Settling taxes jointly with a minor child raises many doubts among parents who run a business. The starting point is that Polish law does not provide for a joint tax settlement with a child – unlike the joint settlement of spouses. Under this name people usually mean one of three mechanisms in the PIT Act: the settlement of a person raising a child alone (Article 6 sections 4c–4f), the child tax relief (Article 27f) or – the subject of this article – adding a minor child's income to the parents' income (Article 7). Questions most often concern situations where the child earns their own revenue, for example from renting out inherited property. Tax law regulates this area in detail, but it has to be understood thoroughly to apply the right solutions correctly.
The settlement as a person raising a child alone is available to a parent or legal guardian – an unmarried woman or man, a widow, a widower, a divorcee, a person legally separated, or a person whose spouse has been deprived of parental authority or is serving a prison sentence – who in the tax year raises alone a minor child, an adult child receiving a care allowance (zasiłek or dodatek pielęgnacyjny) or a social pension (renta socjalna), or an adult child in education up to the age of 25. On request in the annual tax return, the tax is calculated as twice the tax on half of the parent's income (taking Article 7 into account). A child in education up to 25 does not give this right if their income taxed under the tax scale or under Article 30b (except a survivor's pension) and revenue exempt under Article 21 section 1 points 148 and 152 together exceeded in the year twelve times the social pension for December – with the amount of PLN 1,978.49 in force from 1 March 2026, this is PLN 23,741.88 (Article 6 section 4e). The preference is not available if the parent raises even one child together with the other parent, including shared (alternating) custody (Article 6 section 4f), or if the parent or the child uses the flat 19% tax (podatek liniowy) or the flat-rate tax on recorded revenue (ryczałt) – except ryczałt on private rental (Article 6 section 8). The child tax relief, in turn, is a deduction from tax calculated under the tax scale. In none of these cases is the child a party to the parent's tax return. Parents also often ask about the 800+ child benefit in your tax return.
The basic legal act governing the taxation of minor children's income is the PIT Act (personal income tax), which in Article 7 section 1 sets out the rules for adding children's income to the parents' income. These rules aim to ensure fair taxation in the context of the family's economic unity, where children's income in fact serves to maintain the whole family.
Income of minor children (own and adopted) taxable in Poland, except income from their work, pensions (renty), scholarships and income from items given to them for free use, is added to the parents' income. This rule applies provided that the parents have the right to collect the fruits (pożytki) of the sources of the children's revenue
Basic rules for taxing minor children's income
Under the PIT Act, minor children as a rule do not settle their income on their own, except for income excluded from being added to the parents' income (a return is then filed in the child's name). Their income is added to the parents' income, which follows from the assumption of the family's economic unity. Quite different issues arise once the child is an adult – for example, an adult child not contributing to household bills.
However, the rule of adding minor children's income to the parents' income does not apply to certain categories of income. The exceptions are income from the children's work, income from pensions (e.g. a survivor's pension), income from scholarships and income from items given to the children for free use. These categories of income are taxed in the minor child's name.
The key factor in deciding how income is taxed is whether the parents have the right to collect the fruits of the sources of the children's revenue. If the parents do not have this right, none of the minor children's income is combined with the parents' income
To understand this issue fully, you need to look at the Family and Guardianship Code (Kodeks rodzinny i opiekuńczy, KRO). Under Article 101 KRO, parents must manage, with due care, the assets of a child under their parental authority. However, the management exercised by the parents does not cover the child's earnings or items given to the child for free use.
The Family and Guardianship Code also restricts acts exceeding the scope of ordinary management. Under Article 101 § 3 KRO, parents may not, without the permission of the guardianship court, perform acts exceeding the scope of ordinary management or consent to the child performing such acts.
The legislator distinguishes two basic situations here:
- Parents, as statutory representatives, perform a legal act on the child's behalf
- Parents consent to the child performing an act exceeding the scope of ordinary management
The legislator has not provided a list of acts exceeding the scope of ordinary management, but many acts concerning real estate have this character, especially its purchase, sale or encumbrance. This means that transactions involving property owned by minors require particular legal attention
How children's income is added to the parents' income
The rule of adding children's income to their parents' income is general and applies both to income taxed under the general rules and to income taxed as a flat rate. The income should be added by source of revenue, which means that a minor's income from a given source is added to the parent's corresponding source of revenue.
The wording of Article 7 section 1 of the PIT Act ("unless the parents do not have the right to collect the fruits of the sources of the children's revenue") makes it clear that where the parents do not have the right to collect the fruits of the sources of the children's revenue, none of the children's income is combined with the parents' income.
Combining income is justified by the fact that the children's income is de facto family income and is used to maintain the family. That is why the legislator provides for combining it, so that the indirect tax subject, namely the whole family, is taxed.
Where the parents do not have the right to collect the fruits of the children's assets, the family's economic unity is broken and there is no reason for it to act as one indirect tax subject. The income is then taxed in the minor child's name
Where the parents do not have the right to collect the fruits of the sources of the children's revenue, this income is taxed in the minor child's name. In the opposite situation, the minor child's income is combined with the parents' income in the annual tax return. The parent shows the child's income taxed under the tax scale in the PIT/M attachment to the PIT-36 return, and revenue from private rental (flat-rate tax on recorded revenue, ryczałt) in their own PIT-28 return, without the PIT/M attachment. If both parents have the right to collect the fruits, each of them shows half of the child's income (revenue).
Applying these rules in practice requires examining the specific legal and factual situation each time. You need to analyse whether, in the given case, the parents have the right to collect the fruits of the sources of the child's revenue, as this determines how the income is taxed.
Taxation of minors' income from property rental
Revenue from renting out property is a special category of minor children's income. Under Article 9a section 6 of the PIT Act, income earned by taxpayers from the source specified in Article 10 section 1 point 6 (private rental) is taxed as a flat-rate tax on recorded revenue.
It follows that revenue from rental, sub-rental, lease, sub-lease and other agreements of a similar nature, as well as from the lease or sub-lease of special branches of agricultural production and of a farm or its components for non-agricultural purposes or for running special branches of agricultural production, which is not earned as part of a business, is taxed under the flat-rate tax on recorded revenue.
Under Article 12 section 1 point 4 letter a of the Act on flat-rate income tax, the flat-rate tax on recorded revenue is 8.5% of revenue up to PLN 100,000 and 12.5% of revenue above PLN 100,000
The law contains nothing to prevent rental revenue earned by a minor from being taxed under the flat-rate tax at 8.5% up to PLN 100,000 and at 12.5% of revenue on the excess above that amount. Our accounting firm in Warsaw prepares ryczałt rental settlements and tax returns.
However, two basic situations must be distinguished, which have been described in tax rulings of the Director of the National Tax Information (KIS). The first situation was presented in the ruling of 16 June 2020 (no. 0112-KDIL2-2.4011.260.2020.2.IM), in which the tax authority set out specific conditions that must be met for rental revenue not to be added to the parent's revenue.
With the court's permission, the parents bought a flat for their minor son using money the child had received as compensation after an accident. All the rental revenue goes to the minor's separate sub-account, and the money is meant to secure the child's future and rehabilitation. The mother, as legal guardian, does not have the right to collect the fruits of this source, so the revenue will not be added to her revenue.
Procedures for settling minors' rental income
In the situation described in the first case, where the parents do not have the right to collect the fruits, the rental revenue will not be added to the parent's revenue. It will be taxed in the minor child's name. In that case the parent should file the PIT-28 return on the child's behalf and sign it as the minor's legal guardian, and the tax is paid to the child's individual tax micro-account.
The second case was described by the Director of KIS in the ruling of 9 November 2018 (no. 0115-KDIT3.4011.385.2018.2.DP). The parents had bought a flat and intended to give it to the child as a gift. In this ruling the tax authority stated that a mere clause in the notarial deed saying that the minor's parents would not have the right to collect the fruits of renting the flat is insufficient.
In the absence of an actual exclusion of the right to collect the fruits, the minor's parents will have the right to collect the fruits of property owned by the child. In that situation, the revenue from this source should be added to the parents' revenue
The procedure for settling minors' rental income requires a detailed analysis of each case. The key is to establish whether, in the specific situation, the exceptions to the rule of adding a minor child's income to the parent's income set out in Article 7 section 1 of the PIT Act apply.
If the parent retains the right to collect the fruits, revenue from renting out premises should be added to the parent's revenue by source of revenue. This means that revenue from renting out a flat must be settled in the PIT-28 return filed in the parent's name – where both parents have this right, each of them files their own PIT-28 with half of the child's revenue.
To establish whether the parent has the right to add the minor children's income to their own income, or whether the minor should settle on their own, you need to examine how the parents' right to collect the fruits is shaped under the Family and Guardianship Code.
Practical aspects of joint settlement
When applying in practice the rules on adding a minor child's income to the parents' income (commonly called joint settlement with a minor child), a number of important aspects must be taken into account. The system of taxing minor children's income, excluding income from work, pensions, scholarships and items given for free use, in essence treats this income as if it were the parents' income. Among other family topics, we cover maternity benefit when combining work with parental leave.
The parents are responsible for correctly settling and disclosing the children's income in the annual return, which rules out assigning a tax obligation to the minor in this respect. This rule aims to simplify the tax system and ensure efficient tax collection.
Minor children's income is added to the parents' income while keeping the division into sources of revenue. This means that rental income earned by the child is added to the parent's rental income, not to other sources of revenue
Applying these rules in practice requires keeping proper documentation and records. The parents must be able to show all income earned by the minor child and settle it correctly in their tax return.
If the parent runs a business, adding the child's rental income does not affect the nature of that business. Rental income remains a separate source of revenue and is settled under the relevant rules, regardless of the form of taxation of the parent's business.
Particular attention should be paid to situations where a minor child earns income from different sources. Each source of revenue must be settled under the rules that apply to it, while keeping the rule of adding it to the parent's corresponding source of revenue.
Documentation and formal obligations
Settling minor children's income involves certain documentation obligations. The parents should collect documents relating to all income earned by the child and prepare the appropriate documentation for the tax return.
For revenue from private rental, the Act on flat-rate income tax does not require keeping revenue records (Article 15 section 3). It is still worth keeping your own summary containing all relevant information about the rental agreements, rent amounts and payment dates.
The basic documentation obligations include:
- Recording rent received on an ongoing basis (your own summary)
- Keeping rental agreements and documents confirming receipt of rent
- Documenting charges relating to the upkeep of the property (under the flat-rate tax they do not reduce revenue)
- Preparing the PIT/M attachment to the parent's PIT-36 return – only where the child has income taxed under the tax scale
- Filing the PIT-28 return including the child's revenue (where both parents have the right – each with half)
Parents acting as the minor child's statutory representatives bear full responsibility for the correct settlement of the child's income. This covers both the formal and the substantive aspects of calculating the tax due
Documentation must be kept for the period required by tax law, which allows any explanations to be given in the event of a tax audit. Particular attention should be paid to filing returns and paying tax on time.
In practice, parents are often unaware of their obligations relating to settling their minor children's income. This can lead to problems with the tax authorities, which is why it is so important to understand and apply the rules in force properly.
Analysis of special cases
Tax practice involves a variety of situations that require individual analysis. Cases where a minor child inherits property with certain encumbrances or restrictions on the right to collect the fruits are particularly complicated.
The wording of wills or gift agreements is important. If the testator or donor has expressly excluded the parents' right to collect the fruits of the property, this may affect how the rental income is taxed.
| Situation | Right to collect the fruits | Method of taxation | Tax return |
|---|---|---|---|
| Standard inheritance | Parents have it | Added to the parent's income | PIT-28 in the parent's name |
| Exclusion in a will | Parents do not have it | Taxed in the child's name | PIT-28 in the child's name |
| Money in a separate account | May not apply | Depends on the circumstances | Individual analysis |
| Notarial clause | Insufficient | Usually applies | PIT-28 in the parent's name |
What matters is not only the formal exclusion of the right to collect the fruits, but also the actual circumstances showing that the parents have no access to the child's income. The tax authority analyses the entire factual and legal situation
A special category are cases where a minor child earns income from renting out property located abroad. In that case, the rules on avoiding double taxation and the rules for settling foreign income must also be taken into account.
A family inherited from the grandfather a flat rented out for commercial purposes. The minor daughter became the owner of the property, but the parents, as legal guardians, manage the rental. The monthly rent of PLN 3,000 is paid into the parents' account, and they use the money for the needs of the whole family. In this situation, the rental income is added to the parents' income.
Consequences of incorrect settlement
Incorrect settlement of a minor child's income can lead to serious tax consequences. The tax authorities may open proceedings to determine an additional tax liability and impose sanctions for incorrect settlement.
The most common errors in settling minor children's income include:
- Failing to include the child's income in the parent's return
- Applying the rules on the right to collect the fruits incorrectly
- Assigning income to the wrong sources of revenue
- Failing to file the PIT/M attachment (for the child's income taxed under the tax scale)
- Calculating the flat-rate tax on recorded revenue incorrectly
The consequences of incorrect settlement may include paying additional tax with interest and, in the case of intentional action, also criminal penalties. That is why it is so important to understand and apply the rules in force properly
If you discover errors in your settlement, you can file a corrected tax return. The correction should be filed promptly after discovering the error, which may reduce the interest charged.
Particular attention should be paid to situations where the tax authority challenges how a minor child's income has been settled. You may then need to present detailed documentation confirming that the approach taken was correct.
