Is the gift a tax deductible cost for the giver (provider)?

The purchase of a gift will constitute a tax cost, provided that the expenditure is incurred in order to generate income or to maintain or secure a source of income. In practice, this means that gifts should bear a company logo, of low value, and their delivery should be massively for advertising purposes (i.e. promoting the brand or products of the company). In addition, when input VAT on the purchase of gifts is not deductible, it is a tax deductible cost. In contrast, elegant and valuable gifts given to selected contractors and gift baskets in which we place branded sweets and alcohols are used to build or maintain good relationships and create a favorable image of the company, are representative and do not charge tax costs.

Is the gift a taxable income for the recipient (beneficiary)?

Generally, giving gifts for advertising purposes results in a tax revenue for the recipient that increases the tax base.

EXCEPTION !! Gifts up to PLN 200,00 gross are exempt from tax, provided that they are not lavish, representative and are given to natural persons who do not run a business (e.g. a client, employee of our contractor or a person cooperating with him on the basis of a mandate contract).

WARNING !!  Exemption does not take place and every gift must be taxed if the recipient of the gift is:

• entrepreneur (a natural person conducting business activity),
• employee of the service provider or a person who does not run a business relationship with the service provider in a civil law relationship.*

* EXCEPTIONS !!

1. 1. A gift given to an employee is exempt from tax only if all three conditions are met:
      • the benefit is in kind or in cash,
      • is financed from the funds of the Company Social Benefits Fund or trade union funds,
      • the amount of the benefit does not exceed PLN 1.000,00 gross in a tax year.

Christmas vouchers and vouchers are not benefits in kind, therefore they must be settled by the employer, paying the advance to the employee's income tax.

1. 2. A gift given to an employee is also tax-exempt if it is part of a donation. The Act on inheritance and donations exempts from tax donations received from unrelated persons (from the third tax group) up to a total of PLN 4.902,00 over 5 years.

WARNING !! However, it should be borne in mind that donations do not constitute tax costs at the healthcare provider.

Who is required to pay tax on gifts?

provider:

• The right party to pay the tax is the service provider, who collects the tax on behalf of the recipient and includes the value of the gift in the PIT-11 declaration if a gift is given to an employee or a natural person who does not run a business who cooperates with the service provider on the basis of a mandate contract or a specific task.

beneficiary:

The competent party to pay the tax is the recipient when:

• we will give a gift to another entrepreneur for advertising purposes,
• we will give a gift with a value exceeding PLN 200,00 gross for advertising purposes to a natural person not conducting business activity.

On the other hand, the service provider (entity providing the gift) is obliged to fulfill the information obligation on the recipient's achievement of revenues from other sources by submitting the PIT-8AR or PIT-11 declaration, respectively, if the beneficiary / recipient is another entrepreneur or a natural person not conducting business activity.

WARNING !! PIT-11 replaced PIT-8C in the scope of providing information on revenues from other sources. PIT-8C reflects only information on revenues from cash capital.

Declarations should be submitted to the taxpayer and the tax office by the end of January of the following tax year.

Tax effects - VAT

Each transfer of goods or materials that were entitled to a deduction of input VAT and is related to the business activity of the taxpayer is subject to VAT upon issue. Only small value gifts are eligible for the exemption if:

• we keep a record of the gifts given, allowing for the identification of the persons to whom they were given - up to PLN 100,00 net in a given tax year for a given person
• we do not keep records of recipients - only gifts up to the unit price of PLN 20,00 net in a given tax year for a given person.

An alternative to gifts:

Company Christmas Eve among employees and contractors become an alternative to the gifts given. Expenses incurred for the organization of the holiday meeting can be included in tax costs when its main purpose is to discuss business matters, such as: presenting the objectives of cooperation with contractors for the next year or a summary of the ending financial year. If the purpose of the meeting is only to build a positive image of the company, spend time with business partners, then the organizer will not be able to include the expenses incurred as tax costs.