Donation to fight the coronavirus - settlement on the basis of PIT and VAT
The current virus situation is a difficult period for all people and also for the country's economy. Therefore, the government, as part of the Anti-Crisis Shield, introduces many concessions for entrepreneurs. In addition, the Siepomaga Foundation decided to organize a fundraiser to equip hospitals with the necessary medical equipment and protection measures. Any aid aimed at combating COVID-19, not only for the benefit of the indicated foundation, may be accounted for as a donation to fight the coronavirus, when it is donated by both a private person and a natural person running a business.
Donation to fight the coronavirus in PIT
Pursuant to Art. 23 sec. 1 point 11 of the PIT Act, operating costs do not include donations made to an organization that pursues public benefit objectives. Therefore, if the taxpayer wants to deduct a donation to fight the coronavirus, he cannot include it directly in tax deductible costs. These donations can reduce the tax base when calculating the advance payment for PIT or flat-rate tax or be deducted only in the annual tax return.
The tax base may be reduced by the value of the donation made only for the purposes of preventing and combating coronavirus infections for the benefit of:
entities performing medical activities entered into the list referred to in Art. 7 of the COVID-19 Act;
The Material Reserves Agency for the purpose of performing statutory tasks;
Central Base of Sanitary and Anti-Epidemic Reserves for the purpose of carrying out statutory activities.
Pursuant to Art. 52n paragraph. 1 of the Act amending the Act on special solutions related to the prevention, prevention and combating of COVID-19, other infectious diseases and emergencies caused by them, and certain other acts, the deduction is made of donations made from January 1, 2020 to September 30, 2020.
If the coronavirus donation is made:
until April 30, 2020 - the deduction is made in 200% of the donation value;
in May 2020 - a deduction is possible up to 150% of the donation value;
from June 1, 2020 to September 30, 2020 - the taxpayer deducts the amount corresponding to the value of the donation made.
Deduction of the donation in the PIT advance payment
To deduct a donation for the purposes set out above, it is enough to reduce the tax base by the deductible amount, i.e. 200%, 150% or 100% of the donation value, depending on the date of donation. Deduction of a donation in advance applies to both taxpayers paying income tax (tax scale, tax rate of 19%), as well as paying a lump sum on recorded income, with the exception of:
flat-rate tax on capital funds.
The donation is also not deducted in the case of paying the tax resulting from the sale of real estate against payment.
Deduction of a donation in the annual tax return
Taxpayers who decide not to deduct a donation related to the fight against the currently prevailing virus, have the option of including it in the annual tax return. The donation made should be listed in Appendix PIT-O in part B and in part D. In such a situation, it is necessary to clarify:
the full name and country of the recipient,
the amount transferred.
Similarly to the deduction of a donation in advance, this form of reduction of the tax base will not be used by taxpayers who settle with a tax card, pay a flat-rate tax on capital and tax on sale of real estate.
How to document a coronavirus donation?
Correct documentation is the basis for the deduction of a donation related to the fight against COVID-19. We are talking about proofs of payment to the account (in the case of a cash donation) or other proofs that allow for an unambiguous identification of the donor and the donation value transferred. In the case of donations other than cash, a statement of the recipient is required, indicating its receipt.
Donation to fight coronavirus and VAT
Art. 7 sec. 2 of the VAT Act indicates that the taxpayer is obliged to tax on the basis of VAT the free transfer of goods for which he was entitled to deduct input VAT (in whole or in part).Due to the fact that in the current situation all assistance in the fight against COVID-19 is necessary, the government decided to tax the donation at 0% VAT. We are talking here exactly about manufactured products, as well as purchased and donated, such as:
medical devices referred to in the Act of May 20, 2020 on medical devices,
medicinal products and active substances referred to in the Act of 6 September 2001 Pharmaceutical Law,
personal protective equipment, i.e. masks, face shields or protective glasses, coveralls, goggles, safety glasses, caps, shoe covers and gloves.
The right to apply the 0% rate is valid from February 1 to August 31, 2020, therefore, according to the assumptions, this right is to be applied retroactively, i.e. for donations made before the entry into force of the amending act. The condition for the application of the 0% VAT rate is the transfer of the above-mentioned products to entities such as:
Material Reserves Agency,
Central Base of Sanitary and Anti-epidemic Reserves,
infectious diseases hospitals - transformed into single-profile infectious diseases hospitals (so-called single-name hospitals).
The transferred goods must be used for the purposes of combating and preventing the spread of COVID-19 infections, preventing and combating the effects of the coronavirus.
Settlement of the donation to fight the coronavirus in wFirma.pl
Deduction of a donation in the course of the year
In order to reduce the PIT tax base, when calculating the PIT advance payment, use the tab: START »TAXES» INCOME TAX »CALCULATE TAX, select the option I RUN ANOTHER BUSINESS ACTIVITY. Then an additional field will be displayed: INCOME FROM OTHER ACTIVITIES, in which you should enter the value to be deducted in a negative value. In this way, the tax base will be reduced accordingly.
Deduction of a donation in the annual tax return
To prepare an annual tax return, go to the tab: START »TAXES» ANNUAL DECLARATIONS »ADD DECLARATION and select the appropriate form of the declaration.
The PIT / O annex can be added when generating the declaration or it can be specified on the last page of the annual declaration.
In this case, the amount of the donation should be entered in part B, in field 11 (for a taxpayer) or in field 12 (for a spouse).
However, in part D, you should define the full name of the recipient, their country and the value of the donation.
Donation to fight the coronavirus on the basis of VAT
In order to show the free handover of goods, go to the tab: RECORDS »SALES VAT REGISTER» ADD ENTRY, then in the ACCOUNTING DATE field, select the date of handing over the goods, and in the VAT RATE field:
0% - if there is a right to apply a zero VAT rate or
domestic VAT rate corresponding to the donated goods - in other cases.
However, in the field NET VALUE, the net value of the purchase of goods should be completed.