Did you inherit an apartment or a car? Or maybe a larger sum of money or valuable items? You should remember that receiving an inheritance in Poland is connected with the obligation to pay tax on inheritance and gifts. However, this does not mean that every inheritor will have to pay it. There are numerous exceptions that can release you from the obligation to pay the tax. Below, we discuss situations in which the tax on inheritance and gifts will not have to be paid. You will also learn what steps should be taken to avoid negative consequences from the tax office.
Table of Contents
- Tax on inheritance and gifts – who has to pay it?
- Inheritance tax rules
- Inheritance tax in Poland – who can avoid it?
- Tax groups according to the Inheritance and Gift tax Act
- What is the amount of the tax allowance for each group?
- How to calculate the inheritance tax in Poland?
- Reporting inheritance to the tax office
- Who does not have to report the inheritance to the tax office?
- Which tax office is competent for reporting the tax on inheritance and gifts?
- Deadline for reporting the inheritance to the tax office
- Inheritance tax in Poland – tax exemption for the members of the closest family
Tax on inheritance and gifts – who has to pay it?
As a rule, the tax on inheritance or gifts charges either a testator or a beneficiary. Seemingly, there is no room for doubt here. In practice, however, many people wonder at what point they become inheritors. Does it happen at the time of the testator’s death, or only at the time of issuing (or perhaps becoming final) the decision confirming the acquisition of inheritance?
Inheritance tax rules
People who acquired something through inheritance have to pay inheritance tax. Nevertheless, the obligation to pay the tax does not arise at the moment of the testator’s death. Depending on circumstances, it becomes binding:
- at the moment of validation of the decision concerning the acquisition of inheritance, if the inheritance proceedings were pending before the court, or
- at the moment of registering the certificate of inheritance if the inheritors decided (and had such a possibility) to resolve the inheritance issues in the presence of a notary public.
Nonetheless, you have to keep in mind that if the acquisition of inheritance has not been reported for taxation, the tax obligation arises as soon as the taxpayer declares the fact of its acquisition before a tax authority or tax inspection authority.
Inheritance tax in Poland – who can avoid it?
Two factors determine whether a person has a chance to avoid paying the inheritance tax in Poland. The first one is the amount of the so-called inheritance tax allowance. The second one – concerns which inheritance tax group the inheritor or the beneficiary belongs to. Both of the factors are interrelated because the amount of the tax allowance varies depending on the specific tax group to which one belongs.
Tax groups according to the Inheritance and Gift tax Act
Belonging to particular groups depends on the degree of kinship between the person acquiring the inheritance and the testator. There are three tax groups:
|Tax Group||People belonging to the tax group|
|I||spouse (the present one), spouse during separation, descendants (son, daughter, grandchildren, great-grandchildren), ascendants (e.g. mother, father, grandparents), siblings, stepchild, stepfather, stepmother, parents-in-law, son-in-law, daughter-in-law|
|II||descendants of siblings (e.g. niece, nephew), siblings of parents (e.g. uncle, aunt), descendants and spouses of stepchildren, spouses of siblings (e.g. sister’s husband), siblings of spouses (e.g. wife’s brother – brother-in-law), spouses|
|III||all persons not included in the previous two groups, including those unrelated to the recipient.|
From the 27th of October 2020, the Inheritance and Gift tax Act also identifies as descendants people who stay or have stayed in a foster family, in a family orphanage, in an educational care facility or in a regional care and therapy centre referred to in the Act of 9 June 2011 on Family Support and Foster Custody System. Accordingly, people being a foster family, operating a family-type orphanage or working with children in an educational care facility or in a regional care and therapy centre are ascendants.
What is the amount of the tax allowance for each group?
Tax is not imposed on an inheritance or a gift with a value which does not exceed:
|The value||Tax group|
|9.637 PLN||if the acquirer is classified in the tax group I|
|7.276 PLN||if the acquirer is classified in the tax group II|
|4.902 PLN||if the acquirer is classified in the tax group III|
There is no obligation to pay the tax if the value of the inheritance or gifts does not exceed the tax-free amount. Only the acquisition of inheritance or gift exceeding the tax-free amount is subject to taxation.
How to calculate the inheritance tax in Poland?
If the value of the inheritance or gift exceeded the tax-free amount, the first step is to determine its value. The value of inherited or donated goods as well as belonging to a particular tax group will affect the amount of tax.
The tax is calculated based on the surplus of the tax base over the tax allowance. The method of its calculation is presented in the table below:
|Excess in PLN||The tax amounts to|
|From acquirers belonging to the tax group I|
|10 278||20 556||308.30 PLN and 5% of the excess over 10 278 PLN|
|20 556||822.20 PLN and 7% of the excess over 20 556 PLN|
|From acquirers belonging to the tax group II|
|10 278||20 556||719.50 PLN and 9% of the excess over 10 278 PLN|
|20 556||1 644.50 PLN and 12% of the excess over 20 556 PLN|
|From acquirers belonging to the tax group III|
|10 278||20 556||1 233.40 PLN and 16% of the excess over 10 278 PLN|
|20 556||2 877.90 PLN and 20% of the excess over 20 556 PLN|
Reporting inheritance to the tax office
Anyone who receives goods or intangibles for free should file an SD-3 form and pay tax on inheritance and gifts.
However, after acquiring an inheritance from a close member of a family, you should submit the declaration on an SD-Z2 form. This form, together with instructions on how to fill it, can be downloaded from the official website of the Ministry of Finance.
What happens if the taxpayer reports the fact of acquiring an inheritance or gift but not on the official form? According to the Minister of Finance, it is unacceptable for the tax authorities to deny the right to exemption when the taxpayer reports goods or property rights to the competent head of the Tax Office in a different way than the SD-Z2 form. Consequently, it is sufficient to report the inheritance in writing or in the record of acceptance.
Who does not have to report the inheritance to the tax office?
As a rule, anyone is exempt from the obligation to report an inheritance as long as he/she:
- acquired within 5 years from one person – as inheritance or otherwise –property of the total value not exceeding tax allowance,
- received an inheritance or a gift from the closest family and is subject to full tax exemption (in such case you should submit the SD-Z2 form).
In the event of receiving an inheritance from the immediate family, persons who have received property whose value does not exceed 9,637 PLN are exempt from the obligation to report the inheritance or gift to the tax office. At the same time, what is counted here is the value of the property received within 5 years from one person including all gifts and inheritance together.
Which tax office is competent for reporting the tax on inheritance and gifts?
The choice of the relevant tax office for submitting the form by the inheritor depends on what was included in the inheritance.
If the inheritance included real estate, the competent tax office is determined by its location. This rule also applies if the real estate is only one of the components of the inherited property. In other cases, you should submit the form should to the competent tax office based on the last place of permanent residence of the testator. If there was no such place – based on his or her last place of stay.
Deadline for reporting the inheritance to the tax office
You should submit the SD-3 form within one month from the moment when the tax obligation arose. In case of inheritance, the moment of tax obligation is counted from the date on which the decision on its acquisition becomes final or from the moment a notary registers the inheritance certificate.
On the other hand, when it comes to the SD-Z2 form submitted by members of the closest family, the deadline for submission amounts to 6 months from the moment the tax obligation arose.
Inheritance tax in Poland – tax exemption for the members of the closest family
When acquiring goods or property rights through inheritance by a spouse, descendants (children, grandchildren, great-grandchildren), ascendants (parents, grandparents), stepchildren, siblings, stepfather and stepmother, the inheritor may claim the total exemption from tax on inheritance and gifts. However, the exemption does not apply to inheritance when the testator’s death occurred before the 1st of January 2007.
The condition that must be met in order to use the exemption is to report the assets acquired as a result of inheritance to the tax office. As was mentioned before, the inheritors have 6 months for that from the moment of the court’s decision confirming the acquisition of the inheritance, or from the date of registration of the inheritance certificate by a notary public.
When you do not need to report the inheritance?
The reporting obligation does not apply to cases when the market value of the acquired inheritance does not exceed the tax-free amount. The principle of accumulation of the value of property acquired recently from the same person and in the period of 5 years preceding the acquisition of the inheritance should be taken into account here. Currently the value amounts to 9 637 PLN.
An exception may appear when the inheritor becomes aware of the inheritance after six months from the date on which the tax obligation arose. Then the exemption applies when the inheritor reports these goods or property rights to the head of the tax office within 6 months from the date of receiving information about coming into the inheritance. The only condition is to provide evidence that the inheritor learned about the inheritance later.
If the acquisition of property through inheritance is not reported within the indicated time frames, then it is subject to taxation on general principles.
Have you received an inheritance in Poland? Are you wondering what steps you should take to complete all formalities before the tax office? You are not sure if you are entitled to an exemption from the inheritance tax in Poland? You do not want to be exposed to negative consequences from the tax authority? We encourage you to contact our law firm. Our experts will help you with any formal issues regarding inheritance or gifts. Contact us!
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