The Family Foundation Act, which entered into force in May 2023, introduced a new legal institution into the Polish legal system. The family foundation is designed as a tool for intergenerational asset protection and succession planning.
Purpose of a family foundation
The primary purpose of a family foundation is to manage assets for the benefit of designated beneficiaries in accordance with the founder’s will. It is explicitly not designed for conducting business activity (although limited economic activity is permitted).
Key features:
- Minimum founding capital: PLN 100,000
- Founded by a natural person through a founding act (notarial deed) or by will
- Beneficiaries designated by the founder
- Governed by a management board, with mandatory supervisory board if more than 25 beneficiaries
- Registered in the National Court Register (KRS)
Tax treatment:
- Exempt from CIT on income from permitted activities
- 15% CIT on distributions to beneficiaries
- Beneficiaries in the closest family group (group 0) pay no personal income tax on distributions
Advantages:
- Asset protection from creditors of individual family members
- Structured succession planning without dividing the family business
- Tax-efficient distribution of income to family members
Limitations and risks:
- Recent and anticipated tax law changes create uncertainty
- Limited business activity scope
- Polish legal system instability affects the predictability of the institution
- Relatively high ongoing compliance costs
For these reasons, I consistently recommend that clients consider Liechtenstein as an alternative jurisdiction for family foundations, particularly when stability and predictability are paramount.
Paweł Osiński
Attorney, expert in family foundations and asset protection