The Polish state, like most countries in the world, to secure its influence, blames citizens with various types of fiscal burdens. In addition to all known taxes: income, VAT, excise or tax on winnings, there are many taxes that the average person has not heard of and does not know that she should pay them. One such non-obvious tax is family loan tax. Below is everything you need to know about this tax. We invite you to the article.
Family loan tax – what is it?
According to the Act of 9 September 2000 on tax on civil law transactions, each private loan is subject to PCC tax in the amount of 2% of the base (in this case, the loan amount is the basis). In other words, by concluding a loan agreement with someone, we are obliged to give the tax office 2% of the amount borrowed. Fortunately, the legislator has provided for several exceptions in which we are not obliged to pay this tax.
According to art. 9 par. 10 of the Act on tax on civil law transactions are exempt from taxation:
- loans from credit unions or company funds, trade union funds, employee relief and loan funds;
- cooperative savings and credit unions;
- loans received from one person in the amount not exceeding PLN 5,000 or PLN 25,000 from many people – received within 3 consecutive calendar years, starting from January 1, 2009;
- loans granted by entrepreneurs who do not have their registered office or management in Poland, who conduct activities in the field of loans and lending.
In addition, we will avoid taxation if you borrow money from your immediate family, specifically from people who belong to the first tax group. According to the act, they are:
- son in law,
- daughter in law,
The limit amount, for which we do not have to report a loan to the tax office, is PLN 9,637 per one person within 5 years. If the amount borrowed by us exceeds this sum, we are forced to report it to the appropriate tax office and meet two conditions:
- Submit a document certifying the transfer of the loan to a bank account or postal order.
- Submit a PCC3 declaration on tax on civil law transactions to the competent tax authority within 14 days from the date of the act.
The fulfillment of the above conditions exempts us from the obligation to pay 2% tax for the amount above PLN 9,637. It should be remembered that this rule does not apply to loans between parents-in-law, son-in-law and daughter-in-law. These persons are required to pay the tax if the loan amount is exceeded.
What are the consequences of not complying with the conditions for dismissal?
The Act clearly and legally defines the obligations to be met in order to receive tax exemption and penalties for failure to do so. If the loan is not reported within the statutory period of 14 days, the taxpayer is forced to pay a tax of 2%. If, however, taxpayers refer to the fact of concluding a loan agreement during the tax inspectorate’s inspections and the taxpayer fails to submit relevant documents confirming the transfer of money to a bank account, money order or the account of Spółdzielcza Kasa Oszczędnościowo Kredytowe, he will be charged a 20% tax the basic amount. That is why it is very important to ensure that all formalities are within the deadline set by law, because otherwise you may have to pay additional costs.
How to draw up a loan agreement?
Everyone knows that all contracts, even those made with relatives, should be in writing. For this reason, it is worth ensuring that the loan agreement in the family contains all the necessary information, such as:
- who – means the person providing the loan;
- what – the amount of the loan granted;
- commu- nity of the person accepting the loan;
- a possible percentage of the amount borrowed;
- loan repayment date;
- the degree of kinship of the persons concluding the contract.
Such a contract does not have to be confirmed by a notary. Issues related to loan taxes lie with the borrower and he must settle them.
It is worth remembering that in the title of a transfer with a loan, enter that it is a loan in the family. We will then have a credible proof of transfer in the event of a US inspection or subsequent enforcement of your claims.
Loan and donation? Differences in taxes
In the case of donations, as in the case of a loan, persons from the first tax group are exempt from the tax if the donation does not exceed PLN 9,737. A further family also has a chance to avoid taxation, but in their case the tax-free amount is respectively:
- PLN 7,276 for the second group (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);
- PLN 4,902 for the third group (other buyers).
It is worth mentioning that within the first group, the group 0 is distinguished, which includes:
- descendants (eg son, daughter, grandchildren, great-grandchildren);
- introductory (eg mother, father, grandparents);
This group is exempt from tax for an amount exceeding the limit amount, provided that they meet the following conditions:
- They will report it to the relevant tax office.
- They adequately document the donation (similar to a loan).
These persons are required to meet these conditions within 6 months of receiving the donation.
In other cases, you must submit a declaration to the appropriate tax office, within 1 month of receiving the donation and pay the tax, which is:
- 3% – up to PLN 10278;
- 308 PLN 30 PLN and 5% surplus over 10,288 PLN – for the amount from 10278 PLN to 20556 PLN;
- PLN 822 PLN 20 and 7% surplus over PLN 20,556 – for an amount over PLN 20556.
As you can see, tax regulations in Poland may seem a bit complicated and do not bypass even the closest family. However, the fulfillment of the conditions for dismissal on time will mean that we will not have to bear additional costs related to a loan or donation from the immediate family.