Coronavirus: tax deduction for donations to support the fight against COVID-19 

Covid-19 relief - donations and amounts of deductions

The new tax preference provides for the possibility to reduce the tax base by the value of the monetary or in-kind donation made for the purposes of preventing and combating the SARS-CoV-2 epidemic.

Monetary donations

According to the new provisions introduced under the anti-crisis shield, entities conducting business activities may make monetary donations for the benefit of the following entities:

• entities providing medical services, entered in a list prepared by the locally competent director of the voivodeship branch of the National Health Fund in consultation with the voivode,
• the Material Reserves Agency for the purpose of carrying out statutory tasks,
• Central Database of Sanitary and Anti-epidemic Reserves for the purpose of carrying out statutory activities.

Donations made between 1 January 2020 and 30 September 2020 shall be deducted.

The amounts of deductions are as follows for donations made:

• by 30 April 2020 - a deduction is made for an amount equivalent to 200% of the value of the donation,
• from 1 May to 31 May 2020 - a deduction is made for an amount corresponding to 150% of the value of the donation,
• 1 June 2020 to 30 September 2020 - a deduction is made for the amount corresponding to the value of the donation.

In order to obtain the highest possible relief, it is therefore necessary to make the donation as soon as possible and, what is important, monetary donations are not subject to VAT.

Moreover, the donation relief may be deducted at the stage of making an advance payment for tax on income registered during the tax year.

ATTENTION! The value of the donation cannot be deducted when paying the lump-sum income tax in the form of a tax card, lump-sum income tax on capital funds, tax on the sale of the property.

The condition for the deduction is to document the donation made in the form of a proof of transfer to the beneficiary's bank account.

In-kind donation

In-kind donations made for the purposes of combating, and preventing the spread of COVID-19 are subject to the same rules as for making monetary donations. This means that deductions for donations in kind under income taxes remain the same as for monetary donations and the deduction period for donations covered by the relief (1 January - 30 September 2020) is the same.

The only difference is that in the case of in-kind donations made to the entities provided for in the regulations, i.e. the entity registered in the list of entities conducting medical activities, the Agency of Material Reserves and the Central Database of Sanitary and Anti-epidemic Reserves, VAT at the 0% rate may be applied from 1 February 2020 to 31 August 2020 for the following items and goods:

• laboratory glass and laboratory equipment,
• medicinal products and active substances (Act of 6 September 2001 - Pharmaceutical Law),
• medical products and in vitro diagnostic medical products (Act of 20 May 2010 on medical products or Regulation (EU) 2017/745 of the European Parliament and the Council of 5 April 2017 on medical products),
• specialist diagnostic tests to analyse and detect pathogenic agents in the human body, water, soil and air,
• disinfectants (Regulation (EU) No 528/2012 of the European Parliament and of the Council of 22 May 2012),
• masks, covers and protective glasses for the face, goggles, safety goggles, shoe protectors, caps, overalls and gloves.

The condition for the application of the reduced VAT rate is the conclusion of a written agreement of donation between the donor and the recipient, which implies that the goods supplied will be used for the purposes of combating and preventing the spread of COVID-19.

In the case of in-kind donations made between 1 February 2020 and 25 March 2020, i.e. the date of entry into force of the Ordinance of the Minister of Finance on the reduction of VAT rates for certain goods and services in the case of free of charge releases of certain goods, the provisions of this Ordinance provide for the possibility to apply the reduced rates during this period also in the case where no written agreement of donation has been concluded beforehand - the condition in this case is the confirmation of making the in-kind donation in writing.

The written confirmation should include at least the data identifying the donor and the recipient, the value of the donation and the recipient's declaration of the acceptance of the donation.