Donation agreement
Donation agreement is one of the most common contracts concluded in everyday life. By entering into a donation contract, the donor undertakes to provide a gratuitous benefit to the recipient at the expense of his or her estate. Therefore, it is a unilaterally binding contract under a gratuitous title, i.e. there is no obligation of any equivalent benefit on the other party to the contract.
The object of the donation may be a specified sum of moneybut also movable and immovable property and fractions thereof, transferable property rights, an assemblage of things and future rights and things. Not every benefit made free of charge to another entity will be treated as a donation.
Obligations to provide gratuitous services regulated by other provisions of the Civil Code, such as rent-free lease, lending, interest-free loan, gratuitous commission and gratuitous safekeeping, do not constitute a donation.
The declaration containing the donor's will should be made in the form of a notarial deed, with the proviso that a contract concluded without this form becomes valid if the performance has already been rendered. In cases where regulations require a special form, the donation should be concluded in this form - e.g. in the case of disposals of real estate, rights on real estate or an enterprise.
The donation is taxable under the Inheritance and Gift Tax Act. The tax liability rests with the giftee, unless legislation exempts it. The exemption is determined by the degree of relationship between the donor and the recipient. In contrast, the tax is higher the further the relationship is. For this purpose, three tax groups are distinguished.
It includes all persons not included in any of the above groups, i.e. strangers and persons related or related in a further circle (cousins, stepfather's or stepmother's family).
The donation for those in group I, benefits from tax exemption.
However, the condition for obtaining it is the need to report the donation to the tax authorities on form SD-Z2, within six months from the date of conclusion of the contract or fulfilment of the promised performance (a contract concluded in the form of a notarial deed is notified to the tax office by a notary). The value of the donation previously obtained in this case is irrelevant, as the exemption is comprehensive.
Notwithstanding the above exemption, certain amounts of donations have been set for each tax group which do not have to be reported to the tax office, as they are always tax-free.
They amount to: PLN 9,637 for those in tax group I, PLN 7,276 for group II and PLN 4,902 for those in group III. This exemption can be used once within 5 years. However, when calculating the tax, the value of all donations received from the same person during that period is added up.
If they are cash donations, the funds must be transferred to the recipient's bank account or transferred by postal order. Any other way of making a cash donation will not justify its tax exemption.
It is possible to revoke a donation. This is possible when the recipient has committed gross ingratitude towards the donor. Ungratefulness is considered to be inappropriate and hurtful behaviour with an intensity of ill-will of a very high degree or such behaviour that violates commonly held social mores.
In addition, a donor may revoke a donation that has not yet been executed if the conclusion of the donation agreement has resulted in such a deterioration of the donor's financial condition that doubts have arisen as to the donor's ability to support himself or herself or to meet his or her maintenance obligations.
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