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AGN EMEA Tax Committee News
On May 22, 2023, the Family Foundation Act entered into force in Poland.
The Family Foundation can be an interesting investment vehicle not only for people living permanently in Poland, regardless of whether they have assets here or not.
Income from the current activity of the foundation is exempt from corporate income tax. Taxation only takes place when the funds are disbursed to the beneficiaries.
Any natural person can become a founder, regardless of place of residence or citizenship.
A family foundation may be established by one or more founders (exception: a foundation established in a will).
It is required to create an initial fund with a minimum value of PLN 100,000 (approx. EUR 22,000). It can be money, securities, real estate and other rights.
The basic objectives of the foundation are to protect the assets earned and to multiply them without tax burdens.
The founder determines the circle of beneficiaries and the scope of their rights. Any natural person can become a beneficiary, regardless of the degree of kinship with the founder.
A family foundation may operate in economic transactions:
- Being a partner in other companies.
- Investing in securities and rights of a similar nature.
- By renting and leasing immovable and movable property.
- By granting loans to beneficiaries and “their” companies.
Foundation management rules do not have to be complicated: they are largely determined by the founder himself.
One of the most important benefits of running a family foundation is the very favourable taxation mentioned above, especially when the contributed assets, the founder and the beneficiaries are in the circle of the immediate family:
- The donation of property by the founder to the foundation does not result in taxation with taxes and donations, nor with personal income tax (PIT) and corporate income tax (CIT).
- The current income of the foundation is not subject to CIT.
- Withdrawal of funds is subject to corporate income tax.
- Beneficiaries pay personal income tax, which varies from 0% to 15% depending on the degree of relationship.
From a business point of view, the advantages of family foundations include:
- Keeping assets in one hand.
- Effective asset management and its multiplication.
- Separation of business and family matters.
- Family financial security.
- Development of the company from the perspective of many generations.
It is worth taking a closer look at the advantages of a family foundation in Poland and estimating whether it can be a sensible idea for protecting and multiplying capital for future generations.
Brought to you by the AGN Tax Committee
If you have any questions in relation to this article, please get in touch with Tomasz Paszkowski.
Tomasz Paszkowski
Tax Advisor
JRD
Email: tomasz.paszkowski@jrd.pl
Phone: +48 22 654 02 14
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