Table of Contents:
1. When is a donation from close family members exempt from tax?
2. How to transfer a donation to qualify for a tax exemption?
Cash donations given “hand-to-hand,” even within the closest family, are not exempt from inheritance and donation tax. However, there is a way to transfer money that avoids taxation—and it does not require a bank transfer from one account to another.
When is a donation from close family members exempt from tax?
The issue of tax exemptions for close family members (the so-called zero group) is governed by Article 4a of the Inheritance and Donation Tax Act. According to this provision, donations to spouses, descendants (children, grandchildren), ascendants (parents, grandparents), siblings, and stepchildren are exempt from inheritance and donation tax.
If the value of the donation does not exceed the exemption threshold of PLN 36,120, there is no need to report it to the tax office. (When calculating the limit, the value of assets received from the same person during the current year and the previous five years is combined.)
For donations exceeding this limit, the SD-Z2 form must be submitted to the tax office (unless the donation is made through a notarial deed). This must be done within six months. For monetary donations, an additional condition applies: if the amount exceeds PLN 36,120, it must be documented by proof of transfer to the recipient’s account or through a postal transfer.
How to transfer a donation to qualify for a tax exemption?
Unfortunately, the Supreme Administrative Court (NSA) ruled against taxpayers regarding the form of monetary donations within close family. According to the NSA, cash donations handed directly to a family member do not qualify for a tax exemption (ruling by 7 judges, case no. III FPS 3/22, dated March 20, 2023).
This means that parents or grandparents wishing to transfer a monetary donation to their children or grandchildren must do so via a bank transfer or postal transfer. Only these methods ensure exemption from inheritance and donation tax.
It turns out, however, that cash donations can be exempt if the money is deposited at a bank branch into the recipient’s account. The regulations do not require the donation to be made via a bank transfer, only that it is documented with proof of deposit into the recipient’s account. This condition is fulfilled if the donor personally deposits the money at a bank. A deposit slip shows both the donor and recipient, satisfying the documentation requirement.
This favorable interpretation is supported by an individual tax ruling dated October 28, 2024, no. 0111-KDIB2-2.4015.158.2024.1.KK.
