Inheritance law

Changes to inheritance and donation tax

The Ministry of Finance has issued a draft regulation amending the rules for taxing the value of property and assets rights transferred to another person as a donation or inheritance. The key change will be an increase in the amounts subject to tax exemption.

Reasons for change

The Ministry of Finance will increase the values of things and property rights exempt from inheritance and donation tax, not subject to taxes, as well as the amount limits of the tax scales according to which the tax is calculated. However, this is not the result of a new action to reduce the tax burden on Poland, but the aftermath of rising prices and rampant inflation.

Tax groups

It is important to remember that what the tax rate will be, and whether it is necessary at all, depends on who is making the gift. The inheritance and donation tax law defines three tax groups:

  1. Tax group I: spouses, children, grandchildren, great-grandchildren, parents, grandparents, great-grandparents, stepchildren, son-in-law, daughter-in-law, siblings, stepfather, stepmother, in-laws;
  2. Tax group II: descendants of siblings, siblings of parents, descendants and spouses of stepchildren, spouses of siblings and siblings of spouses, spouses of siblings of spouses, spouses of other descendants;
  3. Tax group III: all other purchasers.

Depending on membership in a particular group, the amount of gift tax varies from 3 per cent to 20 per cent. Tax liability arises when the gift is transferred to the recipient or when the donor makes a declaration in the form of a notarial deed.

Proposed main changes

Under the proposed changes, the tax-free amount for inheritances and donations for groups 1, 2 and 3 is to change. After the changes, this amount is to increase:

  • From PLN 9,637 for group I to PLN 10,434,
  • From PLN 7,276 for group II to PLN 7,878,
  • From PLN 4,902 for group III to PLN 5,308.

The Minister of Finance has proposed that under the changes, in the case of a donation from one donor, the tax-free amount will be up to PLN 10,434, in the case of a donation from multiple donors up to PLN 20,868 in total.

The tax scales according to which inheritance and donation tax is calculated in each tax group will also change. The individual tax levels will be increased, as well as the amounts of excess on which the tax depends. The increased values will apply to situations in which the tax obligation arises from the day after publication.

According to the draft, the new regulation is to enter into force on the day following the day of publication. The Ministry assures that it will have a positive impact on the financial situation of taxpayers.

All information regarding the issues described above can be clarified by our lawyers specializing in Polish inheritance law.

Author team leader DKP Legal Marta Oleśkowska
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