Flood relief donation costs vs. minimum income tax. New provisions also in force in 2025

On 5 October, the Act of 1 October 2024 amending the Act on special solutions related to flood recovery and certain other acts [Amendment Act] entered into force.

Donations for flood relief with no impact on minimum income tax

Newly introduced article 1(25) of the Amendment Act provides that for the purposes of calculating the loss and the share of income in revenue (the profitability ratio) for the purposes of minimum income tax (article 24ca(1) of the Corporate Income Tax Act of 15 February 1992 [CIT Act]), the cost of production or the purchase price of items deductible for donations and offerings of any kind made for flood relief shall not be taken into account.

As a reminder, pursuant to Article 24ca (1) of the CIT Act, tax on companies that are taxpayers with Polish tax residency and tax capital groups that in the tax year:

• incurred a loss from a source of revenue other than from capital gains, or
• achieved a share of income from a source of revenue other than capital gains, in income from that source, of no more than 2%,

– is 10% of the tax base (minimum income tax).

Pursuant to the amendment, when calculating the aforementioned losses and income level, deductible expenses relating to the production or purchase price of items from donations and offerings of any kind, which were provided by a given taxpayer in support of flood relief, might not be considered.

What does it mean in practice?

In practice, this means that the costs indicated will not reduce the tax results determined in accordance with the minimum CIT regulations of entities that have decided or will decide to support flood victims through the donation of goods or other resources. This is particularly essential for taxpayers with a high probability of meeting the prerequisites for payment of this tax for 2024.

This provision applies until the end of the calendar year following the year in which the flood occurred, i.e. until the end of 2025.