Family donation - is it taxable?
Donation as a gratuitous transfer of an asset to another person is subject to inheritance and donation tax. In some situations, after meeting certain conditions, you can take advantage of the tax exemption. How tax is donation in the family?
Donation and tax groups
In terms of inheritance and donation tax, there are 3 tax groups:
group I: 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;
group II: 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;
group III: other buyers.
Within the first tax group, there are the so-called group 0, i.e. spouse, descendants (e.g. son, daughter, grandchildren, great-grandchildren), ascendants (e.g. mother, father, grandparents), siblings, stepfather, stepmother.
Family donation and taxation
For all tax groups, there is a tax-free amount up to which you do not have to pay budget dues. If the donation amount exceeds the free amount, the recipients will have to pay inheritance and donation tax.
The tax obligation in the case of a donation falls on the donor, which means that it is not the donor, but the person who receives the donation should pay any tax.
Tax-free amounts are as follows:
in group I - PLN 9,637,
in group II - PLN 7276,
in group III - PLN 4,902.
The exception is a donation to a family belonging to tax group 0. In this group, the donation may be completely exempt from taxation, even if it exceeds the established limit of PLN 9,637, provided that the recipient reports it to the tax office.
A family donation must be reported to the tax office
Making a donation within group 0 after exceeding the amount of PLN 9,637 requires the submission of the SD-Z2 form to the tax office within 6 months from the moment of exceeding the limit. Only then will the donation be tax-free. After submitting the form to the office, the recipients can benefit from tax exemption regardless of the amount of the donation, because there is no limit in this regard.
Up to PLN 9,637, a donation in the immediate family is tax-free and there is no need to complete any formalities with the tax office.
If the donation exceeds PLN 9,637, in order to benefit from the tax exemption, it must be reported to the tax office within 6 months.
In any case, the donation does not need to be reported to the office if the donation agreement was prepared by a notary.
A cash donation looks a bit different. Transferring money in group 0 should be properly documented in each case, and after exceeding the limit of PLN 9,637, additionally reported to the tax office. Therefore, it is necessary to have a proof of transferring the donation to the buyer's payment account or another document that allows for the verification of the donation, regardless of its amount. Only then can you exercise your right to be exempt from paying tax.
So, a cash donation, when it exceeds the established limit, is not taxed in the zero tax bracket when:
will be transferred by bank transfer or in any other form allowing for its verification;
will be reported to the tax office on the SD-Z2 form within 6 months of its receipt.
The SD-Z2 form must be accompanied by proofs of receiving the donation (e.g. printouts from the bank account).
Donation to the family and failure to report it to the office
Failure to submit a donation by a person who may benefit from the exemption results in the fact that it is subject to taxation on general principles.