The operation of non-governmental organisations in Poland is governed by a clearly defined legal framework, at the heart of which lies the organisation’s statute. It is the content of the statute that determines whether a given activity may be carried out as unpaid statutory activity, fee-charging public benefit activity, or whether it should be classified as commercial activity. This distinction has very practical consequences – it directly affects bookkeeping requirements, tax obligations, and legal risk.

Unpaid Public Benefit Activity

The most basic form of NGO activity is unpaid public benefit activity. In this model, the organisation pursues its statutory objectives by providing services or goods to beneficiaries free of charge. Funding comes from external sources – typically public grants, donations, income from the 1.5% personal income tax designation, or surpluses generated by commercial activity.

From an accounting perspective, unpaid activity generates no sales revenue; its costs are recorded under unpaid statutory activity.

Fee-Charging Public Benefit Activity

Fee-charging activity sits between social and market activity. The law permits organisations to charge beneficiaries fees, but only up to the amount covering the cost of delivering the given task. The defining feature of this type of activity is the absence of a profit motive – the organisation cannot set prices in a way that generates a margin.

In practice, this requires detailed cost calculation covering both direct costs (materials, specialist fees, organisational expenses) and appropriately allocated indirect costs (administration, infrastructure).

A positive financial result is permissible, provided it arises from differences between planned and actual costs rather than deliberate action. Any surplus generated must be used exclusively for statutory purposes.

When Does Fee-Charging Activity Become Commercial?

The boundary between fee-charging and commercial activity is not always clear-cut. The main triggers for reclassification include:

• fees charged exceed the cost of producing the service or good – resulting in a margin,
• remuneration of persons involved in fee-charging activity exceeds 1.5 times the average monthly salary in the enterprise sector,
• the activity has the characteristics of continuity and organisation and begins to dominate the structure of the organisation.

It is worth noting that tax and supervisory authorities assess the classification of activity not only on the basis of statutory provisions, but primarily on the basis of how it is actually conducted.

Commercial Activity in NGOs

Commercial activity is permitted, but it serves a supplementary role relative to statutory activity. Its primary purpose is to generate funds that support the organisation’s social mission. It is conducted on market terms, with the possibility of applying margins and achieving profit.

The formal requirements include: appropriate provisions in the statute, registration in the National Court Register (KRS), and full bookkeeping in accordance with the Accounting Act.

The non-profit principle applies here too – any profit generated cannot be distributed among members; it must be used entirely for statutory purposes.

Bookkeeping Obligations

Regardless of the type of activity carried out, NGOs are required to maintain separate accounting records. This means recording income and costs separately for unpaid, fee-charging, and commercial activities – implemented through appropriate analytical accounts and cost allocation keys for shared expenses.

The principles for assigning income and costs to each type of activity should be set out in the organisation’s accounting policy document.

Corporate Income Tax (CIT)

NGOs are subject to corporate income tax, but may benefit from the exemption provided for in Article 17(1)(4) of the CIT Act. The exemption covers income designated for statutory purposes, provided it is actually spent on those purposes.

Merely declaring the intended use of income is not sufficient – what matters is that the expenditure is actually incurred and properly documented. Organisations are required to file annual CIT-8 declarations together with annexes showing exempt income.

Value Added Tax (VAT)

The application of VAT does not depend on the form of activity, but on the nature of the transactions carried out and the level of turnover. Once statutory thresholds are exceeded, the organisation must register as a VAT payer and maintain sales records in accordance with applicable regulations. Even fee-charging public benefit activity may be subject to VAT if it meets the conditions set out in the VAT Act.

Summary

Unpaid, fee-charging, and commercial activities form a coherent but demanding framework for NGO operations. The boundaries between these forms are relatively fine, and crossing them can lead to serious financial and legal consequences. Professional financial management and ongoing monitoring of the income and cost structure are therefore essential for the safe and effective operation of any non-governmental organisation.

Legal basis:

• Act of 24 April 2003 on Public Benefit Activity and Volunteerism (Journal of Laws 2023, item 571, as amended)
• Act of 29 September 1994 on Accounting (Journal of Laws 2023, item 120, as amended)
• Act of 15 February 1992 on Corporate Income Tax (Journal of Laws 2024, item 280, as amended)