Poland: every taxpayer can redirect 1.5% of their total annual income tax to a public benefit organization

Tsvetelina Sokolova

Spasimir Domaradzki, PhD in Political Science (2007), is a researcher and lecturer at the Faculty of Political Science and International Relations at the University of Warsaw. This interview is part of journalist Tsvetelina Sokolova’s work on the Mediapool website to find out what the procedures and practices are in Poland and Romania regarding the redirection of a portion of income tax owed, which citizens of these countries can donate to NGOs. In Romania, such donations are used to support independent media registered as NGOs, and again, thanks to this practice, a critical mass of donors has led to the financing and construction of a children’s hospital built by the NGO Dăruiește Viață (Donate Life).

Is there a public funding mechanism for the NGO sector in Poland?

Indeed, there is also a mechanism in Poland that allows each taxpayer to donate 1.5% of their annual tax to a public benefit organization. This means that not all NGOs can receive such support. The status of a public benefit organization is granted by submitting an application to the court. Once granted this status, the NGO must be entered in the State Court Register. Along with the 1.5% percentage, NGOs with this status benefit from a number of tax and administrative exemptions, but also from a number of obligations and restrictions. For example, one of these is that they must have internal control bodies and cannot receive remuneration higher than the national average. In addition, these NGOs must submit an annual report on their activities. The mechanism was introduced in 2004 and until 2023 only 1% could be redirected, but from 2023 onwards it is 1.5%.

Does this scheme work?

I am not an expert in this field and can only describe the general framework. But the system is extremely effective. Last year, approximately 1.9 billion zlotys (approximately 900 million Bulgarian leva or 460 million euro) in taxes were redirected to the NGO sector, which shows how much money we are talking about. On the other hand, the mechanism is very effective. Not every NGO can apply. You have to apply for public benefit organisation status, and once you obtain this status, you can then advertise. As taxes have to be paid by the end of April, everywhere you turn you see posters urging NGOs to redirect 1.5% to them. This covers a very wide range of organizations—educational and so on. Any organization that is granted this status by a court decision can apply.

Do you have a general idea of what the requirements are for this status?

There is a law from the beginning of the 21st century, but it was updated in 2018 for the benefit of the public and volunteering. The requirements are regulated there. Any NGO can apply to the court for recognition of its status, then the organization can operate, and then there are quite a few obligations and quite a few benefits. In terms of benefits, these organizations are exempt from a number of taxes—income tax, property tax, all kinds of government taxes and court fees, as well as some taxes related to products and services. Within these organizations, people who have to go into the army, even though we don’t have compulsory military service, can go to such an organization instead of the army. There is a possibility that their activities will be promoted by the public media. There are also facilities for renting real estate from the state or municipalities.

And what are the obligations of these organizations?

They are mainly financial in nature. They must have had this status for at least two years. They must submit an additional report to the accounting department. There is a state institute for civil society, which acts as a supervisory body.

What are the salary restrictions for workers?

The salaries of workers in these organizations cannot exceed the average. They must have an internal control body in which no one has been convicted. Any surplus earned by the organization (income over expenditure) must be allocated to socially useful activities—they cannot distribute it as profit.

Is journalism funded on this NGO principle?

Even large private media outlets in Poland also set up organizations, foundations, or associations, and these can also apply for funding. With this money, they do journalism for the public good.

Have there been any scandals or abuses with this method of funding?

There are not many scandals or problems. But in the past, when I was involved in the activities of the Bulgarian school, the only difference was that if you had an income of less than 50,000 leva per year, there was even an option for simplified reporting. But organizations are very careful because the control mechanism exists and losing this status would make a big difference for some organizations.

Do you think this should be introduced in Bulgaria?

Yes, absolutely. It is a mechanism that not only encourages and supports civil society, but also creates a sense of community among taxpayers. When you pay your taxes and you have the opportunity to decide for yourself where 1.5% of them should go and you can choose who to give them to, a number of issues that in Bulgaria are always a matter of last-minute social mobilization, such as child welfare or treatment, everyone can decide where to direct these funds.

Photo: Spasimir Domaradzki (source: YouTube)

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