FAQ - Investment

“….frequently asked questions!”

We have answered some questions for you. We look forward to your questions. It is very important to us to answer and publish them here. Please write to us!

Does the lender have to pay income tax or capital gains tax?

In principle, interest income is taxable, even if the payment is made as a Water of Life shopping voucher. However, if you are not self-employed, you can receive tax-free income of up to EUR 730 per year in addition to your salary. Ie: Up to a loan amount of EUR 24,333 (at 4%) or EUR 36,500 (at 7%) you do not have to pay tax on the interest income from it. The Water of Life also does not pay any CGT (Capital Gains Tax) on your interest. Only banks are allowed to do that.

If your additional income exceeds EUR 730 per year, you are obliged to submit an income tax return. As is usual in Austria, there is a complicated loop-in regulation: Only twice the amount exceeding EUR 730 per year is fully taxable.

Example: Your profit is EUR 1,200.00. The tax-free EUR 730 is deducted from this = EUR 470. Double that is EUR 940.00. Your tax base increases by this EUR 940.00. From additional income of EUR 1,460, the amount is fully taxable.

Is the Water of Life investment loan model covered by law?

Are there problems with the financial market supervisory authority?

Our model is a so-called “qualified subordinated loan” as part of the Alternative Financing Act which came into force on 01.09.2015. We have therefore found a legal and clean solution.

What happens after the minimum contract period has expired?

What happens after 5 years, i.e. after the contract has expired, if the Lender wants to extend the contract: Is the interest rate then also 7% or 4% per year?

After 5 years, both the lender and Water of Life can terminate the loan. If neither party terminates the loan, the loan continues with the same conditions. In the event of termination, the entire loan amount will be returned to the lender and the contract will expire.

What happens if Water of Life becomes insolvent?

Water of Life GmbH is not at risk of insolvency. The company was founded in 2015 and has a group of well-funded shareholders. The current development is also pleasing, the future prospects are very large.

The lenders receive comprehensive information from us, along with the current balance sheet figures every year and the opportunity to find out about the progress of business personally in our company.
There is complete transparency. From a purely legal point of view, in the event of insolvency, the claim from the subordinated loan is settled after the repayment of the non-subordinated debt (e.g. bank loans). This usually results in a loss of some or all of the capital for the lender. Insolvency is therefore even less likely and the subordination is not at a major disadvantage.

What happens to the lender's assets in the event of death?

The loan is a claim against Water of Life that falls into the estate of the deceased. This means that this claim remains valid and passes to the legal heirs.

What influence does the Alternative Financing Act have on existing loans?

This law only changes the legal framework for loan agreements from September 1, 2015.

What amounts can be invested due to the new legal situation?

For new contracts, loans per lender are generally limited to an amount of EUR 5,000 per year. For loans exceeding EUR 5,000, the lender must declare on a separate form when concluding the loan agreement that he/she is investing no more than twice his/her average monthly net income (calculated over 12 months) or a maximum of ten percent of his/her financial assets.

Can I invest my money anonymously?

No. We have to follow both the provisions of the Alternative Financing Act and the provisions of the Money Laundering Act. Therefore we are obliged to verify the identity of all our lenders. In addition, for amounts over EUR 15,000, we are obliged to comply with the provisions on money laundering and terrorist financing measures. To do this, we have to verify the identity of the investor and need a copy of an official photo ID for the loan agreement to come about.

We will be happy to answer any further questions by telephone on +43 664 444 9337 (Dr. Johannes Pfaffenhuemer CEO) or by e-mail at office@wateroflife.at.