## Family Foundation in Poland ### Introduction A family foundation in Poland is a legal entity created by a founder to accumulate and manage assets for the benefit of beneficiaries. Introduced by the Act of 26 January 2023 on Family Foundations, it addresses the need for effective succession planning in family businesses and protects family assets from fragmentation during inheritance. ### Historical Background Prior to the 2023 Act, Polish law lacked adequate solutions for succession in family businesses, leading to disputes among heirs. The new framework, inspired by European models (e.g., Austria), allows founders to transfer assets tax-free while limiting their liability. The law was drafted in 2022 and enacted on 22 May 2023, effective from 1 January 2024. ### Key Features - **Tax Benefits**: Assets transferred to the foundation are exempt from inheritance tax (PCC) and corporate income tax (CIT). Dividends and interest are taxed at 15% for immediate family beneficiaries, while others pay 10% or 15% depending on tax brackets. - **Liability Protection**: The foundation shields assets from the founder's personal liabilities, except for alimony obligations. - **Limited Commercial Activity**: The foundation can engage in limited commercial activities, such as property management, investment in companies, and financial services, but not speculative trading. ### Legal Structure - **Establishment**: Requires a minimum asset value of 100,000 PLN, documented in a founding act or testament. The foundation is registered with the Court of Common Pleas in Piotrków Trybunalski. - **Governance**: Organs include a board (for 25+ beneficiaries) and a meeting of beneficiaries. The board manages daily operations. - **Liquidation**: Occurs if the foundation's purpose is fulfilled, operations become unprofitable, or it fails to meet obligations. ### Operational Scope - **Asset Management**: Invests in shares, bonds, and real estate for family wealth preservation. - **Tax Efficiency**: Avoids double taxation on dividends and interest, making it ideal for holding family assets. ### Challenges and Controversies The foundation's commercial activities are limited to avoid speculation. Disputes may arise over the interpretation of these restrictions, potentially leading to tax penalties. ### Conclusion Family foundations provide a robust mechanism for intergenerational wealth transfer in Poland, balancing tax efficiency with asset protection and business continuity.