Introduced in May 2023, the Polish family foundation (fundacja rodzinna) represents a significant development in Polish corporate law, offering foreign investors and their Polish partners a sophisticated vehicle for wealth preservation, business succession, and long-term asset management.

Executive Summary

The family foundation is a legal entity designed to manage family business assets while ensuring structured succession across generations. For foreign investors with Polish business interests, this instrument provides a stable, tax-efficient structure that separates business ownership from operational management while safeguarding family wealth against fragmentation through inheritance.

Unlike traditional corporate structures, the family foundation allows founders to establish binding rules for asset distribution and governance that extend beyond their lifetime, offering a level of control and continuity previously unavailable under Polish law.

Key Benefits for Investors

• Multi-generational succession planning – Unlike standard inheritance rules, the family foundation allows founders to structure succession with conditional terms and specific timelines, providing unprecedented flexibility.
• Asset consolidation – All family business assets can be held within a single legal entity, preventing fragmentation through inheritance and maintaining operational coherence.
• Ongoing beneficiary distributions – The foundation can provide regular payments to beneficiaries, including the founder, enabling retirement from active management while maintaining income streams.
• Posthumous governance – Founders can establish binding governance rules in the foundation’s charter that continue to direct asset management and distribution after their death.
• Alignment of business and family interests – The structure harmonizes commercial objectives with family needs, reducing potential conflicts between active and passive stakeholders.

Establishment Requirements

A family foundation must be established through a notarial deed, either as a founding act or within a testament. Only natural persons with full legal capacity may serve as founders. Multiple individuals can jointly establish a foundation through a founding act, though testamentary foundations are limited to a single founder.

The foundation requires an initial endowment of at least PLN 100,000 (approximately EUR 23,000 or USD 25,000), which must be maintained throughout the foundation’s existence. Legal personality is acquired upon registration in the dedicated Family Foundation Register.

Beneficiary Structure

The founder determines both the circle of beneficiaries and the scope of their entitlements. Eligible beneficiaries include natural persons (typically family members) and non-governmental organizations conducting public benefit activities. Notably, founders themselves may be designated as beneficiaries, enabling continued income distribution during their lifetime.

Permitted Business Activities

Family foundations are generally prohibited from conducting active business operations – a deliberate limitation designed to minimize risk and protect contributed assets. However, the legislation permits specific passive and investment activities:

• Disposal of owned or possessed assets (except assets acquired solely for resale)
• Leasing, rental, and licensing of owned assets
• Participation in commercial companies, investment funds, cooperatives, and similar entities in Poland or abroad
• Acquisition and disposal of securities, derivatives, and similar financial instruments
• Granting loans to selected entities
• Foreign currency transactions related to foundation activities
• Agricultural enterprise operations

Tax Framework

Corporate Income Tax (CIT)

Family foundations benefit from a broad CIT exemption. This exemption covers the gratuitous acquisition of assets (such as the founder’s initial contribution) as well as income from permitted activities. The exemption creates significant tax efficiency for wealth accumulation and investment activities conducted within the foundation.

However, distributions to beneficiaries or founders, and asset transfers upon dissolution, are subject to a 15% CIT rate applied to the value of the distribution or transfer. This creates a tax-deferred structure where wealth can grow tax-free until distributed.

Personal Income Tax (PIT)

Individual recipients of foundation distributions face PIT obligations determined by their relationship to the founder:

• Full exemption – Available to the founder and close family members in the so-called ‘zero group’ (spouse, descendants, ascendants, stepchildren, siblings, stepparents)
• 15% rate – Applicable to all other beneficiaries

Importantly, distributions from family foundations are exempt from Polish inheritance and gift tax, avoiding potential double taxation.

Inheritance Law Considerations

The Family Foundation Act introduced important modifications to Polish inheritance law, particularly concerning forced heirship (zachowek) – the statutory right of close relatives to claim a portion of an estate. The new provisions allow for waiver of forced heirship claims, installment payments, deferred payment terms, and reduced amounts.

Contributions made to a family foundation more than ten years before the founder’s death are excluded from the estate calculation for forced heirship purposes (unless the foundation itself is an heir). Additionally, benefits received by an heir from the foundation reduce their forced heirship entitlement proportionally.

Liability for Founder’s Obligations

The foundation bears joint and several liability for the founder’s pre-existing obligations, including maintenance duties. For maintenance obligations arising after establishment, the foundation’s liability is subsidiary – triggered only if enforcement against the founder’s personal assets proves unsuccessful. This structure ensures that dependent family members remain protected.

Governance and Family Charter

As family businesses grow in complexity and the number of stakeholders increases, implementing family governance becomes essential. Family governance provides a structured decision-making framework that facilitates communication and reduces conflict potential.

The foundation’s charter (statut) serves as the binding governance document for all beneficiaries. A well-crafted charter, tailored to the specific family’s circumstances, balances the interests of the founder, beneficiaries, and other stakeholders while establishing clear rules for multi-generational continuity.

Conclusion

The Polish family foundation represents a mature, well-designed legal framework that addresses long-standing gaps in Polish succession law. For foreign investors with Polish business interests, it offers a compelling combination of asset protection, tax efficiency, and governance flexibility.

Despite upcoming legislative changes, the family foundation remains an attractive and secure instrument for succession planning and wealth preservation. Investors considering Polish market entry or expansion should evaluate this structure as part of their long-term strategic planning.