Understanding Crowdfunding Investment

Do you want to make a crowdfunding investment? If this is a project you've been thinking about for some time, perhaps reading this article will help you take the plunge? As a responsible investment platform dedicated to renewable energy, Enerfip is THE ideal solution for investing your money in a sustainable and meaningful sector. So how does it work? We'll explain everything so you can become a committed player in the energy transition!

👀 Also read: What is the return on an investment via crowdfunding?

Definition of Crowdfunding

Crowdfunding or participatory financing is defined by entreprendre.service-public.fr as: “an alternative to traditional bank loans, which allows a project leader to collect funds online, through a dedicated online platform, from contributors to finance a specific project”.

To delve deeper into the subject, let us complement this definition with the values ​​that are dear to us. At Enerfip, our goal is to invent new solutions that address the challenges of the energy transition, promote transparency, and are easy for investors to access. Accessibility is a real priority on our platform, which is why we invite you to participate from just €10. Our mission is to empower everyone to channel their savings toward the energy transition and promote green finance.

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The different types of crowdfunding

What is crowdlending?

Also known as “participatory lending,” crowdlending is a type of participatory financing. So what makes it special? Unlike crowdfunding through donations or participation, crowdlending financing varies. It's a loan!

Crowdlending is aimed at a wide variety of projects: small businesses, startups, personal loans, and even real estate financing. It offers a wide range of opportunities allowing you to support the sector that suits you best.

💡 Crowdlending investment is ideal for those who want to diversify their portfolio while giving it meaning!

What is crowdequity?

Also called “equity crowdfunding,” it is a type of equity crowdfunding. Whether you are a professional or an individual, you can invest directly in the capital of unlisted companies by becoming a shareholder through the purchase of shares.

As a reminder, the AMF (Autorité des Marchés Financiers) defines a share as “a security of ownership that represents a portion of the capital of the company that issued it.” She adds that a “share can generate income (dividend) and gives its owner voting rights at general meetings. In addition, they can be listed on the stock exchange. It is a risky investment whose value can fluctuate up or down.”.

💡 Crowdequity investing is ideal for those who want to invest in companies by becoming shareholders.

Does real estate crowdfunding mean anything to you?

If you are looking to make a crowdfunding investment, you might be interested in real estate crowdfunding.This investment is ideal for cautious people who want to diversify their savings by investing in real estate. Real estate, often seen as a safe haven, allows you to combine attractive returns with stability, even over short time horizons.

Whether it's construction or renovation, a real estate transaction gives you concrete visibility of what you're involved in.

💡 Investing in real estate crowdfunding is ideal for those who want to build wealth with tangible investments.

Advantages and disadvantages of crowdfunding investment

What are the advantages?

If crowdfunding investment appeals to you, its advantages won't disappoint you either! Everyone benefits, from project leaders to savers.

• For managers, it's a quick way to raise funds without upfront costs and benefit from alternative communication and promotion. It's the citizens, the press, the media, etc. who relay the information and make the project a success!
• For you, the investor, this is an interesting financing alternative to diversify your portfolio. It is possible, through crowdfunding investment, to benefit from more advantageous returns than the more traditional investments offered by banking institutions.

What are the risks?

Like any investment solution, investing presents a risk of capital loss and liquidity. Therefore, it is essential to only invest the money you do not need immediately and to diversify your savings.

As for project leaders, it may unfortunately happen that the project does not reach completion due to not finding full financing. However, if the minimum threshold is not reached through citizen financing, the money generated will in fact be returned to the investors.

Taxation of Crowdfunding Investments

Taxation is often the part that worries you the most. However, after a few explanations, it will become clearer. You'll see, understanding the taxation of crowdfunding investments is child's play!

Bond Market

For an investment in bonds on Enerfip, the single flat-rate withholding tax (PFU) applies by default to any interest received. What is it? Also known as the flat tax, it amounts to 30% and is made up of: the CSG (Generalized Social Contribution) and the CRDS (Contribution to the Repayment of Social Debt), which are compulsory withholding taxes that contribute to the financing of Social Security and Social Protection in France. They amount to 17.2% of the gross amount of your interest; income tax, which is a deduction made under income tax worth 12.8%.

🤔 Good to know
For legal entities taxed on companies in France, the profit tax applies: a reduced rate of 15% up to €42,500 of profit for SMEs, and 25% above that.

Shareholder market

If you decide to invest in shares, the taxation varies. You can be taxed in two different ways: on capital gains and on dividends.

• If you choose the first option, namely capital gains, you will be subject to a flat-rate tax rate. What does that mean?To social security contributions and the mandatory flat-rate withholding tax on final income. Your tax liability will therefore amount to 30% in total (individuals).
• If you choose to be taxed on dividends, the PFU applies, unless you choose to be taxed on the progressive scale. In this case, you benefit from a 40% reduction on dividends and a 6.8% deduction of CSG on your taxable income (individuals).

👀 Also read: Controlling the taxation of your responsible investments