Donation in the immediate family - should it be taxed?
A donation is a free transfer of a given asset to another person. During this activity, a tax obligation arises in the form of inheritance and donation tax. The need to pay it often discourages from transferring assets in this way. This tax is relatively high, its rates vary from 3 to 20% on the part of the donation that exceeds the tax-free amount. Check what are the consequences of the donation in the immediate family.
Donation in the immediate family - tax groups
In the case of inheritance and donation tax, three tax groups are distinguished:
group I - includes: spouse, descendants (e.g. son, daughter, grandchildren, great-grandchildren), ascendants (e.g. mother, father, grandparents), stepson, son-in-law, daughter-in-law, siblings, stepfather, stepmother, in-laws. The tax-free amount for tax group I is PLN 9,637;
group II - includes descendants of siblings, siblings of parents, descendants and spouses of stepchildren, spouses of siblings and siblings of spouses, spouses of siblings of spouses, spouses of other descendants. The tax-free amount for group II is PLN 7276;
group III - includes other buyers, and the tax-free amount is PLN 4902.
Within group I there are the so-called group 0. They belong to it:
descendants (e.g. son, daughter, grandchildren, great-grandchildren),
ascendants (e.g. mother, father, grandparents),
People who do not belong to the zero tax group, in the event of receiving a donation exceeding the above-mentioned free amounts, must pay the appropriate tax on this account to the tax office. A donation in the immediate family for people from the zero tax group entitles you to complete tax exemption. If the amount of the donation exceeds the amount of PLN 9,637, it must be reported to the competent tax office and the donation must be accurately documented. If the value of the donation is lower than PLN 9,637, the office is not required to be notified. It should be remembered that if the value exceeds PLN 9,637, the donation will be tax-free only if the taxpayer reports the acquisition of the property.
Failure to declare the acquisition of assets
Failure to report the acquisition of property by the exempt person results in the fact that the donation is subject to taxation on general principles. This means that in such a case, a donation in the immediate family requires the submission of a declaration and payment of tax. The obligation to report the acquisition of property by exempt persons and to submit a declaration by other taxpayers is excluded if the donation agreement was prepared by a notary public.
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Does receiving a family donation require reporting this fact to the tax office?
A donation in the immediate family requires reporting it to the appropriate tax office on the SD-Z2 form. The taxpayer has six months from receiving the donation to report a donation from people from the zero tax group. On the other hand, persons obligated to pay tax have only one month from the date of receiving the donation or accepting the inheritance to file the declaration and pay the tax.
The tax exemption for donation is not limited in any way. There is no quota limit for a tax-exempt donation and no conditions for using or disposing of the donation. A donation in the immediate family for a taxpayer may therefore be beneficial due to the right to use it for business purposes.
If the entrepreneur receives a donation from the immediate family, it is only necessary to prepare a document including the fixed asset or other asset in the relevant records. He does not show any income from receiving the donation and he does not pay any income tax, as these benefits are subject to inheritance and donation tax (however, if the value of the donation exceeds the free amount, it must be reported). In art. 23 sec. 9 of the PIT Act, the legislator indicated on what basis it is possible to include depreciation write-offs in tax costs. Since January 2018, it is possible to include in the tax costs depreciation write-offs of a fixed asset acquired through a donation, if the donor made depreciation write-offs on these components. In this case, the provisions of Art. 22 g of paragraph 1. 12 and art. 22 h of paragraph 1. 3 and the provision of art. 22 g of paragraph 1. 15.
What does a donation look like in the immediate family?
The donations made may constitute a deduction from income for an entrepreneur taxed with progressive tax or a lump sum. Pursuant to Art. 26 sec. 1 point 9 of the PIT Act, this happens only when donations were made for the purposes of public benefit organizations, religious organizations, for the purposes of vocational education or blood donation, in the value not exceeding 6% of the taxpayer's income.
Please note that there are also situations where the donation is subject to VAT. This is the case when the entrepreneur donates goods or materials from which he was entitled to deduct VAT. It is then necessary to take into account Art. 7 sec. 2 of the VAT Act, which says that the free transfer of goods belonging to his enterprise by a taxpayer is otherwise called a supply of goods. The delivery of goods is, among others the transfer or consumption of goods for the personal purposes of the taxpayer or its employees, shareholders, etc., as well as any other donation.
A transfer free of charge may be called a supply of goods if the taxpayer had the right, in whole or in part, to reduce the amount of tax due by the amount of input tax on the acquisition, import or production of these goods or their component parts.
Pursuant to the act, each delivery of goods within the territory of the country, including a donation to the immediate family, is subject to VAT. Thus, in the event of a donation of goods, the taxpayer should show and pay the VAT due to the office. In the KPiR, however, the value of goods from the 10 KPIR column should be canceled.