I just performed some due diligence on Lendermarket and I see a lot of credit risk and tax risk
I know the Irish market very well since I had some substantial investments until a few months ago and I do not like it at all since the Irish government loves big multinationals and loves to screw private investors and SMEs. My investments went well only because when I originally invested I made use of some tax exemptions.
Lendermarket Limited is legally incorporated in Ireland and their legal address is the adddress of this company registration entinty:
while their management is all based in Estonia at Creditstar AS offices (the names can be verified in linkedin):
You can check the company details here (company number 585178) and on google (they are a micro company with tiny equity):
So while Creditstar AS (the group) has a decent balance sheet, with Lendermarket you run a very high platform risk due to their tiny equity.
Finally the tax situation in Ireland is very bad for non resident or resident lenders to private companies or private individuals (this is different for some big multinationals or funds who make use of some important exemptions to the standard rules), I suggest to read this document in full:
Notice that paragraph 1.1.2 covers "Indirect lending structures" like the one setup by Lendermarket
LenderMarket is obviously working on the limit of Irish law when it says:
"How is the earned income taxed?
The Lender shall be fully responsible for paying all taxes arising from any repayments obtained as a result of its investment based on legislation of respective country. All repayments will be paid from Lendermarket to the lender bank account without any deduction or withholding for or on account of any tax."
But then it says:
"Lendermarket does not provide any tax advisory services to the investors and we strongly suggest seeking for professional tax advice."
Well according to Revenue Lendermarket should withold tax at 20% (standard Irish income tax rate) on the interest payments to the investors (resident or non resident, it does not matter) and then provide an R185 form to the investor at the end of each year. However even worse (and this is where the Irish are really screwing SMEs and private investors alike), to be fully compliant the investor (even non resident!!!) should then request a non resident PPSN number and perform an Irish income tax declaration where the Irish government will take another slice of the interest with the abusive (for a non resident since it receives no social benefits in Ireland) Universal Social Charge and all the bureaucracy associated (obviously presenting the R185 to claim credit for the income tax already withheld. You can then request a credit of all these taxes to your country of origin tax authority (which might not accept them!). This means that investing in an Irish P2P platform is VERY TAX INEFFICIENT!
Of course if you do not have an Irish bank account or any other assets in Ireland and Lendermarket is not audited by Revenue (given their small size) and your residency country does not have a tax treaty with Ireland that allows enforcement of Irish tax claims in your country then your risk is limited since in general since the Irish Revenue has no power to enforce claims outside Ireland that are not of a criminal nature:
There are a few Irish Revenue rules (and more with respect to direct investments) that run contrary to EU treaties like differential treatment for residents and non residents which is strictly prohibited in EU law and they still try it on, but then avoid prosecutions I believe because they know they are on the wrong side of EU law and do not want to make it public, in Spain instead the situation is much worse, the tax authorities of various autonomous regions are so stupid to prosecute and then loose, making very public their thieving behaviour and receiving warnings and penalties from the EU. However this Irish tax rule on P2P lending is treating residents and non residents equally, so I very much doubt it can be challenged.
