Polish Court Rules Tax Office Cannot Tax Direct Property Donation to Son

Poland's Supreme Administrative Court has affirmed a taxpayer-friendly stance, ruling that tax authorities cannot levy taxes on a property donation gifted to a son if the funds are transferred directly to the seller. This decision provides significant relief for individuals engaging in property transactions involving family gifts.

The case involved a taxpayer who received 200,000 Polish zloty from his parents as a gift to jointly purchase a secondary market property. However, the funds were not deposited into the son's account but were paid directly by the parents to the property sellers. The taxpayer sought confirmation that this arrangement qualified for an unlimited tax exemption for close family members.

Tax authorities initially denied the exemption, arguing that the gift was paid to a third party and not properly documented. They suggested the funds should have been transferred to a dedicated sub-account for the recipient. The taxpayer contested this, and both the Provincial Administrative Court in Lublin and subsequently the Supreme Administrative Court sided with him.

The Supreme Administrative Court emphasized that its prior rulings permit such direct payments to third parties, like property developers, to qualify for the tax exemption. This precedent clarifies that the method of payment, when clearly documented as a gift for a specific purpose, does not preclude the tax-free status for close family members.