Transfers in unmarried couples: The tax authorities may demand a substantial sum.
Living together, even without marriage, requires shared financial support – paying rent or mortgage, bills, and groceries. This seems obvious. However, cohabiting couples are considered strangers in the eyes of the law. This means that by transferring large sums of money, cohabitants risk being sued by the tax authorities for the tax due.
If people live in an informal relationship and one partner regularly or one-off transfers larger amounts to the other's account, the tax authorities may consider such transfers a gift . Non-family members face significantly lower tax-free allowances and higher tax rates. Failure to report a gift may result in the obligation to pay tax and interest .
What does the law say about transfers between partners without marriage?The Act of 28 July 1983 on Inheritance and Gift Tax leaves no doubt regarding transfers between partners without marriage. Article 9 provides for three tax-free amounts:
- PLN 36,120 , if the buyer is a person from the first group (spouses, descendants and ascendants, stepson, son-in-law and daughter-in-law, siblings, stepfather)
- PLN 27,090 , if the buyer is a person classified to the second tax group (descendants of siblings, siblings of parents, descendants and spouses of stepchildren, spouses of siblings, siblings of spouses)
- PLN 5,733 , if the purchaser is a person classified to the third tax group (other purchasers)
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Cohabiting partners fall into the third group. For them, the tax-free allowance is the lowest. Importantly, according to the Act, acquisitions are cumulative over five years. This can result in several seemingly small transfers triggering a tax liability, as the limit of PLN 5,733 is exceeded.
How much can the tax office take from unmarried couples?"The tax is calculated on the excess of the tax base over the tax-free amount" - as stated in Article 15 of the Act.
What does this mean? For unmarried couples, the third tax bracket, rates start at 12% for the excess amount above PLN 5,733, up to PLN 10,278.
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For "donations" between PLN 10,278 and PLN 20,556, you must pay PLN 1,233.40 to the Tax Office and an additional 16% on the amount above PLN 10,278. Those who make transfers exceeding PLN 20,556 will pay a whopping PLN 2,877.90 and 20% on the amount above PLN 20,556.
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