Do you have cash at home? The IRS can impose 75% tax. Check when

More and more Poles, in the face of economical uncertainty and increasing concerns about privacy, decide to store savings in cash. Keeping money outside the banking strategy gives you a sense of control and independence. Although this is full legal, having crucial sums at home can attract attention not only to thieves, but above all to the taxation office. The absence of adequate papers to confirm the origin of the measures may consequence in a financial disaster. The Fiscus has a powerful tool – sanctioned taxation rate of 75% on undisclosed income. It is crucial to realize where officials can knock on our door and request clarification. The ignorance of the rules is not a defense, and the consequences can be highly severe, especially erstwhile we make larger purchases or receive money from our family.

Is it legal to keep cash at home? We clarify the rules

Let's start with the basics: having cash at home, regardless of the amount, is not prohibited in Poland. Each citizen has the full right to have his or her legally earned and taxed money in any way – besides by storing it in a proverbial sock. The problem is not just in the fact of having physical banknotes, but in the work to prove their legal origin in case of checks.

In Polish law there is no authoritative cash limit that can be kept at home without having to study this fact. This means that you can theoretically store any amount. In practice, however, any amount which appears to be disproportionately large in relation to the officially declared gross may be of interest to the tax. Officials may consider that already several tens of thousands of PLN in cash requires additional explanations, in peculiar if the individual afraid does not carry out a high-cash business or his or her earnings do not indicate this. Fiscus isn't after money, but for possible taxation evasion.

When can the fiscal ask about your savings? These situations are a red flag.

The taxation office is most frequently curious in cash in circumstantial foreseeable situations. It is then that the payer must be ready to prove where his money comes from. Otherwise, the procedure for gross from undisclosed sources is triggered. It is good to know that there is simply a regulation in specified proceedings reversed burden of proof – it is for the payer to show that the measures are legal.

Here are the most common scenarios that can trigger the taxation control:

• Purchase of costly assets for cash: The acquisition of a car, an apartment, a game of land or luxury goods and the payment of a cash transaction is an emergency signal for the office. The taxation office may carry out a alleged cross-check, checking that the taxable individual had documented income allowing specified expenditure.
• Tax investigation: In the course of a standard taxation return analysis (PIT), officials may announcement a crucial discrepancy between declared income and the standard of surviving or expenditure of the taxpayer.
• Report or criminal proceedings: Information about holding large, undocumented cash may come to the office as a consequence of a tip or be a side effect of another proceedings, e.g. criminal proceedings.

If the payer is incapable to supply reliable evidence specified as sales contracts, donations confirmation, inheritance papers or taxation returns, the office may impose a punishment taxation rate of 75% the amount of origin which has not been explained.

Cash donation? Watch out for the taxation trap.

A very common origin of more cash at home is donations from the closest family. Many Poles, however, do not realise the formalities that are crucial to avoid tax. In the case of donations in the alleged zero taxation group (marriage, children, parents, siblings) the full taxation exemption for inheritances and donations applies. However, there is 1 very crucial condition.

In order to be effective, the donation must stay submitted to the taxation office on the SD-Z2 form within 6 months from receiving it. Furthermore, if the amount of the donation exceeds the threshold of PLN 36 120 (limit valid from 1 July 2023 for donations from 1 individual in 5 years), the money must be transferred by bank transfer or postal transfer. Receiving a large sum in cash, even from their own parents, and failing to confirm the transfer may consequence in the failure of the right to exemption and the request to pay the taxation on general terms.

How to safely paper and store cash?

The basis for safety in relations with the taxation is solid documentation. Any larger sum of money that goes to our hands should have its paper or electronic confirmation. It is absolutely essential to store any purchase-sale contracts (e.g. car, real estate), notarial acts, papers confirming receipt of the inheritance or decently reported donation forms. It's the only effective defence shield against charges of undisclosed income.

A separate issue is the physical safety of the money stored. Keeping large amounts at home puts them at hazard of theft, fire, flooding or another destruction. Standard housing and home insurance policies have very low limits of liability for cash – frequently only a fewer 1000 zlotys. If you choose to save more savings, it is essential check the General Conditions of Insurance of your policy and consider buying extra protection or investing in a certified safe, which is frequently the condition of the insurer at higher amounts.