When purchasing a first-time home, the funds for the purchase or the down payment often come from immediate family. When making a gift to loved ones, we assume it's tax-free. Tax authorities are very formal about exemptions for technical cash transfers. This often leads to disputes with the tax authorities regarding the possibility of gift tax exemptions when cash is transferred without a bank account. However, if the money for the home is transferred via bank transfer, the gift will be exempt.
But what if we want to be sure about how the donation will be used and transfer the money directly to the developer's account?
Until recently, this would have involved receiving a tax decision establishing the tax liability and denying the right to exemption. In such a situation, the only solution would have been to appeal the tax decision. However, administrative courts typically side with the taxpayer in such cases, as in the judgments of the Supreme Administrative Court of June 27, 2018, file reference II FSK 1873/16, the Regional Administrative Court in Gliwice of January 25, 2023, file reference I SA/Gl 1069/22, and the Regional Administrative Court in Szczecin of June 22, 2023, file reference I SA/Sz 209/23.
However, tax authorities are beginning to agree with the administrative courts' position. An example of this is the recently issued tax ruling of September 22, 2023, reference number 0111-KDIB2-3.4015.149.2023.2.JKU. It was issued at the request of a taxpayer who received a gift from her parents to purchase an apartment. However, the gift was deposited into a separate bank account of the developer with whom she had entered into an agreement. She learned that the gift would not qualify for the exemption because it was not made to her bank account when filing her tax return with the tax office.
In the issued tax interpretation, the Director of the National Tax Information indicated that in order to benefit from the gift tax exemption, three conditions must be met:
- receiving a donation from one of the closest persons listed in the Act;
- documenting receipt with proof of transfer to the buyer's payment account, to his account, other than the payment account, in a bank or a cooperative savings and credit union or by postal order;
- submitting a notification of the acquisition of ownership of cash within 6 months.
In the authority's opinion, all three conditions were met. The donors were parents (close relatives), the donation was documented by proof of transfer to the recipient's bank account, which was managed by the developer, and the recipient complied with the deadline for reporting the donation to the tax office.
The authority did not provide a detailed justification for its position. However, it is worth noting the positive ruling, according to which the donation does not have to be transferred to a bank account owned by the recipient. It is sufficient to transfer the cash to a bank account assigned to the recipient but owned by another entity, such as a developer.
This decision is beneficial for taxpayers who, often through no fault of their own, but as a result of the donor's actions, would be forced to pay tax.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of October 30, 2023.
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