You might be wondering…

• “If I lend someone my car, is that a loan for use or a lease?”

• “What’s the difference between a loan and a loan for use?”

• “Can a lease ever be free of charge?”

Clients often ask me…

• “If I let a friend use company equipment for free, do I need a loan-for-use contract?”

• “An employee still has the company laptop – is that a lease or a loan?”

• “If I lend money to a friend, should we sign a contract?”

Legal explanation and key distinctions

🧩 Loan for use (§ 2193–2196 of the Civil Code)

• A gratuitous contract – the lender allows temporary use of a specific thing; the borrower must return the same item in the same condition.

• The subject is an individually determined item (e.g., a specific bicycle, a tool).

• The same thing must be returned after the agreed period.

• Common between friends, neighbours, or employers and employees.

💰 Loan (§ 2390–2394 of the Civil Code)

• The subject is a fungible thing determined by quantity and type – typically money, grain, or fuel.

• The lender provides the thing; the borrower returns another of the same kind and amount.

• May be interest-bearing or free of charge.

• Ownership transfers to the borrower.

🏠 Lease (§ 2201 et seq. of the Civil Code)

• Always a paid relationship.

• The subject is an item the tenant uses for rent.

• The same item is returned after the lease ends; normal wear and tear is accepted.

• Typical for flats, offices, cars, or equipment.

Comparison table

Biggest risks and common mistakes

• Using the wrong term – e.g., “loan agreement” (smlouva o půjčce) under Czech law actually means a loan, not a loan for use.

• Tax risks – a free “lease” may be reclassified as undeclared income.

• Wrong contract form – some types require written form for tax or evidentiary reasons.

Step-by-step guide

1️⃣ Define what is being transferred – a specific thing or things of the same kind.
2️⃣ Decide whether the arrangement is paid or free.
3️⃣ Assess the risk of wear, damage, and return.
4️⃣ Set out responsibility for damage and return conditions.
5️⃣ For money loans, specify the interest rate and repayment date.

Example from practice

A business owner lent a company car to a friend “for a while.” The friend used it for six months without a written contract and claimed it was a loan for use.
The tax office reclassified it as a lease without declared rent, treating it as non-monetary income and imposing back taxes.

Why verbal agreements aren’t enough

While borrowing a bike from a neighbour may not require paperwork, in business relationships or repeated use, even a “free” arrangement can have legal and tax implications.
Without a written agreement, it’s hard to prove the true intent — whether it was a loan, a lease, or a loan for use.

Lawyer’s recommendation

The difference between a loan for use, a loan, and a lease is not just a matter of words — it’s about legal certainty.
A single wrong word can change the entire nature of your relationship.

Checklist:

• Is it clear whether the subject is for use or consumption?

• Is it paid or free?

• Do you have a written contract?

• Are you aware of the tax implications?

FAQ

Is a money loan a “loan for use”?
No. Lending money is a loan, because what is returned is not the same money, but an equivalent amount.

Can a lease be free of charge?
No. If no payment is agreed, it’s a loan for use, not a lease.

Does a loan have to bear interest?
Not necessarily. It can be free of charge, but terms should always be agreed in writing.