DONATION OF FUNDS FROM PARENTS’ FOREIGN ACCOUNTS

Nowadays, it often happens that a foreign citizen residing in Poland receives a donation of funds from his or her parents abroad. The question then arises about the tax consequences of such a situation. This topic is discussed in this article.

Pursuant to Article 1(1)(2) of the Inheritance and Donation Tax Act of 28 July 1983, the acquisition by natural persons of ownership of property located in the territory of Poland or property rights exercised in the territory of Poland, received in the form of a donation or bequest, is subject to taxation. In turn, the acquisition of ownership of things located abroad or property rights exercised abroad is subject to Polish inheritance and donation tax if, at the time of the opening of the inheritance or conclusion of the donation agreement, the acquirer was a Polish citizen or had a permanent residence in Poland (art. 2 of the above-mentioned act).

Therefore, it is first necessary to analyze whether the object of the donation, which is to be cash, will be located on the territory of Poland at the time the agreement is concluded. In the case of the transfer of a sum of money in the form of a transfer from a bank account held in a foreign bank, such a situation will not occur. Therefore, Article 1 of the Inheritance and Donation Tax Act will not be applicable. It is therefore necessary to consider whether, at the time the agreement was concluded, the acquirer was a Polish citizen or had a permanent residence on the territory of Poland in order for Article 2 of the above-mentioned Act to be applicable. Permanent residence of foreigners is regulated by the Act of 12 December 2013 on foreigners. The conditions for granting a permanent residence permit are listed in Article 195 et seq. of the aforementioned Act. It should be emphasized at this point that staying on the territory of Poland on the basis of a temporary residence permit cannot be equated with permanent residence. Therefore, if the purchaser of a donation from a foreign bank account does not have Polish citizenship or a permanent place of residence in the territory of Poland, then the donation will not be subject to inheritance and donation tax. A similar position was contained in a tax interpretation by the Director of the National Tax Information of 14 February 2024, numbered 0111-KDIB2-2.4015.148.2023.3.PB.

However, what if the purchaser has Polish citizenship or, for example, has a permanent residence permit? Then, in the case of a donation from a foreign parent’s account, the tax exemption for the immediate family set out in Article 4a of the Inheritance and Donation Tax Act will apply. However, in order to benefit from this exemption, it is necessary to submit a notification of the acquisition of ownership of the funds to the tax office on form SD-Z2 within 6 months of the receipt of the donation and to document the receipt of the donation. Moreover, if the donation is made in a foreign currency, the recipient should convert the donation amount into zlotys according to the average exchange rate announced by the National Bank of Poland on the day the tax obligation arises (the issue of the moment when the tax obligation arises is regulated in Article 6(1)(4) of the above- mentioned Act). However, the submission of form SD-Z2 is not necessary if the donation was made in the form of a notarial deed or if the sum of donations from a given donor within 5 years does not exceed the amount of PLN 9637.

In conclusion, in the case of receipt of funds from parents from abroad, it is crucial to establish whether the acquirer has Polish citizenship or permanent residence on the territory of Poland. If this is the case, then he will be able to benefit from the exemption set out in Article 4a of the Inheritance and Donation Tax Act. Otherwise, the donation will not be taxable.