Foreign donation tax – this issue raises many questions among Polish citizens residing abroad. Under current regulations, receiving funds from a foreign donor may result in a tax obligation if certain conditions are met.
Foreign donation tax – regulations
According to Article 2 of the Act of July 28, 1983, on Inheritance and Donation Tax (Dz.U. 1983 No. 45, item 207), a foreign donation tax is applicable if, at the time of receiving the funds (or goods or rights), the beneficiary was a Polish citizen or had permanent residence in Poland. This means that even individuals residing permanently outside Poland may still be liable to pay this tax.
Article 2 of the Act on Inheritance and Donation Tax
The acquisition of ownership of things located abroad or property rights exercised abroad is subject to taxation if, at the time of the inheritance opening or conclusion of the donation agreement, the acquirer was a Polish citizen or had permanent residence in Poland.
Obligation to report
Individuals receiving donations from abroad must inform the Polish tax office about this financial gain. The notification must be submitted within six months from the date of receipt using the SD-Z2 form, provided they meet the conditions for tax exemption. If the funds come from a close family member (classified as the so-called zero tax group), they may qualify for a tax exemption, provided that all formal requirements are met. Otherwise, a shorter deadline applies, with a different declaration (SD-3) and the obligation to pay tax.
Lack of Double Taxation Agreements
Poland has not signed international agreements to eliminate double taxation in the area of inheritance and donation tax. This is not uncommon in international tax law. However, it means that a foreign donation tax may be levied both in the country where the asset originates and in Poland. The Ombudsman has repeatedly highlighted this issue, stressing the lack of regulations to minimize the risk of double taxation. To date, this has not resulted in any legislative changes.
Foreign donation tax – summary
Foreign donation tax – this topic is particularly important for Polish citizens living abroad. In many cases, notifying the Polish tax office about such a financial gain is necessary, and in some situations, double taxation may apply. To avoid uncertainties, it is advisable to consult a tax expert and complete all formalities within the required deadlines.
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