Poland’s National Tax Information Directorate clarified whether a daughter and her husband financing their mother’s home renovation constitutes a taxable gift.
Daughter and Husband Plan Mother’s Home Renovation
A homeowner sought a tax interpretation regarding the financing of her home’s renovation by her daughter and son-in-law. The daughter and her husband reside in a separate part of the house, governed by a written usage agreement.
They intend to renovate the upper part of the building, which they occupy as their permanent residence. The planned work includes replacing the roof structure and covering, along with renovating the occupied floor. The building permit was issued to the mother, the homeowner.
However, the renovation will be financed exclusively by the daughter and her husband using their own income. Invoices for construction work and material purchases will be issued to the son-in-law and/or daughter, as they are the ones providing the funds. Payments will be made directly by them.
Tax Office: Renovation Financing Not a Gift
The Director of the National Tax Information (KIS) recalled that under Polish law, the tax on inheritance and donations applies to the acquisition of ownership of property or property rights in Poland through inheritance, legacy, gift, usucaption, or other gratuitous acquisitions.
The law does not define “gift,” referencing the Civil Code, which defines a gift as a gratuitous transfer of property from the donor’s assets to the donee. The benefit is gratuitous if the recipient does not provide anything in return.
The KIS Director ruled that the financing of a home renovation by a daughter and her husband for their mother, who owns the property, is outside the scope of gift and inheritance tax. This is because it does not constitute the acquisition of funds or property rights. Therefore, the KIS agreed with the homeowner that no tax obligation arises in this situation.