The UK tax authority has issued a good guide that should be applicable to many other countries in the EU too, although it’s always important to check with your country’s authorities for specific guidance.
The advantage of peer to peer loans for lenders is that they can generate higher interest rates that exceed the interest that could be earned from banks and other financial institutions.
P2P loan platforms also give borrowers an alternative to the finance which they may get from standard financial intermediaries.
Lenders place their money with a peer to peer platform which is then lent to lots of different borrowers as many small loans. Each borrower borrows small amounts from many different lenders to make up the full loan they need. The platform will collect the repayments of interest and capital from each borrower and pass them to the lenders.
The interest received from peer to peer loans (your profits as a lender) is taxable in the same way as any other interest received.