From one of the latest decisions of the Provincial Administrative Court in Łódź, we can learn that the phrase used in the inheritance tax and donations law to document the monetary donation received through the payment account, should be understood as an obligation to indicate that there has been a transfer of money from the donor's property to the donated property, where the way this transfer is carried out in this case is secondary.
Complainant in July 2017 reported to the tax office the acquisition by donation 110,000 EUR. She received money from her father in Russia and was to use it to build a house.
The donation was confirmed by an agreement providing that the donation would be paid into the personal account of the recipient within the 7 days from the signing of the contract. The complainant, in accordance with the agreement, paid the amount received to her bank account and made a donation to the US using the form SD-Z2.
It was found that the tax authorities contested the applicant’s compliance with the condition of exemption, and did not consider that such proof of the payment of cash by the applicant himself to its account.
According to the tax authorities, the exemption would only be involved if the donor transferred the money to the bank account of the recipient (possibly by postal transfer) which clearly and unambiguously documents who, to whom and to what amount they gave. According to the tax authorities, extending this exemption to ‘own-payments’ would constitute a complete departure from the condition of documenting how the money was received.
He did not agree with this WSA in Łódź, indicating in his ruling that used in the recipe Article 4a(1)(2) Act dated 28 July 1983 on inheritance and donation tax (Journal of Laws of 2019, item 1813 t.j.
of day 24 September 2019) the phrase ‘document their receipt with proof of transfer to the paying account of the buyer’ shall be understood as an obligation to demonstrate that money has been transferred from the donor’s assets to the donated assets (grants) and that the way in which that transfer has been carried out is of secondary importance.
According to the WSA in Łódź, it does not have to be a cash-free transfer, that is, from the donor's bank account to the bank account of the recipient.
Where cash is received by the cash-gifted person for the application of the exemption in question, it is sufficient to pay the funds received in this form by the credited bank, as in the case at hand.
In conclusion, according to the WSA in Łódź, in the event of receipt of cash by a cash gifted person, the application of the exemption provided for in the Act is sufficient to pay the funds received in this form by the bank self-employed person. Finally, it is worth noting that this judgment is not final, so we have to wait for the position of Chief Administrative Court.
Judgment of the Provincial Administrative Court in Łódź 25 August 2020, o reference no. I SA/Łed 861/19
Author: Paweł Boś
Junior Tax Consultant, related to Russell Bedford Poland 2018. Author of numerous articles on legal and tax matters, published in the industry press. Law student at Leon Kozminski Academy in Warsaw