Aid to Ukraine - preferential tax treatment

Aid to Ukraine - preferential tax treatment 

Aid to Ukraine - preferential tax treatment
The Ministry of Finance has announced the introduction of preferential tax treatment for those providing aid to people affected by the events in Ukraine and recipients of such aid. Reliefs will also be introduced for companies, and zero VAT on donations to refugees is now in force. 

Donations to non-governmental organisations (NGOs)

Currently, both companies and individuals are able to deduct donations (both financial and in-kind) to non-governmental organisations from their tax base.

The value of the donation that can be deducted from the tax is:

  • For companies (CIT) – up to 10% of income
  • For individuals (PIT) - up to 6% of income

To take advantage of the deduction, it is necessary to document the donation, e.g. in the form of a transfer receipt.

Including the donation in company costs

The Ministry of Finance is currently working on extending the available reliefs . Among the new solutions, it will be possible to treat expenses for the manufacture or purchase of goods that are the subject of a donation aimed at counteracting the effects of the war in Ukraine as tax-deductible costs (PIT and CIT). This preferential tax treatment is planned to apply to donations between 24 February and 31 December 2022, provided they are made to:

  • non-governmental organisations (including those from Ukraine),
  • local government units,
  • Government Strategic Reserve Agency,
  • entities providing medical and emergency rescue services on the territory of Poland and Ukraine.

This relief will therefore not cover aid provided directly to people in need, as the participation of the above-mentioned entities will be necessary.

Zero VAT on donations to refugees

From 5 March to 30 June 2022 there is a Regulation of the Minister of Finance in force concerning the zero VAT rate for free supplies of goods and services made to:

  • the Strategic Reserves Agency,
  • medical entities,
  • territorial self-government units - entities acting as coordinators and intermediaries for the aid provided to refugees.

The conditions to apply 0 percent VAT are:

  • an agreement (in writing) between the taxpayer and one of the abovementioned entities,
  • a donation made to those affected by the war in Ukraine.

Zero VAT is for services made after 24 February 2022. For donations made between 24 February and 4 March 2022, i.e. before the Regulation comes into force, written confirmation of the transfer of goods or provision of services is required.

Relief for citizens of Ukraine

Further reliefs will also be added to those currently applicable  for people from Ukraine who came to Poland because of Russia's invasion of Ukraine. The Ministry of Finance has announced the introduction of, among others, the following solutions:

  • Exemption from inheritance and donation tax for Ukrainian citizens between 24 February and 31 December 2022.
  • Exemption from income tax (PIT) on benefits to Ukrainian citizens from ordinary individuals and companies, such as:
    • Providing accommodation
    • Providing food
    • Funding of education
    • Financing medical treatment

Further proposals for tax  relief related to the current situation in Ukraine are to be prepared in the near future.

Tax advisory

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Agata Nie┼╝ychowska
Agata Nie┼╝ychowska
Tax Director