Poland Plans Overhaul of Inheritance and Gift Tax Law for Simplification

The Polish Ministry of Finance has unveiled plans to amend the Inheritance and Gift Tax Act, aiming to simplify procedures, cut administrative costs, and improve the system’s transparency. These proposed changes are outlined in the government’s list of legislative works.

One significant simplification targets inheritances and gifts from close family (Group I). The current obligation to obtain a certificate from the tax office confirming tax exemption will be abolished for situations involving the sale or encumbrance (like mortgaging via a notary) of assets acquired from these immediate relatives. This aims to ease property transactions within families.

Another key adjustment concerns the taxation of recurring, unpaid benefits, such as annuities. The government intends to simplify the valuation rules in response to a March 2025 Supreme Administrative Court resolution. This ruling established that the tax base should be calculated on each individual installment of the benefit as it is paid, rather than on the total estimated value for the entire duration, revising the previous approach.

Furthermore, the Ministry indicates that the thresholds for tax-free amounts and the tax scales themselves are also scheduled for revision. Currently, tax liability depends on the value received exceeding specific limits, which vary based on the recipient’s relationship to the donor or deceased (categorized into three tax groups: immediate family, extended family, and unrelated persons). For instance, gifts within Group I above PLN 36,120 currently require reporting for exemption. Cumulative limits over five years also apply.

The requirement for cash donations within the immediate family to be documented via bank transfer or postal order to qualify for tax exemption remains a crucial aspect of the existing regulations likely to be retained. Overall, the planned legislative changes signal a move towards a less bureaucratic and more straightforward inheritance and gift tax system in Poland.