The legal basis for the exemption should be sought in the Corporate Income Tax Act (the inheritance and gift tax law applies only to natural persons and therefore the home of the child as an organisation is not subject to that law).
In the case of a monetary or material donation to the Child's House, it is appropriate to examine the legal status of the gifted Child's House. If the Child’s House has the status of a budgetary unit, it shall follow the principle expressed under Article 6(1)(3) Corporate Income Tax Act[1], Income tax exemptions are subject to budgetary units.
Exemption under Article 6 is an entity exemption, which means that it applies to all budget units. Thus, if the Child's House is a fiscal unit and receives income from the donation, the total value of the donation received is subject to corporate tax exemption. Therefore, such a Child House will not be required to tax the received donation, nor will it have to meet any additional criteria to benefit from such exemption.
The situation is slightly different if the Child’s House is not a budgetary unit and, for example, the unit in question under Article 3(2) and 3 Laws on public benefit activities[2]. So, as a general rule, if the gifted organization in question meets the conditions set out in that provision, it can be considered for a possible exemption, such a donation will be exempt from tax provided that the gifted organization uses it for statutory purposes.
A tax exemption may be granted to an organisation whose activities (defined for its statutory purposes) are covered by the Corporate Income Tax Act. The basic exemption regulation is Article 17(1) point of the Corporate Income Tax Act[3], according to which tax-free income is the income of entities whose purpose is to:
- scientific activities,
- scientific and technical,
- education, including student education,
- cultural,
- in the field of physical culture and sport,
- environmental protection,
- support for social initiatives to build roads and telecommunications networks in the countryside and supply of water to villages,
- charity,
- health and social assistance,
- professional and social rehabilitation of disabled persons, and
Religious cult - in part intended for these purposes.
Corporate income tax exemption is also granted to public benefit organisations on the basis of Article 17(1)(6c) Act. They may benefit from an exemption to a greater extent than other types of organisation.
Pursuant to that regulation, the revenue of the public benefit organisation allocated to all statutory purposes, but excluding economic activities indicated, is exempt under Article 4 Laws on public benefit and voluntary activities, except for the exemption specified under Article 17(1)(4) Corporate Income Tax Act.
An anonymous donor is in a less advantageous situation, because such a donation (whether or not a gift has been donated by a natural or legal person) cannot be deducted from the tax. Money donation should be documented by a transfer and, in the case of things, a document confirming the transfer of this donation.
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1 Act dated 15 February 1992 on corporate income tax (Journal of Laws of 2023, items 185, 326, 412, 825, 1059).
2 Act dated 24 April 2003 on public benefit and voluntary activities (Journal of Laws of 2023, item 571).
3 Act dated 15 February 1992 on corporate income tax (Journal of Laws of 2023, items 185, 326, 412, 825, 1059).