Polish regulations require a 0.5% tax on loans from family members, but exemptions exist for close relatives, contingent on fulfilling specific conditions and timely declarations.
Tax on Loans from Family Members
Generally, a 0.5% civil law transaction tax (PCC) applies to loans between family members in Poland, based on the Act of September 9, 2000, concerning the PCC. The tax obligation arises upon the loan agreement or each disbursement if the total amount isn’t known upfront.
Failure to pay the 0.5% PCC can result in a penalty rate of 20% if the loan agreement is later disclosed to tax authorities during an audit or other proceedings.
Tax Exemptions for Close Family
Loans from close family members are exempt from PCC under certain conditions, as outlined in Article 9, point 10, letter b of the PCC Act. This applies to loans between individuals defined in Article 4a of the Inheritance and Gift Tax Act.
To qualify for the exemption, a PCC-3 declaration must be filed within 14 days of the loan, and proof of funds transfer to the borrower’s bank account or postal transfer must be provided.
Eligible Family Members
Eligible family members include spouses, descendants (children, grandchildren), ascendants (parents, grandparents), stepchildren, siblings, and step- and foster parents. The Inheritance and Gift Tax Act also extends this definition to include adoptive parents and children, as well as those in foster care.
Loan Amounts and Declaration Requirements
For loans exceeding 36,120 PLN (as of July 1, 2023), a PCC-3 declaration must be submitted to the tax office within 14 days of receiving the loan. The borrower should enter the loan amount in position 31 of the form and 0 in position 33 (tax amount).
Loans up to 36,120 PLN are exempt from PCC and do not require a PCC-3 declaration, even if provided in cash.
Ministry of Finance Clarifications
The Ministry of Finance clarifies that submitting a copy of the loan agreement to the tax office is not mandatory, but documentation should be available upon request. Late filing of the PCC-3 declaration, even by one day, forfeits the exemption, resulting in taxation at the standard 0.5% rate.
The Ministry also states that loan repayments do not affect the tax exemption status. For a single loan, one declaration is sufficient if submitted jointly; otherwise, each borrower must file a separate declaration.