1. Would a corporate legal entity in your jurisdiction be entitled to make a corporate income tax deduction in respect of donations made in favour of a public benefit organisation based in the EU outside of your jurisdiction (“EU PBO”)? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?
  2.  Would an individual in your jurisdiction be entitled to make an income tax deduction in respect of donations made in favour of an EU PBO? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?
  3.  Would an EU PBO be entitled to the same treatment as a national non-profit organisation (charity) in your jurisdiction based on the EU law principle of equal treatment of EU entities? Is an EU PBO obliged to pay gift tax in your jurisdiction if it receives a donation from a donor who is resident in that country?
  4.  Would it make sense to channel the donations from your jurisdiction to a third country-based charitable foundation (in e.g. the US or Ukraine) rather than to an EU PBO?

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A corporate legal entity may deduct expenses to an EU PBO or EEA PBO which carries out humanitarian aid activities and supports victims of armed conflict. Legal entities cannot deduct more than 10% of the tax base in a given tax year. The donor has to document confirmation of the transfer of donations to an EU PBO. There are also restrictions on the type of income against which a deduction may be made, e.g. no deduction may be made from income from unrealised profits, a foreign controlled entity or qualified intellectual property rights. Additionally, the donations may not qualify as a tax-deductible cost.

Taxpayers may also, on the basis of special regulations introduced in connection with the war in Ukraine, recognise in-kind donations as a tax-deductible cost if they are donated to Polish or Ukrainian charity organisations or to entities performing medical rescue in Poland and Ukraine (– it should  be further analysed whether an EU PBO may be qualified as such). The donation must be for the purpose of counteracting the effects of war in Ukraine. Monetary donations to Ukraine cannot be claimed as a tax-deductible cost. The taxpayer can use both benefits at the same time.

2. Would an individual in your jurisdiction be entitled to make an income tax deduction in respect of donations made in favour of an EU PBO? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?

Individuals are entitled to deduct donations transferred to a non-profit organisation from an EEA state. The necessary condition is that the donor has a statement from the organisation stating that, at the date of the donation, the organisation was a PBO and pursued statutory purposes, such as charitable aid and support for victims of armed conflicts. In addition, the taxpayer must possess confirmation of the donation. The individual may deduct a maximum of 6% of income. (These deductions, however, may not be applied to income taxed within some specific taxation methods, such as flat rate.) The donations may not be qualified as a tax-deductible cost.

As for legal entities, individuals may also recognise in-kind donations as a tax-deductible cost, subject to the conditions described in Q1.

3. Would an EU PBO be entitled to the same treatment as a national non-profit organisation (charity) in your jurisdiction based on the EU law principle of equal treatment of EU entities? Is an EU PBO obliged to pay gift tax in your jurisdiction if it receives a donation from a donor who is resident in that country?

As regards applicability of deductions described in Q1 and Q2 – yes, both corporate entities and individuals may apply the deduction to donations made to either Polish, similar EU or EEA charity organisations.

An EU PBO is not obliged to pay gift tax in Poland. Corporate entities, as a rule, pay corporate income tax on such donations if they are Polish tax residents. Therefore, foreign tax residents are not subject to corporate income tax in Poland.

4. Would it make sense to channel the donations from your jurisdiction to a third country-based charitable foundation (in e.g. the US or Ukraine) rather than to an EU PBO?

Such channelling might be problematic in respect of applicability of deductions as these entities are not EU- or EEA-based, but direct in-kind contributions to Ukrainian charity organisations may be subject to the special treatment described in Q1.