The NSA ruling introduces revolutionary changes in the tax on donations. Under an agreement with a donor, money can be spent for a fixed purpose and no tax can be paid from expenditure.
The facts in question concerned the situation of a taxpayer who received a monetary donation from her mother. Due to the failure to notify this fact to the tax authorities, it has lost the possibility of exempting from taxation a donation received in the so-called immediate family circle (gift under the so-called zero tax group).
However, before the tax authorities, she claimed that the donation was subject to the obligation to execute the order. Her mother obliged her to hand over some of the money to her husband and to use the rest to buy the property.
The tax authority only partially took account of the taxpayer's explanations and demanded tax on that part of the donation she spent on purchasing the property for herself. The dispute was about to be interpreted Article 7(1)(2) Laws on inheritance tax and donations.
According to these provisions, the tax base is the value of the acquired assets and rights after deduction of debts and liabilities.
If the heir, gifted or person to whom the ordinary or debt-bearing record has been made has been burdened with the obligation to execute the order or ordinary record, the value of the charge shall be the weight of the inheritance, donation, ordinary or debt-bearing record and, in the case of an instruction, if it has been executed.
In the oral justification, the court pointed out that there were two the conditions for reducing the tax base. After first There must be an order in the donation agreement. Second, the command must be executed. It does not matter, according to the Court of Cassation, whether the order will be executed for the benefit of a person third, gifted or given.
The taxpayer consistently argued that the issue of money under the orders of the mother resulted in a non-taxable amount as there was no tax base. In the Authority’s view, this position was unacceptable, since the taxpayer’s real use of the donation cannot remain a natural tax.
Dispute in first the instance was won by a fiscal. However, the gifted woman did not lay down her weapon. She challenged the sentence of the Provincial Administrative Court to the Chief Administrative Court, which acknowledged her right.
NSA found that there are no grounds to believe that only an instruction given to a person third will be the burden of the donation. In the oral justification, the court pointed out that there were two the conditions for reducing the tax base. After first There must be an order in the donation agreement.
Second, the command must be executed. It does not matter, according to the Court of Cassation, whether the order will be executed for the benefit of a person third, gifted or given. The NSA stressed that tax authorities cannot change the nature of civil law institutions in order to make a profit over the interpretation of tax law.
The objective agreed in a specific civil law agreement takes precedence over the typical objective. Consequently, nothing precludes the parties from concluding in the donation agreement an obligation to execute the order to the gifted one.
This ruling is groundbreaking, first of all, because it allows taxpayers to legally reduce the tax on inheritances and donations, regardless of the tax group in which they are located. The legislator does not provide, in addition to the above, for any other conditions concerning the reduction of the tax base, in particular the prohibition on the exercise of an order on its own behalf. In practice, this means that a little more money will be left in the taxpayer’s pocket when the contract is properly arranged.
Author:
Marcin Kołkowicz
Tax advisor, tax consultant at Russell Bedford Poland Sp. z o.o., graduate of the Administration, Management and Marketing of the Catholic University of Lublin named after John Paul II. The subject of tax law deals with from 2012. He gained experience in Lublin and in Warsaw tax advisory offices. Author and co-author of many tax publications, in particular for Tax and Tax Portal TaxFin.pl. In his career, he dealt with both direct and indirect taxation issues, with particular emphasis on VAT.