Higher exemptions in inheritance and donation tax and other changes applicable to natural persons
The Slim VAT 3, an act of law recently signed by the President, introduces certain changes to inheritance and donation tax, PIT and flat-rate tax.
- Higher limits of tax exemption in inheritance and donation tax
Starting from 1 July 2023, the limits for tax exemptions applicable to each taxable group were increased.
1) PLN 36,120 – if the acquirer falls within the first tax group (this group includes spouses, descendants, ascendants, stepchildren, sons-in-law, daughters-in-law, siblings, stepfathers, stepmothers, parents-in-law);
2) PLN 27,090 – if the acquirer falls within the second tax group (this group includes siblings’ descendants, parents’ siblings, ascendants and spouses of stepchildren, siblings’ spouses and spouses’ siblings, spouses of spouses’ siblings, spouses of other descendants);
3) PLN 5,733 – if the acquirer falls within the third tax group (this group includes other acquirers).
Importantly, the provisions governing the tax exemptions for the so-called 0 group, i.e. the spouse, descendants, ascendants, stepchildren, siblings, stepfather and stepmother, have not changed. If the donee or heir falls within this group, they can – subject to certain conditions – benefit from the exemption irrespective of the value of the donation/inheritance.
- Higher limit of income for flat rate tax on private lease
Spouses who rent private property (i.e. not as part of their business activity) will pay a higher flat-rate tax (12.5%) only when the income from such lease exceeds PLN 200,000. Previously this limit was PLN 100,000.
- Accounting for income from capital funds
Starting from 2024, those who invest in capital funds will account for their income from such investments in the same way as for income from securities. Thus, funds will no longer calculate and pay the tax as remitters, but the calculation and payment will be done by taxpayers. This change does not apply to situations where the fund pays a dividend or other benefits without purchasing or redeeming units: in this case the fund will still act as the remitter.
With the new regulations, it will be possible to deduct a loss on capital funds from income from securities or vice versa. On the other hand, income from funds will be included in the solidarity tax, so potentially it will be subject to a higher tax than to date.
- Income from bonds
A new definition of income from bond repurchase by the issuer will take effect next year. The income will consist of the difference between the amount obtained from bond buyback along with payments received for the last period before the buyback and expenses incurred to take up or purchase said bonds on the primary and secondary market by a taxpayer or testator, provided that interest paid by the taxpayer or testator upon taking up or purchasing the bonds is not expense insofar as such interest is not taxable or is exempt from tax.
- Reliefs for parents of disabled children
The limit of income for deduction of child relief will not apply to parents who bring up disabled children, effective for tax returns for 2023.
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