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Family foundation – a new wealth planning institution in Polish law

The family foundation is a new wealth planning instrument introduced in Poland. The family foundation allows to achieve ETR at the level of 15% and the suspension of taxation until the income is distributed from the foundation (potentially tax-free reinvestment of profits). The objectives of the foundation and its beneficiaries are decided by its founder, who may also be a foreigner. A family foundation is a solution to ensure the continuation of the business and the protection of the assets in the long term.

The family foundation is a new wealth planning institution that was introduced in Poland on 22 May 2023. It was aimed at streamlining the building of family businesses which allow for better capital accumulation and stimulating investment activity from generation to generation. This solution was modelled on the concept of family foundations operating in other European countries.

Family foundation – what is it?

A family foundation is a separate entity with legal personality that can only be established by an individual (one or more). The establishment of a family foundation requires a deed of incorporation or a declaration in the will. The specific objectives of establishing and operation of a family foundation are defined by the founder in the foundation`s articles of association.

The restriction of the type of founders to individuals is due to the role of the family foundation, i.e. the management of assets previously owned by an individual and the pursuit of selected objectives of individuals. For example, the income and assets of a family foundation can be used for financing individual’s everyday expenses and education.

A family foundation is intended to ensure that the business continues to operate for generations, in particular without any inconveniences that may arise due to inheritance law, as well as to safeguard the financial needs of its beneficiaries. In the long term, it provides the opportunity to continue the business and protect the assets accumulated by it.

Beneficiary of a family foundation

Most often, the beneficiaries of a family foundation will be family members of the founder. However third parties may also be designated as well as NGOs and the founder themselves.

Being able to designate a founder as a beneficiary of a family foundation will in practice enable these individuals to retire from the workforce, while at the same time providing that person with the means for ongoing maintenance.

Can a family foundation run a business?

As a general rule, a family foundation is not an entity to carry out business activities. However, as an exception, the law allows it to carry out certain activities i.e.

  1. disposal of assets, provided that the assets were not acquired solely for the purpose of further disposal;
  2. renting, leasing or making the assets available for use on any other basis;
  3. joining and participating in commercial companies, investment funds, cooperatives and entities of a similar nature established either domestically or abroad;
  4. acquiring and disposal of securities, derivatives and rights of a similar nature;
  5. granting loans to:
    1. companies in which the family foundation holds shares,
    1. partnerships in which the family foundation participates as a partner,
    1. beneficiary
  6. the circulation of foreign means of payment belonging to the family foundation for the purpose of making payments related to the activities of the family foundation;
  7. the production of non-industrially processed plant and animal products, with the exception of processed plant and animal products obtained within the framework of specialised agricultural production activities and products subject to excise duty, provided that the quantity of plant or animal products originating from own cultivation, breeding or rearing used in the production of the product in question constitutes at least 50% of that product;
  8. forest management.

Taxation of a family foundation

A family foundation is a corporate income tax taxpayer, but generally it pays corporate income tax when it transfers benefits or assets to its beneficiaries. The CIT rate paid on the transfer to beneficiaries is 15% of the value of benefits or assets distributed.

While the income of a family foundation derived from its activities carried out within the scope indicated by the law is subject to corporate income tax exemption, income arising from business activities outside that scope will be taxed at a rate of 25%.

An important point is that the establishment of a family foundation and contributing assets to it is not taxed (neither tax on civil law transactions nor corporate income tax).

What is more, the law provides for exemption from personal income tax of distributions received by beneficiaries who belong to the founder’s closest family, i.e. the founder himself/herself, his/her spouse, descendants, ascendants, siblings, stepchildren, stepfather or stepmother (the so-called ‘tax group zero’ within the meaning of the Inheritance and Donations Tax Act). It should be noted that the distributions from foundation to the beneficiaries is excluded from inheritance and donations tax.

Changes to the law of succession

The introduction of the family foundation into the Polish legal system has also brought about changes in inheritance law, in particular concerning the reserved portion (i.e. the entitlement of the testator’s close relatives to claim payment from those who have acquired the right to inherit).

The family foundation provisions provide for the possibility of waiving the right to a reserved portion of the inheritance, spreading it into instalments, deferring payment dates and even, if justified, reducing its amount.


A family foundation offers the opportunity to accumulate assets without fragmenting them, but with the possibility of continuing family business and reinvesting profits. The establishment of a family foundation in Poland is also possible for foreigners. It appears that this instrument can contribute to the continuity of companies across generations as well as effective wealth and equity planning. Favourable income tax treatment is another advantage worth pointing out. The first applications for the establishment of a family foundation have already been submitted. It is worth looking into and considering the benefits that may arise from the establishment of a family foundation in Poland and the possibility of developing the capital entrusted to it