Gifts of little value in the context of income tax


Good contacts with people are an extremely important issue, which must not be forgotten in business either. Taking care of this aspect is associated with acquiring a group of reliable and loyal contractors. The solution that allows you to establish and deepen the relationship with the customer are small gifts, gadgets, freebies attached to the products sold on a daily basis. Entrepreneurs who accept small-value gifts should bear in mind that these gifts may constitute taxable income. Let's see when this happens.

Gifts of little value as income

According to the PIT Act, the taxpayer's income includes not only cash benefits. According to Art. 11 sec. 1 of the PIT Act (Article 12 (1) (2) of the Corporate Income Tax Act, respectively), they also include benefits received or left at the disposal of the taxpayer, received in kind or other free benefits.

Gifts are exempt from income tax

Despite the general necessity to tax gifts with income tax, there are situations that allow you to avoid taxation. The exceptions are the so-called gifts of low value, but only when they are given to natural persons who are not in an employment or civil law relationship with the giver.

According to the regulations, the gift cannot be more than PLN 200. It should be noted that this limit is different for income tax and VAT - in the case of the latter, the small value should not exceed PLN 100.

The second condition that entitles the recipient to be exempt from income tax is the lack of a lavish, representative nature of the received gift. It should be aimed at advertising the gifting company. However, it is burdensome that no regulations separate the concepts of advertising and representation in detail. That is why you often hear the opinion that it is best to put your logo, company name, etc. on the gift for absolute certainty. This greatly increases the likelihood of the gift being considered for advertising purposes.

At this point, it is also worth paying attention to the gifts that the employer gives to his subordinates. In such a situation, the limit of PLN 200 does not apply to the income tax exemption. Gifts for an employee will not be considered taxable income only if it is financed from the Company Social Benefits Fund or if it is entrusted property or office supplies.

When will we pay income tax for the gifts?

Any gifts that have been given by the entrepreneur to a natural person running a business will be taxed. The same applies to the transfer of freebies if the gift goes to a subordinate, with a few exceptions mentioned in the earlier sections of this article. In both cases, it is impossible to apply the exemption for gifts of small value up to the amount of PLN 200 (gross).

Another important question is who is the right party to pay the tax? The answer is not clear cut. If the gift has been transferred to another entrepreneur, then the recipient should settle accounts with the tax authorities. In such a case, the giver is obliged to fulfill the information obligation - the PIT-8AR information is used for this.

If gifts are given to employees, their value should be taxed and charged. Moreover, the gift should be shown in the PIT-11 declaration.

If the recipient is a natural person who does not run a business, the donor should draw up a PIT-8C declaration and submit it to the tax office and to the recipient.

In summary, low-value gifts, while nice and friendly in nature, can be an unpleasant surprise. That is why it is worth knowing the rules of taxing such revenues with income tax and the exemptions that can be applied in their case.