Family foundation – a new bill

by Anna Rucińska

19 December 2022

Sejm has adopted a new bill on family foundations. Compared to the previous version of the bill, this one not only contains legal changes but significantly modifies the tax aspects of how such family foundations work.

Key assumptions

The foundation will have legal personality.
Only a natural person can be the founder.
Assets contributed to the foundation cannot total less than 100 thousand zloty.
Only natural persons and public benefit organisations may be beneficiaries of the foundation.
The foundation will operate through its bodies – the management board, the supervisory board and the meeting of beneficiaries.
The founder will be required to prepare a list of assets contributed to the foundation, to be updated by the management board annually.
The foundation will be able to carry out business activities, such as leasing, renting, selling property, joining and participating in commercial companies, investment funds, acquiring and selling securities, granting loans - within the scope of the Act.

Taxation of foundations and their beneficiaries

The new bill assumes, among other things, that:

assets contributed by the founder to the foundation will be neutral for tax;
payments and assets received by the founder and beneficiaries in connection with the dissolution of the foundation will be exempt from inheritance and gift tax;
the receipt of the above-mentioned payments and assets will create taxable income subject to PIT at a rate of 15 per cent, whereas the founder and beneficiaries from the immediate family will be able to apply an exemption;
the foundation will be exempt from CIT, whereas CIT at the rate of 15 per cent will apply to payments from the foundation and distributed assets if the foundation is wound up.

The bill will enter into force 3 months after its promulgation. This is assumed to take place in 2023.

If you are interested in the profitability analysis for implementing this form of business succession or have questions about family foundations - please contact us.

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Anna Rucińska

Attorney at law (Poland)

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