Flooding has been raging through southwestern Poland for over a week. Losses are estimated in the billions of złoty. One way to mitigate the effects is through tax relief. What can those affected by the floods expect? What relief is available to those supporting the victims? This is discussed in today's article from the Taxes and Taxes series.
Emergency aid
Flood victims can now apply for a 10,000 PLN benefit. Applications can be submitted at a social welfare center, municipal office, or by contacting a social worker. Eligibility for the benefit is not dependent on the number of people in a household. All formalities will be completed in a single visit. The official accepting the application will not require any official certification. The benefit will be exempt from income tax.
Reconstruction Allowance
Another form of support will be a renovation or reconstruction allowance. Payment of the allowance will be based on a community survey and damage assessment. The maximum allowance will be up to PLN 100,000 for the reconstruction of a farm building and up to PLN 200,000 for the reconstruction of a residential building. This allowance will also be exempt from income tax.
Tax-exempt donations
Donations received by flood victims will be exempt from inheritance and gift tax if they are used to remove the effects of flooding in the period until December 31, 2025.
Interest-free loans for salary payments
In the event of a lack of funds to pay employees the remuneration due for the period:
1) justified absence from work (the employee is entitled to an appropriate part of the minimum wage, but not more than for 10 days);
2) readiness to perform work if the employee has experienced obstacles attributable to the employer caused by flooding;
3) performing work consisting in protecting the workplace against flooding.
- An entrepreneur who has temporarily ceased or significantly reduced their business operations due to flooding may receive an interest-free loan from the Guaranteed Employee Benefits Fund. Applications are submitted to the appropriate Marshal's Office.
Receiving a loan will not be subject to income tax.
Depreciation of fixed assets given away free of charge
As a rule, depreciation charges for fixed assets for the period they are given for free use are not tax-deductible. An exception to this rule, however, is the case of giving a fixed asset for free use to a flood victim. In such a situation, depreciation charges will be tax-deductible for the period they are given for free use, but no later than December 31, 2025.
Deferment of ZUS contributions
As announced by the Minister of Finance, the deadline for payment of social security contributions and health insurance contributions by entrepreneurs affected by the flood, due for the period from August 1 to December 31, will be postponed until September 31, 2025. Payment within the deferred period will not result in accruing interest.
Tax deferral
The Minister of Finance also announced that the deadline for paying tax liabilities by businesses affected by the flood will also be postponed. VAT payments are to be deferred until January 25, 2025. Income tax due from September onwards is to be paid by the annual tax return deadline (March 31, 2025 for CIT and April 30, 2025 for PIT).
Reliefs in the payment of tax liabilities
All flood victims can also apply for tax relief under normal rules, i.e. deferment of payment, payment by instalments or cancellation of tax liabilities.
One of the purposes of granting relief, as explicitly stated in the Tax Ordinance, is to repair damage caused by natural disasters or other extraordinary events. To obtain relief, an application must be submitted to the appropriate head of the tax office. The basis for granting relief is a legitimate, important interest of the taxpayer or the public interest. If relief is denied, the taxpayer has the right to appeal to the director of the tax administration chamber.
Donations without VAT
In accordance with the draft regulation amending the regulation on reduced rates of tax on goods and services, in the event of concluding a contract with:
1) a public benefit organization;
2) a local government unit;
3) a healthcare entity;
4) the Government Agency for Strategic Reserves
- for the free supply of goods or the free provision of services, if the goods supplied or services provided are used for purposes related to helping people affected by heavy rainfall or floods in September 2024, a reduced rate of 0% VAT will apply.
Deduction of donations from income
Moreover, as before, in the case of making a donation to a public benefit organization, the donor may deduct its value from income, but not more than 6% of income (PIT taxpayer) and 10% of income (CIT taxpayer).
We would like to inform you that our Law Firm provides free assistance in preparing applications for deferment of deadlines, instalment payments or cancellation of tax liabilities for flood victims.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of September 22, 2024
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