Lending Money to a Friend in Spain and How to Get It Back

🇪🇸 Read the original in Spanish

Lending money to a friend or family member is a very common act of generosity, but when trust is broken and the debtor fails to pay you back, the situation can turn into both a personal and financial nightmare. In Spain, it is common to make these loans "by word of mouth" or through simple WhatsApp messages, under the belief that informality makes things easier. However, the Spanish legal system requires compliance with certain formalities to avoid problems with the tax agency and, above all, to guarantee that you will get your money back if things go wrong. Below, we offer a complete and detailed guide to shield your money before lending it and to know exactly how to claim it through legal channels if it is not returned.

The Legal Framework for Loans Between Individuals in Spain

Lending money between individuals (friends, family, or acquaintances) is a legal concept fully regulated in Spain. It is not a simple moral agreement, but a contract with the force of law between the signing parties.

The Civil Code and the Mutual Loan Contract

The substantive regulation is found in the *Spanish Código Civil (Civil Code). Article 1740 defines the loan contract, distinguishing comodato (a loan of a non-fungible thing to be used and returned) from a simple loan or mutuo (mutual loan). In the case of money, we are talking about a contrato de mutuo*: one party delivers money to another on the condition that they return the same amount of the same kind and quality.

Article 1753 of the Código Civil establishes that the person who receives the loan acquires ownership of the money and is obliged to return to the creditor another sum of the same kind and quality.

Is It Mandatory to Charge Interest?

Absolutely not. Article 1755 of the Código Civil points out that interest shall only be due when it has been expressly agreed upon. Therefore, in Spain, loans between individuals are presumed to be interest-free (gratuitous) unless otherwise agreed in writing.

Tax Office Control (Property Transfer Tax)

One of the most serious mistakes is thinking that, because it is a loan between friends, the Agencia Tributaria (Tax Agency, commonly known as Hacienda) does not need to know. Every loan between individuals must be registered.

Even if the loan is interest-free, it is subject to the _Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados_ (ITP-AJD / Property Transfer and Documented Legal Acts Tax). The good news is that, under Spanish tax law, loans between individuals are exempt from paying this tax, but there is still an obligation to file the tax liquidation form (_Modelo 600_) with the tax office of your Comunidad Autónoma (Autonomous Community) within 30 business days from the signing of the contract. If you do not do this, Hacienda may suspect that it is a disguised donation (gift) and demand that the person receiving the money pay high taxes, in addition to imposing penalties on both parties.

How to Shield the Loan: The Written Contract

To have real guarantees of recovering your money, a verbal agreement is not enough. Although the Código Civil recognises the validity of verbal contracts, in practice, if the debtor denies the debt, the burden of proof falls on you, and proving the existence of the loan without documents is extremely complex.

The loan must be formalised through a _contrato privado de préstamo_ (private loan contract). This document must contain, at a minimum, the following details:

• Full identification of both parties (first name, surname, address, and DNI/NIE (foreigner identification number)).
• The exact amount of money being lent in euros.
• The date of delivery of the money and the method of delivery (it is highly recommended to make a bank transfer so that there is a paper trail of the movement of funds).
• The repayment term and whether it will be made in a single payment or in monthly/quarterly instalments.
• The interest rate, clearly specifying if the loan is interest-free (0% interest) or if an interest rate applies (for example, the Interés Legal del Dinero (Legal Interest Rate of Money)).
• Consequences in case of non-payment (late payment interest or penalties).

For greater legal security, the contract can be elevated to a public deed before a notario (notary), which will enormously speed up any subsequent legal claim, although this carries associated notary fees.

Practical Example: Carlos's Loan to Sofía

To understand how this process works and the importance of documentation, let's analyse the following practical case:

> Example: Carlos decides to lend his friend Sofía the sum of €6,000 so she can pay for the renovation of her commercial premises. Both sign a private loan contract on 1 February 2023. The contract stipulates that the loan is interest-free (0% interest) and that Sofía will return the money in 12 monthly instalments of €500, starting on 1 March 2023. Carlos transfers the €6,000 from his bank account to Sofía's, writing in the concept line: "Personal loan as per contract dated 01/02/2023". The next day, they submit the Modelo 600 to Hacienda, leaving the loan registered and tax-exempt. > > Sofía pays the first 4 instalments (€2,000) on time, but from July onwards she stops paying due to financial problems. In December, after several unsuccessful communication attempts, Carlos decides to start legal proceedings. Having the signed contract, the proof of the €6,000 transfer, and the bank statements showing he only received €2,000, Carlos has all the necessary evidence to win the case quickly. The liquid and enforceable debt he will claim amounts to exactly €4,000.

Step-by-Step Practical Steps to Claim the Money

If you have lent money and the repayment deadline has passed without you receiving the payment, you must follow an orderly strategy to maximise your recovery options without unnecessarily exhausting the judicial route if it is not required.

Step 1: Amicable Claim (Informal Out-of-Court Route)

Before starting legal proceedings, contact the debtor in writing (preferably via WhatsApp or email so there is a record). Explain that the deadline has passed and propose a flexible payment plan if they have liquidity problems. Keep a copy of all replies where the debtor explicitly acknowledges that they owe you the money.

Step 2: The Formal Demand for Payment (Burofax)

If the amicable route fails, you must send a _burofax_ with acknowledgement of receipt and certification of text. This is a service provided by the Spanish post office (Correos) that legally proves that the debtor has received a payment demand and the exact content of it. In the burofax you must:

• Identify the loan contract.
• Claim the exact amount owed.
• Grant an unextendable deadline (usually 10 to 15 days) to make the payment.
• Warn that, if payment is not made, legal action will be initiated.

The burofax is key documentary evidence before the courts and often puts enough pressure on the debtor to make them pay for fear of going to trial.

Step 3: The Order for Payment Procedure (Juicio Monitorio)

If the burofax is ignored, the ideal route in Spanish procedural law is the _Juicio Monitorio_ (Order for Payment Procedure), regulated in the _Ley de Enjuiciamiento Civil_ (LEC / Civil Procedure Act) in Articles 812 to 818. It is a fast-track procedure designed specifically to claim monetary, liquid, determined, overdue, and enforceable debts.

• Debts under €2,000: You can file the initial petition for the monitorio yourself, without the need for an abogado (lawyer) or procurador (court procurator). Standardised forms are available at the courts for this purpose.
• Debts over €2,000: Although technically the initial petition does not require the signature of professionals, it is highly recommended to have a lawyer and a court procurator, as if the debtor opposes the claim, the process will turn into an ordinary verbal trial or a minor claim trial where their intervention will be mandatory.

Once the lawsuit is admitted, the court will give the debtor a period of 20 business days to pay or formally oppose it in writing, detailing their reasons.

Step 4: Enforcement of Assets (Embargo)

If the debtor does not pay or oppose within the 20-day period, the court will issue a decree ending the monitorio process, allowing you to request the execution of the ruling. This means you can ask the judge to order the embargo (seizure) of bank accounts, salaries, tax refunds, or assets of the debtor until the total debt, plus late payment interest and court costs, is covered.

Key Deadlines, Amounts, and Figures You Must Know

In the Spanish civil and tax fields, deadlines and amounts determine the legal strategy to follow. These are the figures and limits you must memorise:

• 5 years: This is the statute of limitations to claim debts arising from a personal loan contract in Spain (according to Article 1964 of the Código Civil, reformed in 2015). If you let 5 years pass from the date the money was due to be returned without making any formal claim (such as a burofax), you will lose the legal right to demand the money. Each reliable claim (burofax) interrupts this period and restarts the 5-year countdown.
• €2,000: This is the financial threshold that marks the need for professionals. If the debt you are claiming is €1,999 or less, you do not need to pay a lawyer or a court procurator to file the juicio monitorio. If the debt is €2,000 or more, you will mandatory need their assistance if the debtor opposes the claim.
• 30 business days: The maximum period you have from the moment you hand over the money and sign the contract to submit the Modelo 600 to the tax office of your Autonomous Community.
• 20 business days: The period granted by the court to the debtor in the juicio monitorio to pay the debt or file a statement of opposition.

Mistakes You Must Avoid

Making mistakes during the loan or claim process can cause you to lose your money permanently or face legal penalties. Always avoid the following:

• Not making a written contract: Relying solely on word of mouth or text messages is the most common mistake. Without a signed loan contract, the debtor can claim before a judge that the money was a donación (a gift) and will have no legal obligation to return it.
• Not registering the loan with the Tax Office: Omitting the filing of the Modelo 600 can lead to a tax inspection. Hacienda may consider the transfer of money as a disguised donation and apply the Impuesto sobre Sucesiones y Donaciones (Inheritance and Gift Tax), with surcharges and penalties for your friend.
• Threatening or harassing the debtor: If the debtor does not pay you, never resort to coercion, incessant calls late at night, posting about their debt on social media, or showing up at their workplace to embarrass them. These behaviours can constitute crimes of coercion or harassment under the Spanish Código Penal (Criminal Code), which will reverse the situation and turn you into the accused.
• Handing over cash without a receipt: If you lend cash and do not have a receipt signed by the debtor saying "I have received the sum of X euros as a loan", you will have no way of proving that the money actually changed hands, even if you have a signed contract.

Frequently Asked Questions (FAQ)

Do WhatsApp messages count as proof of a loan?

Yes, in Spanish procedural law, WhatsApp messages, emails, and voice recordings are admissible as digital evidence. However, for them to have full validity in a trial if the other party challenges them, you may need to provide a computer forensics report certifying that the messages have not been manipulated, or the debtor must acknowledge their truthfulness during the court hearing. It is always better to have a signed contract.

What happens if the debtor declares themselves insolvent?

If the judge issues a seizure order but the debtor has no money in their accounts, no salary, and no properties in their name, they will be declared in a state of provisional insolvency. The debt does not disappear; the court will archive the case temporarily, and you can request the reopening of the enforcement process as soon as the debtor's financial situation improves (for example, if they find a job, inherit assets, or receive state aid).

Can I charge interest to a friend for the loan?

Yes, it is perfectly legal to agree on interest in a loan between individuals. However, the agreed interest rate must not be disproportionate. In Spain, the Ley de Represión de la Usura (Usury Suppression Act of 23 July 1908) penalises loans with interest rates significantly higher than the normal rate for money and manifestly disproportionate. It is advisable to use the Interés Legal del Dinero (Legal Interest Rate of Money), published annually in the State Budget, as a reference.

What is the difference between a loan and a donation for tax purposes?

The main difference lies in the obligation to return the money and the payment of taxes. In a loan, the money must be returned and the transaction is tax-exempt if properly registered. In a donation, you transfer the money gratuitously and permanently, without expecting it back. Donations are not exempt and force the person receiving the money to pay the Impuesto sobre Sucesiones y Donaciones, the cost of which varies substantially depending on the Autonomous Community and the degree of kinship.

In Summary

• Always formalise in writing: Draft and sign a private loan contract detailing the amount, repayment terms, and whether or not it accrues interest.
• Register the transaction: Submit the Modelo 600 to the regional tax office within 30 days to avoid penalties and accusations of a disguised donation.
• Use bank transfers: Avoid cash; a bank transfer is the best means of proof to demonstrate the delivery of the money.
• Claim formally via burofax: Before going to court, demand payment in a verifiable manner, granting a reasonable deadline.
• Go to the order for payment procedure: If the debtor persists in non-payment, use the juicio monitorio, which does not require a lawyer or court procurator if the debt is under €2,000.
• Watch the deadlines: Do not let more than 5 years pass from the non-payment to claim judicially, or the debt will legally prescribe.

General legal information, not personalised legal advice. For your specific situation, ask your question for free at AbogadoAI — answers grounded in Spanish law (BOE), in English.

This is general information, not legal advice. Verify on the BOE or consult a lawyer for your specific case.