interest and dividends. It’s taxed under the base del ahorro (savings base) at progressive rates:

Note that as of January 1, 2025, the top rate increased from 28% to 30% on savings income exceeding EUR 300,000.

How to declare: Report total gross interest from all P2P platforms in Box 0027 of your IRPF declaration (Modelo 100), under “Intereses de cuentas, depositos y activos financieros en general.” If a platform withheld tax abroad (like the 5% Latvia withholding on Mintos), claim the foreign tax credit in Box 0588.

Modelo 720: P2P loans that aren’t represented by securities are generally not reportable under Modelo 720 (foreign asset declaration). However, now that Mintos has transitioned to Notes (which are securities), investors with over EUR 50,000 in Mintos Notes should treat them as reportable foreign securities. Cash balances on foreign platform accounts also count toward the EUR 50,000 threshold for bank accounts. The filing deadline is March 31.

Losses: Losses from defaults can be offset against other savings income, but only when the loan is formally declared irrecoverable (fallido) — meaning all collection efforts are exhausted. Excess losses can be carried forward for 4 years. In practice, proving a P2P loan is fallido can be difficult without formal documentation from the platform.

Germany

Germany applies a flat 25% Abgeltungsteuer (capital income tax) plus a 5.5% solidarity surcharge, giving an effective rate of 26.375% (slightly higher if church tax applies). There’s a EUR 1,000 tax-free allowance per person (EUR 2,000 for married couples) covering all capital income — P2P interest, dividends, and capital gains combined.

The big news for German P2P investors: the EUR 20,000 annual cap on capital loss offsetting was abolished retroactively in the 2024 Tax Act (Jahressteuergesetz 2024). This means losses from P2P defaults can now be fully offset against other capital income without a cap. The loss must be “final” (endgueltig) — the platform or insolvency administrator needs to confirm the loan is unrecoverable.

Report on Anlage KAP of your income tax return.

United Kingdom

The UK offers one of the best tax environments for P2P investors in Europe, thanks to two features:

Personal Savings Allowance: The first GBP 1,000 of interest income is tax-free for basic rate taxpayers (GBP 500 for higher rate). Above that, interest is taxed at your marginal income tax rate (20%, 40%, or 45%).

IFISA (Innovative Finance ISA): Up to GBP 20,000 per year can be invested completely tax-free through qualifying P2P platforms. All interest earned within the IFISA wrapper is exempt from tax. This is one of the best tax shelters for P2P lending anywhere in Europe.

Bad debt relief: The UK has the most favorable loss treatment in Europe. Irrecoverable P2P loans can be offset against P2P interest income, and unused losses can be carried forward for up to 4 years. The platform must confirm the loan is irrecoverable.

France

France applies a 30% flat tax (Prelevement Forfaitaire Unique), which includes 12.8% income tax and 17.2% social contributions. You can opt for progressive income tax rates instead if your marginal rate is below 12.8%, though you’ll still pay the 17.2% social contributions.

Losses from P2P defaults can be offset against P2P gains. French ECSP-regulated platforms provide an IFU (Imprime Fiscal Unique) that pre-fills your declaration.

Italy

Italy applies a flat 26% imposta sostitutiva. If investing through a Bank of Italy-authorized platform, the 26% is withheld at source and the obligation is fully discharged. For foreign platforms (where most P2P investors are), you declare the income on your Modello 730 or Redditi PF and pay 26%.

Netherlands

The Netherlands has a unique system. Rather than taxing actual P2P income, it taxes a deemed (fictitious) return on your total wealth under Box 3. For 2025, the deemed return on investments (including P2P) is 5.88%, taxed at 36%. There’s a tax-free allowance of EUR 57,684 per person.

In practice, this means the effective tax rate is around 2-3% of your invested capital — which can be quite favorable compared to actual-return taxation if your P2P portfolio is performing well. The deemed return rate increases to 7.78% in 2026.

A full transition to actual-return-based taxation is planned for January 1, 2028. Following a Supreme Court ruling in 2024, taxpayers can already submit their actual return if it’s lower than the deemed return.

Portugal

Portugal applies a 28% flat rate on interest income. You can opt for progressive taxation (englobamento) if your marginal rate is below 28%.

The former Non-Habitual Resident (NHR) regime, which could offer 0% tax on foreign-sourced interest for 10 years, was replaced by the IFICI regime in 2025. Under IFICI, eligible new residents may still benefit from exemptions on foreign passive income, potentially making Portugal one of the most favorable jurisdictions for P2P investors who qualify.

Ireland

Ireland has one of the worst tax environments for P2P investors in Europe. Interest income is taxed at your marginal rate (20% or 40%), plus USC (up to 8%) and PRSI (4%). The combined effective rate can reach 52% for higher earners.

Worse still, losses from P2P defaults are not deductible against interest income. This means if you earn EUR 1,000 in interest but lose EUR 600 to defaults, you’re taxed on the full EUR 1,000. In a bad year, the effective tax rate on actual profit can exceed 100%.

Estonia

Estonia applies a flat 20% tax on interest income. The country has an attractive investment account regime that allows tax deferral while funds remain invested, and in 2024-2025 this was expanded to cover investments through ECSP-licensed platforms. However, traditional P2P platforms like Bondora (which aren’t ECSP-licensed) remain ineligible for this deferral.

Withholding Tax: What Platforms Take Before You See It

One of the biggest changes since I originally wrote this guide is the withholding tax landscape. When Mintos transitioned to regulated Notes (securities), mandatory withholding tax kicked in where none existed before.

Here’s the current withholding situation:

Key point: Latvia reduced its withholding tax from 20% to 5% for EU/EEA investors in November 2022, which was a significant win for investors using Latvian platforms. Lithuanian platforms, however, maintain a flat 15% withholding regardless of investor residence.

Claiming the credit: If a platform withholds tax, you can almost always credit that amount against your domestic tax bill through double taxation treaties. For example, if Spain taxes your interest at 19% and Latvia already withheld 5%, you only owe 14% to Spain. Don’t forget to claim this — failing to do so means you’re effectively paying tax twice.

Investing Through a Company vs. as an Individual

For most P2P investors with portfolios under EUR 50,000, investing as an individual is simpler and cheaper. The administrative overhead of a company (formation, annual accounts, corporate tax filings, accountant fees of EUR 1,000-5,000/year) typically outweighs any tax savings.

For larger portfolios, a company structure can make sense in certain countries. Estonia stands out — corporate tax is 0% on retained earnings, with 20% only payable when dividends are distributed. This is attractive for long-term compounding strategies. However, remember that profits are ultimately taxed where you (the owner) are tax resident when you extract them.

If you’re considering a company structure for P2P investing, consult a tax advisor who understands both your country of residence and the jurisdiction you’re considering.

Common Tax Mistakes P2P Investors Make

1. Not declaring reinvested interest. If you earned EUR 500 in interest and reinvested it into new loans, that EUR 500 is still taxable income for the year it was credited.
2. Missing foreign tax credits. If Mintos withheld 5% in Latvia, that reduces your domestic tax bill. Forgetting to claim it means paying double.
3. Assuming no withholding means no tax. PeerBerry, Bondora, and Esketit don’t withhold anything, but you still owe tax on the income. The full reporting burden is on you.
4. Ignoring secondary market transactions. Selling a loan at a premium is a taxable gain. Selling at a discount may be a deductible loss. Every secondary market trade is a tax event.
5. Assuming defaults are automatically deductible. Most countries require formal proof that a loan is permanently lost — a loan being 90 days late is not enough.
6. Not reporting all platforms. Tax authorities increasingly exchange information across borders (CRS/DAC). All P2P income across all platforms must be declared.
7. Not keeping records. Download your tax reports from every platform every year. Platforms can change, shut down, or lose data. Keep records for at least 5 years.

The Impact of ECSP Regulation on Taxes

The European Crowdfunding Service Provider Regulation (ECSP), fully operational since November 2023, doesn’t directly change how P2P income is taxed — taxes remain a national matter. However, it has had indirect effects:

• Transition to securities: Platforms like Mintos moved from “assignment agreements” to regulated Notes, triggering withholding tax obligations that didn’t exist before.
• Better reporting: ECSP platforms must provide standardized documentation, which makes tax reporting easier for investors.
• Estonian investment accounts: Estonia specifically expanded its favorable investment account regime to include ECSP-licensed platforms.
• Possible foreign asset reporting impact: Since Notes are securities, they may trigger foreign asset reporting requirements (like Spain’s Modelo 720) that didn’t apply to the old claims structure.

Practical Tips for Handling P2P Taxes

Based on my years of experience filing P2P lending income:

1. Download tax reports early. Most platforms generate annual tax reports in January-February. Download them as soon as they’re available.
2. Use a dedicated spreadsheet. Track income from each platform, withholding taxes paid, and any secondary market gains/losses throughout the year.
3. Confirm your tax residency on every platform. This ensures Latvian platforms apply the correct 5% rate rather than a higher default rate.
4. Consider a tax tool. Services like Tax-Wizard can generate country-specific tax reports from your P2P platform data.
5. Consult a tax advisor for large portfolios. If your P2P investments exceed EUR 50,000, the nuances of foreign asset reporting, loss offsetting, and potential company structures make professional advice worthwhile.

I have also written a separate guide on taxes on P2P lending for residents in Spain, which goes into more detail on the Spanish filing process. If you’re just getting started with P2P investing, check out my complete guide to P2P lending first.

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