Donation on the CIT-D form - when should it be shown?
The CIT-D form is an attachment to the CIT-8 form, submitted by legal entities in connection with donations received or transferred. By completing this form, the taxpayer may be a donor, a recipient or at the same time make and receive a donation. The article will indicate whether all donations must be shown in the tax information on the CIT-D form and what is the legal basis for these regulations. The article focuses both on donations made by the entrepreneur and those who can receive them. It will also be stated which and how the donation should be shown on the CIT-D form.
What is a donation?
The donation is an agreement regulated by the Act of 23 April 1964 of the Civil Code (hereinafter: the Civil Code). Under it, the donor undertakes to provide a free benefit for the recipient - one person receives a benefit, while the other receives nothing in return. The subject of the donation may be money, movables, real estate, as well as goods subject to tax on goods and services.
In this case, the amount of the donation is considered to be the value of the goods together with VAT in the part exceeding the amount of the input tax, which the taxpayer has the right to deduct in accordance with the provisions on tax on goods and services for the donation. The value of the donation is determined according to market prices.
In the case of entrepreneurs, it is important to properly document the donations made - it is necessary to conclude a donation agreement in writing, for example, have a bank transfer confirming the transfer of funds or a declaration of the recipient about receiving the donation, indicating its amount.
The tax base for donations with an indication of the legal basis
Entrepreneurs are subject to taxation under the Act of February 15, 1992 on corporate income tax (hereinafter: the CIT Act). This extensive act regulates all the titles on the basis of which entrepreneurs pay taxes, with an indication of the deadlines for submitting tax declarations. It also includes regulations on taxation in connection with the acceptance or receipt of a donation by a legal person.
It is worth remembering that making a donation is an expense for the donor, incurred at the cost of his property. It follows from the very nature of the donation agreement that the expenditure incurred by the donor - the entrepreneur due to the performance of the donation agreement cannot be considered a tax deductible cost - it is a free agreement and the donor receives nothing in return for its performance.
Article 18 of the CIT Act indicates that the entrepreneur's tax base is the income determined in accordance with Art. 7 or 7a of the CIT Act (basic rules for determining the income of a legal person), after deduction of the following donations:
1. Donations made for the purposes specified in Art. 4 of the Act of April 24, 2003 on Public Benefit Activity and Volunteering, organizations referred to in art. 3 sec. 2 and 3 of this Act or equivalent organizations, specified in the provisions regulating public benefit activities, in force in a Member State of the European Union other than the Republic of Poland or another country belonging to the European Economic Area, conducting public benefit activities in the sphere of public tasks, implementing these goals - jointly up to an amount not exceeding 10% of the income referred to in Art. 7 sec. 3 or in art. 7a paragraph. 1. The catalog contained in the above-mentioned provision is closed.
The entities receiving this donation must be non-governmental organizations that are not entities of the public finance sector, within the meaning of the provisions on public finance, or enterprises, research institutes, banks and commercial law companies, which are state or local government legal persons and not operating for profit, legal persons or entities unincorporated established on the basis of statutory provisions, including foundations and associations.
Therefore, beneficiaries must conduct public benefit activities in the sphere of public tasks.
2. Donations for the purposes of religious worship - in total up to the amount not exceeding 10% of the income referred to in art. 7 sec. 3 or in art. 7a paragraph. 1. These are donations to churches and other religious associations, or institutions promoting religious worship, both at home and abroad.
It should be noted, however, that donations for charity and care activities carried out by churches and religious associations are excluded from the donor's tax base without limit (in full amount).
3. Donations made for the purposes of vocational education to public schools providing vocational education, referred to in art. 4 point 28a of the Act of December 14, 2016 - Education Law and public institutions and centers referred to in Art. 2 point 4 of this Act - in total up to the amount not exceeding 10% of the income referred to in Art. 7 sec. 3 or in art. 7a paragraph. 1.
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Donation on the CIT-D form - how to fill it in?
The CIT-D form is not a standalone form, and usually constitutes an attachment to the CIT-8 form, unless the entity is not required to submit a CIT-8 declaration. It is important that the form is filled in with capital letters - it will be legible and will reduce the risk of being asked to complete the form or making corrections.
The amounts of the taxable base, as well as the sum of tax payable, should be rounded, i.e. incomplete amounts from - to 49 are rounded down, and from 50 to 99 - up. The remaining amounts are not rounded - this only applies to the tax base and the tax sum.
If the received donation amounts to 16 700.29 - the amount of PLN 16 700 is entered in the field 22-25.
If the donation received is 16,200.89 - the amount of PLN 16,201 is entered in the field 22-25.
The form in section C (information on donations received) indicates only those donors who made a one-time donation to a legal entity with a value exceeding PLN 15,000, or if the sum of donations in the tax year from one donor exceeds PLN 35,000. The form should also indicate the purpose for which the donation was used, in accordance with the sphere of public benefit activity referred to in art. 4 of the Act of April 24, 2003 on Public Benefit and Volunteer Work, as well as on the purpose of religious worship.
Additionally, within the deadline for submitting the tax return, legal persons receiving the donation are required to make this information public and notify the relevant head of the tax office in writing. Entities whose income for a given tax year does not exceed PLN 20,000 are exempt from this obligation.
Section D indicates the donations made and the amounts that are deductible in connection with the donation to the entities indicated in the point on the tax base of donations.
Donation on the CIT-D form - which donations are not shown?
Legal persons may not deduct from the legal basis of taxation donations made to:
legal persons and organizational units without legal personality, conducting business activity consisting in the production of products from the electronics, fuel, tobacco, spirits, wine and brewing industries, as well as other alcoholic products with an alcohol content above 1.5% and precious metal products, or with these metals or trade in these products.
There are also entities that, having received a donation, cannot deduct it, these are:
trade unions and employers' organizations,
foundations established by political parties.