Polish regulations require a 0.5% tax on loans from family members, but exemptions exist for close relatives, contingent on specific conditions and declarations.
Tax on Loans from Family Members
Generally, a 0.5% tax on civil law transactions (PCC) applies to money lent between family members, based on Poland’s Act of September 9, 2000, concerning the PCC.
The tax obligation arises either upon the loan agreement’s conclusion or with each disbursement if the total loan amount isn’t known upfront. It also applies if the taxpayer invokes the loan agreement within five years of the payment deadline.
Tax Rate and Payment Deadline
The PCC tax on loans is 0.5% of the borrowed amount, payable to the tax office within 14 days of the tax obligation arising. A PCC-3 declaration must also be filed within this timeframe. However, if the agreement is notarized, the notary is responsible for collecting and remitting the tax.
Failure to pay the 0.5% tax can result in a penalty rate of 20% if the loan agreement is later referenced to tax authorities.
Tax Exemptions for Close Family
Loans to close family members are exempt from PCC tax under certain conditions, as outlined in Article 9, point 10, letter b of the PCC Act. This applies to loans between individuals defined by the Act of July 28, 1983, on inheritance and donation tax, exceeding the tax-free amount (currently 36,120 PLN).
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 for Tax Exemption
Eligible family members include spouses, descendants (children, grandchildren), ancestors (parents, grandparents), stepchildren, siblings, and step- and foster parents. The definition extends to adopted individuals and those in foster care.
Loans Up to 36,120 PLN – Simplified Rules
Loans up to 36,120 PLN to close family members are exempt from PCC tax without requiring a PCC-3 declaration. This applies to both cash and bank transfers.
Ministry of Finance Clarifications
The Ministry of Finance clarifies that submitting a loan agreement copy to the tax office is not mandatory, but documentation may be requested. For loans exceeding the limit within a five-year period, timely filing of the PCC-3 declaration and proof of funds are required.
The Ministry also emphasizes that failing to file the PCC-3 declaration within 14 days forfeits the exemption, resulting in taxation at the standard 0.5% rate. There is no recourse for late filing, even due to extenuating circumstances.
The Ministry confirms that loan repayment does not affect the tax exemption status. Additionally, loans from a parent to multiple children require separate declarations for each borrower.