Family foundations – tax status

As announced by the legislator in the first half of 2023, it is planned to introduce into the Polish legal order the institution of the Family Foundation, the main purpose of which is to strengthen the legal tools for succession processes by introducing an institution for the accumulation of family assets, allowing capital to be retained in the country for many generations and increasing the potential for domestic investment. The family foundation is intended to minimize the risk of unsuccessful succession and guarantee the continuation of business activities.

A family foundation is a legal entity established to accumulate assets, manage them in the interests of beneficiaries, and fulfill benefits to beneficiaries. The legislator envisages the introduction of preferential taxation rules for the family foundation, according to the draft law on the family foundation its taxation is to be presented as follows:

The family foundation will be a CIT taxpayer entitled to conduct business activities only within the statutorily defined scope such as, among others:

  • disposal of property,
  • renting, leasing or providing property for use,
  • joining commercial companies, investment funds, cooperatives and entities of a similar nature,
  • acquisition and disposal of securities, derivatives and rights of a similar nature,
  • granting loans: to capital companies in which the family foundation holds shares, to partnerships in which the family foundation participates as a partner, to beneficiaries,
  • trading in foreign monetary assets belonging to the family foundation.

At the same time, the family foundation will be subject to entity exemption from CIT with the exception of:

  • benefits made by the family foundation to beneficiaries,
  • property transferred in connection with the dissolution of the family foundation, and
  • conducting activities other than those specified by the Law.

At the same time, if the family foundation conducts other activities other than those permitted by the Law then the foundation’s income will be subject to a sanctioning 25% CIT rate.