An increasingly popular form of receipt of funds by people who carry out their business on the internet consists of so-called ‘donations’. These are voluntary and usually to some extent anonymous payments made to online creators. The problematic issue, for some time now, has turned out to be their taxation method. Therefore – rightfully so – individuals receiving ‘donations’ applied for tax rulings from the Director of National Fiscal Information (hereinafter: ‘Director of KIS’).
In many cases, online creators adopt the standpoint that such voluntary contributions are nothing more than donations. In fact, they are independent of the service of access to the content they post online. Those who consume the content may make their contributions before, during or after exposure to it, or not at all. Therefore, in the event of payment, there is no consideration (contrary to some of the contributions made by doctrine on this subject). At the same time, the applicants emphasised that the value of the ‘donations’ received from one user (recognisable by the nickname on the platform) would not exceed the tax-free amount for persons in the 3rd tax group for the tax on inheritance and donations. Thus, the Director of KIS agreed (until recently in all cases) that they should not be subject to tax on inheritance and donations (for example, in the tax ruling of 13 April 2023, mark: 0111-KDIB2-2.4015.34.2023.1.MM).
However, this may have been due to the fact that the applicants in these cases did not ask about the qualification of ‘donations’ as donations, but referred to them as donations as an element of the factual state. In such a situation, the Director of KIS was not interested in challenging such a qualification and providing an interpretation other than in accordance with the facts contained in the application. An important aspect of considering the payments received as donations is that they are not subject to income tax as long as they are subject to tax on inheritance and donations.
In one of the most recent tax rulings, the Director of KIS was asked to determine whether a ‘donation’ is, in fact, a donation (we informed you about this in our newsletter), and thus to make a tax-relevant legal classification of the event.
In a taxation ruling issued on 9 May 2024 marked 0111-KDIB2-2.4015. 34.2024.3.MM, the Director of KIS drew attention to what conditions must be met in order to constitute a donation. In particular, it is important to establish:
- whether the legal transaction is gratuitous,
- whether there is a donee and a donor,
- what was the nature of the funds transferred.
In doing so, the Director of KIS stated that since the persons making the ‘donations’ are anonymous, one of the parties to the agreement cannot be identified. Consequently, since there is no known donor, there cannot be a donation contract either, so the question of exemption from tax on inheritances and donations is groundless.
Thus, contrary to the earlier stance of online creators, ‘donations’ are not necessarily donations in the eyes of the tax authorities. Therefore, for the correct determination of the tax consequences of such cash flows, it is crucial to first establish their civil law qualification. For this is the basis for determining which taxes and possible exemptions apply.
At the same time, it is worth noting that tax rulings protect the entity to which they are issued only in situations consistent with the factual state. At the same time, it is worth noting that tax rulings protect the entity to which they are issued only in situations consistent with the factual state. This means that it is possible that, as a result of an audit, the authority finds that the ‘donations’ received were not donations (as declared in the factual state), but income. As a consequence thereof, the online creator would have to calculate and pay the outstanding income tax plus interest. However, a different approach is also possible – it all depends on the assessment of the facts in question.
As a consequence of this, the online creator would have to calculate and pay the outstanding income tax plus interest. It is therefore worth re-verifying, if possible, how the creator received payments. In this way, it may be possible to adjust the methods of operation so as to avoid possible unnecessary difficulties and surcharges. In addition, in each case it will be important to apply for an individual interpretation as to how the payments should be treated for tax purposes, in which Nexia Advicero specialists provide comprehensive support. Please feel free to contact us.