According to art. 7 paragraph 1 point 4 of the Act on PCC borrower is obliged to pay tax in the amount of 2% of the tax base, which is the amount or value of the loan. However, there are situations in which, despite receiving a loan, we will not have to pay tax. We explain when the loan is released from PCC
When do you have to pay tax on civil law transactions?
The loan agreement is subject to a tax on civil law transactions. Usually it amounts to 2% of the tax base and charges the borrower. The tax base is in this case the amount or value of the loan granted. The tax obligation results from art. 1 point 1 point 1 lit. b of the Act of 9 September 2000 on tax on civil law transactions.
The PCC tax can also be 20%. This will be the case if we fail to comply with our obligation to pay tax on civil law transactions. This tax also applies to loans for items marked only to the species.
Taxes are also subject to changes in the said agreements, as long as they raise the PCC tax base. This also applies to those having identical legal consequences of court decisions and settlements. The tax obligation arises at the time of the civil law action and is on the borrower’s account. However, the Act contains special provisions that remove or modify this obligation.
What is taxable?
In the light of art. 1 point 4 of the PCC Act, taxation concerns civil law activities whose subject is:
1. Items located on the territory of the Republic of Poland or property rights carried out on the territory of the Republic of Poland.
2. Items located abroad or property rights exercised abroad when the buyer is domiciled or registered in the territory of the Republic of Poland and the civil-law act was carried out on the territory of the Republic of Poland
However, PCCs excluded from taxation include activities subject to VAT or exempted from it under the relevant provisions.
When is the loan released from PCC? Basic information
According to art. 9 point 10 lit. b of the Act on PCC, loans from the closest family are exempt from tax on civil law transactions.
The legislator, by the “closest family”, understands the spouse, the descendants (children, grandchildren, great-grandchildren), preliminary (parents, grandparents, great-grandparents), stepson, stepfather, stepmother and siblings. In order to benefit from the PCC tax exemption, we must submit an appropriate application within 14 days from the date of receiving the loan. This is a declaration on the tax on civil law transactions on the PCC-3 form. If we are entitled to a full exemption from tax, in item 31 of the mentioned form, we enter the amount of the loan granted. However, at the amount of the calculated tax (item 33), enter zero. You should also attach documentation confirming that you have received a loan. It can be a printout from a bank account or e-mail transfer. If we meet these conditions, we will be exempt from paying the PCC tax.
It is worth knowing that if the loan we received did not exceed $ 9,637 within 5 calendar years, it is exempt from tax immediately.
Other types of non-taxable loans
The PCC tax is not burdened with loans in the following cases:
- Maintenance, care, guardianship and adoption.
- Social insurance, health insurance, social welfare, reliefs specified in special regulations for non-professional soldiers and persons performing substitute service and their families, as well as rights for disabled persons and persons covered by provisions with special rights for veterans.
- Election of the President of the Republic of Poland, election to the Sejm, Senate and local self-government bodies and referendum.
- Universal defense duty.
- Employment, social benefits and pay for work.
- Science, education and out-of-school education and health.
- Subject to the regulations on real estate management or toll motorways.
- Subject to the provisions on specific rules for the preparation and implementation of investments in the area of national roads.
- Subject to the provisions on special rules for the reconstruction, renovation and demolition of buildings destroyed or damaged as a result of the action of the element.
PCC tax and loans from private persons
In addition to loans from the immediate family from PCC tax can also be exempt:
1. Loans granted by entities other than those belonging to the first tax group. In the case of a loan from one person, its amount may not exceed $ 5,000 within 3 calendar years. With many entities, the amount of support granted may not exceed $ 25,000 within three calendar years.
2. Loans granted by a shareholder to a capital company.
3. Loans from credit unions or company funds, employee relief and loan funds, savings and credit unions, trade union funds, military collegial savings and loan funds, the company social benefits fund.
The exemption from PCC tax also applies to loans granted by business entities whose activity is related to granting loans or credits that are not located in Poland.
Who is reporting a loan agreement to the tax office?
The obligation to submit a loan agreement to the competent tax office rests with the borrower. He is also obliged to independently calculate the amount of tax due and pay it. The existence of this obligation does not require providing the payer with any decision by the tax authority. We have 14 days to comply with this obligation, starting from the day when the tax liability arose. An exception to this situation is the one in which the tax is collected by the payer. Remember, however, that the fact that this obligation rests with the borrower does not mean that the parties can not make other arrangements. However, the taxpayer is only the borrower and he will bear any sanctions related to failure to do so.
When is the loan released from PCC? Summary
The cost we incur when taking a loan can be not only interest or commission. Sometimes the fact of receiving it will involve the necessity to pay 2% of PCC tax. Therefore, the conclusion of a loan agreement first requires determining whether it is subject to PCC or VAT. You should also check whether the loan is exempt from PCC tax. If it turns out that the loan taken by us is subject to tax exemption, let us make sure that we do not have to fulfill any additional conditions to benefit from this exemption.
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