Any church legal entity, such as a parish, religious order, diocese, or Caritas, can engage in business activities. How many of them do this in Poland? That remains unknown, as this information is not published anywhere. However, TVN24 learned that in 2022 alone, church businesses generated nearly 324 million PLN in profits. This figure comes from 1,008 church entities (the majority being from the Catholic Church). Even more shocking is that not a single zloty of tax was paid on this amount. How is this possible?
Church Business Activities Exempt from Tax
To understand this, we need to go back to 1989, when the communists sought to win favor with the clergy. They passed a special tax exemption for churches and religious associations conducting business activities. This exemption allows church businesses to be tax-free. According to this law, however, untaxed profits must be allocated to purposes such as "religious worship, educational and instructional activities, scientific, cultural, charitable and caregiving activities, the conservation of historic monuments, the operation of catechetical points, sacred investments in the construction, expansion, and reconstruction of churches and chapels, the adaptation of other buildings for sacred purposes, and other investments intended for catechetical points and charitable institutions."
Expenses Virtually Unchecked
However, lawyers interviewed by TVN24 stated plainly that verifying how the money is spent is virtually impossible. "How can one determine if a limousine is genuinely serving the purpose of, for instance, religious worship or the private needs of a hierarchy? After all, a bishop isn’t just a bishop from 9 to 5. Therefore, one could assume that everything he does is part of his religious duties," one legal expert described to TVN24, illustrating just one of many legal dilemmas.
Moreover, the Tax Office shows little interest in the profits of church businesses. Even if tax authorities wanted to scrutinize them more closely, their hands are tied. A church company, in the event of an audit, should document expenditures made from untaxed profits. The problem, however, is that the law does not specify when the funds eligible for exemption must be allocated. Thus, such a company can always declare that the profit is allocated, for example, to religious purposes, but only in 10 or 20 years. Meanwhile, there is no obligation to retain tax documentation after five years.
TVN24 sent an inquiry to the Ministry of Finance asking whether it plans to introduce any changes to these regulations. The ministry did not respond to the inquiry, merely extending the response time until the end of September. The Polish Episcopal Conference also did not provide a comment to the editorial team.
