Donations made to counteract COVID-19 in the period from January 1 2020 to September 30 2020 may be deducted from the tax base determined in accordance with Art. 26 par. 1 or art. 30c of paragraph 1. 2 of the Personal Income Tax Act. The amount of the deduction depends on the trade of donation.
The amount of deduction depends on the date of transfer
In the case of donation made:
- Until 30th of April 2020 - a deduction is made for an amount corresponding to 200% of the value of the donation
- In May 2020 - an amount corresponding to 150% of the donation value is deductible, and
- From 1st of June 2020, to 30th of September 2020 - a deduction is made for the amount corresponding to the value of the donation.
Donation beneficiaries
The donation must be made:
- Entities performing medical activities entered into the list referred to in art. 7 of the COVID-19 Act;
- Material Reserves Agency for the purpose of performing statutory tasks;
- The Central Base of Sanitary and Anti-Epidemic Reserves for the purpose of performing statutory activities;
- Homes for mothers with underage children and pregnant women, night shelters, shelters for the homeless, including those with care services, support centers, family nursing homes and social assistance homes referred to in the Act of 12 March 2004 on social assistance.
Principles of donating and deducting donations
The deduction can be made in the annual declaration in PIT-36, PIT-36L, PIT-28, PIT-37 declarations. In order to take into account the donation, you must complete and attach the PIT/O attachment to the tax return. The taxpayer should have proof of payment to the account in the case of making a monetary donation or - in the case of a non-cash donation - proof of the donor’s identification data and the value of the data donation (e.g. a donation agreement) and the recipient’s declaration of its acceptance. It is important that the document indicates the purpose of the donation, i.e. that it was donated to counteract COVID-19. The lack of this information may be interpreted unfavorably for the taxpayer and deprive the right to deduct due to the fact that the donation is a deliberate donation. It is irrelevant whether the recipient’s actually used the donation for purposes related to the fights against COVID-19.
Such a donation may be deducted from income only if it has not decreased the income on which the lump sum is calculated from recorded income.
Multiple donations are allowed - each donation requires a separate proof of donation. Donation proofs do not have to be submitted together with the tax declaration - they should be delivered to the tax office only upon request.
Projected changes in regulations
It will probably still be possible to deduct preferential donations related to counteracting COVID-19. Until now, this was allowed by specific provisions relating to donations made until 30th of September 2020. The proposed regulations in this regard, which are currently the subject of parliamentary work, assume that the relief will apply to donations made in the period from the 1st of January 2020, by the end of the month in which the state of epidemic declared due to COVID-19 will be canceled.
And so in the case of a donation:
- From 1st October 2020 to the 31st of December 2020 - an amount corresponding to 200% of the donation value is to be deducted;
- From 1st January 2021 to 31st of March 2021 - an amount corresponding to 150% of the value of the donation is to be deducted;
- From 1st of April 2021, to the end of the month in which the state of the epidemic declared due to COVID - 19 is canceled - a deduction will be made for the amount corresponding to the value of the donation.
PwC Comment
If the proposed regulations enter into force in the form described above, persons who consider donating for purposes related to combating the effects of COVID-19 should pay attention to the period in which they decide to donate certain amounts / items to eligible entities. As a rule, if the donations are made later this year, they may significantly affect the possibility of reducing the basis for calculating tax liabilities.5
In practice, in the case of “ordinary donations” (e.g. transferred for the purposes of broadly understood public benefit activities) in persons paying taxes according to the 32% tax rate, each donation of PLN 100 gives the possibility of recovering PLN 32 in the form of a reduced tax liability. However, the same amount of donation given to the fight COVID-19 at the end of 2020 may allow you to recover as much as PLN 64.
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