Did you get a loan from your family? Do you have to report it to the Tax Office? How high tax on the loan will you have to pay? Help the family in a difficult financial situation, contrary to appearances, is of interest to state institutions, so that the whole process proceeds in accordance with the law, it is worth learning the rules that apply when granting a loan or donation to children and other family members.
Is the family loan taxable?
Are you wondering where to get money for upgrading your professional qualifications or buying a car? The immediate family is often the first source of financial help in such situations. However, it should be remembered that support in the family circle is not only your business and you cannot do it behind the fiscal back. The loan is usually subject to a 2% tax on civil law transactions. However, with the help of your immediate family, you can avoid this payment. In addition to the relationship, the amount of the loan is very important.
Exemption from tax on civil law transactions is granted to loans between:
- descendants, or descendants (children, grandchildren, great-grandchildren, etc.);
- ascendants, i.e. people we come from (parents, grandparents, great grandparents);
- stepchildren, or foster children, with whom the relationship had come after remarriage;
- foster parents.
A loan from all the above-mentioned family members is exempt from tax, even if it exceeds PLN 9,637, then you must submit a declaration to the relevant tax authority within 14 days of taking possession of the money. To do this, complete the PCC-3 form. If the loan amount has not exceeded the tax-free one, you do not have to worry about the information obligation. A loan from further family members may also be exempt from tax, but may not exceed the amount set by the legislator.
Taxation of donations
A loan from a donation differs in that it must be repaid. Donation is a form of non-returnable allowance. It also involves other types of taxation. In the case of a family loan, the taxpayer’s obligation is to settle the tax on civil law transactions. The donation is subject to inheritance and donation tax. If the donor is e.g. a son and the amount received was not higher than PLN 9,637, you are exempt from tax and you do not have to inform the Office about this fact. All donations within the so-called “zero group” are exempt from tribute to the state. It is the closest family, excluding mother-in-law, son-in-law and daughter-in-law. However, you will also avoid tax if you donate from the other two groups:
- Group II: descendants of siblings (e.g. children of the sister, grandchildren of the brother), siblings of parents (e.g. aunts, uncles), descendants and spouses of stepchildren, spouses of siblings and siblings of spouses, spouses of other siblings, spouses of other descendants (e.g., granddaughter’s husband);
- Group III: other people.
For group II, the tax-free donation is PLN 7,276, and for group III it is PLN 4,902.
How do I make a donation?
You received a donation from your brother in the amount of 15 thousand. zł? How much time did the legislator provide for making a donation? You have 6 months from the date of acquisition of property rights. To inform the Tax Office, use the SD-Z2 form.
Exemption from the obligation to submit a donation from the family occurs when:
- the amount of the donation does not exceed PLN 9,637 in tax group 1;
- you acquired property rights under a contract drawn up in the form of a notarial deed.
The minimum amount of tax on gifts and inheritance is 3%, if the amount transferred by the donor does not exceed PLN 10,278. The borrower is responsible for paying tribute.
By avoiding the obligation to submit a donation to the Tax Office, you will be exposed to much higher costs. Sanctions tax is much higher. If during the screening it turned out that you acquired property rights, which you had to inform the Tax Office, but you did not do it, you would have to pay over PLN 1072 (with a donation from your brother in the amount of PLN 15 thousand). As you can see, it doesn’t pay to operate behind the tax authorities. It is very important not to make a cash donation. The money should be transferred via bank transfer. The office may demand that such a transaction be documented, and the lack of proof of transfer may also result in a higher tax.
If you have passed the statutory six months provided for submitting the SD-Z2 form, you unfortunately lose your right to tax exemption. In this situation, testify SD-3 and settle the liability to the Office. The amount of tax on monetary donations can be 3, 5 or 7%, which is closely related to the amount that the donor has given you.
Do I need a contract to make a donation?
The contract for the donation of money should, as a rule, take the form of a notarial deed. When using the services of a notary, you do not have to worry about tax, because it is the official’s responsibility to pay the fee. Of course, the amount will be added to the bill issued by the notary public. However, Polish law also respects oral agreements. If the donor did not meet the formal requirements, but nevertheless gave you money, then when the promise is made, the donation is considered legally valid. Translating it into a simpler language: if you got 5,000 from your grandparents PLN, but you have not signed any contract, anyway, you are dealing with a donation when funds are credited to your account.
When to choose payday loans instead of a loan from your immediate family?
Although a loan from a close family is still a very popular form of obtaining money, most Poles are inclined to financial institutions. Why do countrymen use the services of loan companies rather than from private loan institutions? First, the financial liquidity of the family is very important. Sometimes parents simply can’t afford to donate more money. Secondly, when choosing a payday loan or non-bank loan in installments, you also choose independence.
Young Poles see a donation from their parents as a kind of financial umbilical cord that restricts their movements. Surprisingly, cooperation with a loan company often involves less formalities than a family loan. Taking a payday loan online, usually you only need to provide basic information, such as your PESEL number, earnings or address. Verification of creditworthiness takes several minutes and you do not have to worry about any forms at the Tax Office or calculate the amount of tax.
Instantaneous pay is a good alternative to a family loan when you care about discretion. Exposing financial problems to even your immediate family is often embarrassing, you will avoid this by choosing a loan online, then you will not have to explain your situation to anyone, and the data stored by the company will be protected from bystanders. Being able to receive family support is a valuable thing. Remember, however, that you have a much broader spectrum of financial tools at your disposal.