Paying/receiving interest to yourself via own company

Selam aleykum wa rahmetullah wa baraketuh. I hope someone can answer this, as I haven’t found another place were this is discussed.

Just a clarification: I don’t want anything to do with interest-bearing loans, it is haram and, quite frankly, I don’t want to go to war with Allah and his Messenger.

In my (Western) country, I want to lend my own company (I have 100% ownership and am the only employer, it’s the same type/structure as an American limited-liability company) an X amount of money. However, it is required by law that I have to charge interest on that loan; so I would essentially have to charge interest on myself (through the company), and thus pay myself back for example 101 dollars (if the loan was 100 dollars with a 1% interest-rate).
I have looked a fair bit around and it doesn’t seem to be possible to avoid this rule. If I were to just give money freely to my company without an interest-bearing loan, that would constitute financial malpractice by the tax authorities.
So my question is, what is the ruling regarding this? Is it haram to essentially charge yourself interest this way?

What about in a situation where a company would have a fair amount of money in the bank, and a family member wants to get a loan from that company whose CEO is his/her family member? Is it possible to charge interest as the CEO, but that that interest-money is going to be given back (for example privately via the CEO’s own personal money) so that the family member may have the opportunity to get a free loan without any involvement from the banks?

[Just my own thoughts: if we were to look at this ‘liberally’, than nothing would seem haram to just charge yourself interest, although I can see that argument beeing negated by the fact that the tax authorities would ‘benefit’ with that extra interest-money via taxes.
On the other side, if one were to be ‘principal’ because our deen’s stance on interest and the whole ugly system behind riba, I would understand to not even mingle for 1 cent in this grey-area. However, what would the alternatives be in this situation? How can I lend my company money to you know, grow the company?]

Jazaakallahu gair for anything beneficial.


May Allah bless you.

If its a legal requirement and that you are the only shareholder in both companies, then the fact that there is an interest charge would not matter. Because technically speaking, the flow of money is between yourself. From the fiqh perspective, a company is not recognised as a separate person even though it might be considered to be a separate legal entity.
However, if there were other shaholders in one of the company, then this could be problematic.

In regards to charging a family member as a CEO, I think this might be a little complex because you are effectively creating an interest based loan from a shariah perspective even though you will be returning the money from your personal wealth. There might be other factors to consider too. Best to consult a local scholar on this one.

And Allah knows best!

Thank you for your time in answering my question. May Allah preserve and reward you, your family and offspring Mufti!

If it would be possible, could you perhaps elaborate on charging a family member a riba loan through the company (because it is required by law)? What extra factors would be required to consider?

Kind regards