Anyone who has bought an apartment or a car or borrowed a larger amount from friends or family knows that in such a situation a certain tax must be paid. PCC – because we’re talking about it – is a fairly simple tribute in its structure, but it’s worth knowing more about it to avoid discomfort on the part of the tax office.

Income tax, value added tax, value added tax (CIT) – the Poles know these taxes well. Usually the layman has contact with the first two, but sometimes he will have to pay another one: the tax on civil law transactions (PCC). It is worth finding out who pays it and in what situations.

PCC – what is this tax?

The tax on civil law transactions is regulated in the law of September 9, 2000 on taxes on civil law transactions . In this statutory act you will find provisions on the subject of taxation, information on objective and subjective exemptions from paying this liability and tax assessment.

It should be noted right away that the PCC is a tax on contracts (see below), but it does not apply to activities, for example in matters of maintenance, when electing the President of the Republic of Poland, members of the Chamber of Deputies and the Senate, public duty of defense, employment, social benefits, education, etc. that.

It can also be said that it is “competitive” for VAT. If we buy an item and receive an invoice for it, we only pay tax on goods and services, whereas when we buy something from an individual under a contract, we will have to pay tax on civil law transactions.

Tax on civil law transactions – who pays it and why?

The catalog of civil law transactions – as the law calls it – is closed and includes only 9 items:

• Contract of sale and exchange of goods and property rights,
• loan agreement for money or premium items only for types,
• Donation agreement – in the part about assuming the obligations and debts of the donor (eg when we get a car loaded with a loan),
• life contract
• An agreement on the division of the inheritance and an agreement on the dissolution of the common property – in the part related to repayment and additional payments,
• create a mortgage,
• create a paid use (including improper use) and a paid easement,
• invalid deposit agreement,
• company agreement.

The law also states that the PCC is also payable upon a change in the above contracts, if it causes an increase in the tax base, and, according to a court decision or settlement, if it produces the same legal effects.

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The tax on civil law transactions covers items located on the territory of the Republic of Poland and property rights exercised in this area (for example: you buy a car located in Poland). The PCC fee must also be paid if the contract was concluded in Poland and the buyer lives/lives in the Republic of Poland (eg: you buy a car from Germany, but you conclude the contract in Poland).

Who pays PCC?

Every contract has two parties (for example, seller and buyer, lender and borrower, etc.) who have specific rights and obligations. For the respective tax, the PCC pays only one tax, which is shown in the table below:

It can be said that the PCC is usually paid by the party that benefits from it—the buyer, the borrower, the recipient, etc. The law also lists tax-exempt entities , including people with some degree of disability who purchase rehabilitation equipment, wheelchairs, etc. for their own use; public benefit organizations, provided that civil law activity is connected with their pro bono activity; local government units; treasury; government material reserves agency; Foreign countries and their representations and international organizations.

What is PCC Exempt?

An important issue worth knowing is also tax exemptions on civil law transactions. There are actually many exceptions, so let’s list the most important ones:

1. Selling foreign currencies.
2. Selling and transferring virtual currencies (cryptocurrencies).
3. Substitution of an apartment building, premises constituting a separate real estate, the right of cooperative ownership of real estate arising from the provisions of the Law on Cooperatives: the right to a house or one-family building in a small apartment house, if the parties are persons of the first tax group under the inheritance law.
4. Sale of movables worth less than 1000 PLN.
5. Selling bonds, treasury bills and NBP bills.
6. Sale of goods on commodity exchanges.
7. Loans:
   • Between persons of immediate family (spouse, children, grandchildren, great-grandchildren, parents, grandparents, stepson, stepdaughter, siblings, stepfather, stepmother) in excess of PLN 9,637, provided that a PCC-3 declaration and funds transferred to the account are notarized
   • between close and extended family members (immediate family + grandparents, son-in-law, stepmother, in-laws) up to PLN 9,637, calculated as the sum of loans from one person over 5 years;
   • between persons outside the family, if the loan amount does not exceed 1,000 PLN;
   • From credit unions or corporate trusts, labor unions, credit unions, and ZFŚS.
8. Selling equity that is financial instruments.

How much is the tax on civil law transactions?

Fortunately for us taxpayers, there are not many shipping cost rates, but depending on the subject matter of the contract, they will be different.

For real estate, movables, perpetual usufruct, ownership of a cooperative right to buildings or a cooperative right to a commercial building, the tax is 2% if we conclude a sale, an exchange, an annuity for life, a division of inheritance, or a joint cancellation. Ownership and donation . For other equity under the above contracts, the PCC is 1%.

In the case of a contract for the creation of a payable use and a paid easement , the tax is 1%, while for a loan agreement and an irregular deposit agreement – 0.5%.

There are two tax rates for civil law transactions when creating a mortgage. If the mortgage is created to secure current receivables, the PCC will be 0.1%, while for receivables of an unspecified amount, it will be PLN 19.

For the platform, the tax rate is the same – 0.5%.

How do you calculate the tax? PCC in practice

Deadlines are an important issue to consider with PCC. The tax obligation arises when a certain transaction is carried out under civil law, more precisely – a contract is concluded (it does not matter whether it was concluded or not). From that moment on, without a request, you must submit an appropriate declaration to the tax office, to which we will go a little later.

Calculating the tax itself is not difficult, but it is worth knowing which tax base to use, that is, how much tax is to be paid on the basis of it.

It is easy to see the appearance of market value when determining the tax base of the PCC. They are determined on the basis of market prices used in the turnover of objects of the same type and types, taking into account their location, condition and degree of wear, and in the turnover of property rights of the same type on the day of performing a particular activity. Debts and burdens on property/property law are not taken into consideration here. For example: when selling a 5-year-old car, the market value of the same car, with the same “age”, is determined from the place of residence of the seller.

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The market value may differ from the price specified in the contract! If the parties agree on a lower amount, the tax must be calculated on the actual market value, otherwise it will have to be clarified with the tax inspection body and even the missing tax must be supplemented with interest.

PCC-3 announcement

The tax form in which a tax return is filed on civil law transactions is PCC-3. It must be filed without an application, and the PCC fee itself must be paid within 14 days of the tax liability date. The form is submitted to the relevant tax office in the place of residence of the person who is obligated to pay the tax.

In a PCC-3 declaration, we provide our data, residence address, and make clear what the tax is and what the contract is. Then we enter the basis for calculating the tax and its value.

If two or more persons/entities are obligated to pay the tax (joint and multiple liability, for example in the case of an interchange agreement), only one of them submits PCC-3, and the rest is given in Appendix PCC-3A.

Useful information: If the contract is concluded in the form of a notary, we pay the tax to the notary. It is a taxpayer and submits an appropriate return to the tax office.

How to pay PCC-3 online?

Currently, tax on civil law transactions can be paid in two ways:

• In the cash desk of the tax office,
• By transfer to the indicated bank account.

The declaration itself can be submitted online with a qualified electronic signature or signed with “authorization data” (name, surname, PESEL number, date of birth and amount of income for the previous year two years)

Remember about PCC when entering into contracts

There are taxes in every country, but perhaps none as annoying as PCC. When we conclude a contract, say for sale, we and the other party win something, and here it turns out that additional tribute must be paid for it. There isn’t much you can do about it, but it’s important to be mindful of the tax liability itself. Ignoring this fact leads to unpleasant consequences that it is better not to feel on your skin.

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