Tax aspects of helping Ukraine

Provisions were introduced to facilitate tax assistance to Ukraine, as well as to Ukrainian citizens coming to the territory of Poland.

0% rate in VAT

The Minister of Finance issued an ordinance of March 3, 2022 amending the ordinance on goods and services, for which the VAT rate is lowered, and on the conditions for applying the reduced rates.

The regulation states that the 0% VAT rate applies to all free supplies of goods and services offered for the purposes of helping victims of the consequences of hostilities in Ukraine. According to the content of the regulation, the 0% rate is valid until June 30, 2022. The regulation entered into force on March 5, 2022, however, it also applies to donations made between February 24, 2022 and March 4, 2022.

It is important that the donation is made to the entities listed in the regulation, i.e .:

• public benefit organizations,
• local government units,
• the Governmental Agency for Strategic Reserves,
• entities performing medical activities or activities in the field of medical rescue in the territory of the Republic of Poland or Ukraine.

In addition, the condition for applying the preferential rate is the conclusion of a written agreement between the taxpayer and the entity providing such assistance, which will indicate that the donated goods or services will be associated with assistance to the victims of the Russian aggression against Ukraine.

The law regulating assistance to Ukrainian citizens

The law regulating assistance to citizens of Ukraine in connection with an armed conflict in the territory of that state entered into force on March 12, 2022, with effect from February 24, 2022.

According to its regulations, the cost of obtaining revenues (CIT and PIT) are "production costs or the purchase price of goods or rights which are the subject of donations in the period from February 24, 2022 to December 31, 2022 for purposes related to counteracting the effects of actions. war on the territory of Ukraine.” These are donations to selected entities indicated in the regulations:

1. organizations referred to in art. 3 sec. 2 and 3 of the Act of April 24, 2003 on Public Benefit and Volunteer Work, or equivalent organizations specified in the provisions regulating public benefit activities in force in the territory of Ukraine,
2. local government units,
3. The Governmental Agency for Strategic Reserves,
4. entities performing medical activities or activities in the field of emergency medical services in the territory of the Republic of Poland or Ukraine

The condition is that the costs of producing or purchasing donations have not been previously recognized as tax deductible costs, including through depreciation write-offs.

The costs are also expenses for free benefits aimed at counteracting the effects of hostilities on the territory of Ukraine for the benefit of the entities mentioned above.

These donations and gratuitous benefits will not be treated as income by the entities mentioned above.

Originally, the draft act assumed that Ukrainian citizens arriving in Poland would not pay inheritance and donation tax on the aid received, regardless of the amount. However, this solution was withdrawn due to the risk of abuse.

In addition, Ukrainian citizens coming to Poland as a result of hostilities are also exempt from PIT from benefits received from individuals and companies, such as, for example, providing a flat. This preference also applies from February 24 to December 31, 2022.

Downloads

• PKF Alert - Tax aspects of helping Ukraine.pdf [PDF]