Why succession planning matters – the foreign investor’s perspective

A foreign investor doing business in Poland – whether through a Polish operating subsidiary, a holding vehicle, or a real estate or industrial portfolio – sooner or later faces the question of what should happen to the accumulated wealth in the next generation. The challenge is multi-dimensional: it spans tax and corporate law, the operational continuity of the business, the protection of the family’s long-term interests and, very often, the management of latent intra-family conflicts.

Conventional succession tools – wills, lifetime gifts or family-controlled holding companies – frequently fall short, particularly when significant business assets, cross-border family structures or a wide circle of potential heirs are involved. Insufficient succession planning typically leads to fragmentation of the business, forced heir reserve (zachowek) claims, decision-making paralysis and, ultimately, a destruction of the economic value built up over years.

To address these challenges, the Polish legislator introduced the family foundation (fundacja rodzinna) by the Act of 26 January 2023, in force since 22 May 2023. After almost three years of practical experience, this institution has proven to be a sophisticated planning tool – one that is fully accessible to foreign investors and broadly comparable to the family foundations long established in Liechtenstein, Austria, Switzerland or the Netherlands.

This article explains the legal architecture and tax regime of the Polish family foundation from the perspective of a foreign investor. It also addresses the current legislative status, including the consequences of the presidential veto of 27 November 2025 on the planned 2026 tightening of the regime, and the statutory review of the Family Foundation Act scheduled to take place after 22 May 2026.

Current legislative status – the regime that applies in 2026

The legal foundation of the institution is the Act of 26 January 2023 on the Family Foundation, supplemented by amendments to the corporate income tax (CIT), personal income tax (PIT), inheritance and gift tax, and civil law transactions tax acts that establish the dedicated tax regime applicable to family foundations.

In 2025 the Polish Ministry of Finance prepared a draft amendment to the CIT Act intended to take effect on 1 January 2026. The draft proposed substantial tightening of the family foundation regime, including a 36-month lock-up on assets contributed to the foundation, the application of controlled foreign company (CFC) and exit tax rules to family foundations, the exclusion of short-term rental income and most commercial real estate rental income from the CIT exemption, and an expansion of the so-called hidden profits category (covering, among others, loans extended to beneficiaries, founders and related parties).

On 27 November 2025 the President of the Republic of Poland vetoed the act passed by the Polish Parliament. The veto was justified, in particular, by reference to the constitutional principle of citizens’ trust in the State and to the premature character of the proposed changes – introduced less than three years after the institution itself, despite earlier assurances of regulatory stability. As a direct consequence, the planned tightening did not enter into force on 1 January 2026 and family foundations remain subject in 2026 to the unchanged regime introduced in 2023.

Foreign investors should nevertheless be aware that, under article 143 of the Family Foundation Act, the Council of Ministers is required to carry out a comprehensive review of the operation of the Act after 22 May 2026 (i.e. three years after its entry into force). This review is widely expected to become the starting point for a new legislative initiative, ideally with broader public consultation and a longer vacatio legis. From a planning perspective, 2026 should therefore be treated as a window of relative regulatory stability – a window that warrants disciplined use to put long-term wealth structures in place.

Legal architecture of the family foundation

The founder – who can establish a family foundation

Only a natural person with full legal capacity may act as the founder of a family foundation. A foundation may be established either by a notarial declaration of incorporation or by way of a will. Critically for foreign investors, the Act imposes no nationality or tax residency requirement on the founder – a non-Polish citizen, including a person permanently resident outside Poland, may validly establish a Polish family foundation.

Several individuals may jointly act as co-founders, provided they are closely related within the meaning of the Inheritance and Donation Tax Act or otherwise constitute a family. A foundation established by will, by contrast, may have only one founder – this restriction reflects the personal nature of testamentary dispositions under Polish law.

Beneficiaries and the international dimension

Beneficiaries of a family foundation may be natural persons and non-governmental organisations conducting public benefit activity. The founder enjoys broad discretion in defining the circle of beneficiaries and the conditions on which they receive distributions, including age requirements, completion of education, involvement in the family business or other criteria the founder considers relevant.

The Act does not restrict the choice of beneficiaries by reference to nationality or tax residency. The beneficiaries of a Polish family foundation may therefore include persons resident anywhere in the world, which is particularly significant for international business families: the Polish family foundation can serve as a centralised vehicle for managing family wealth across multiple jurisdictions, coordinating distributions to beneficiaries located in different countries.

Governance bodies

The mandatory governing body of every family foundation is the management board, which conducts the affairs of the foundation and represents it externally. The management board may consist of one or more members, who may be appointed from among the beneficiaries or from third parties. In foundations holding sophisticated investment portfolios or operating businesses, the appointment of professional managers is a common and recommended solution.

A supervisory board is generally optional, but becomes mandatory once the number of beneficiaries exceeds twenty-five. In practice, the appointment of a supervisory board is also advisable in foundations holding substantial assets or having a complex beneficiary structure, as it provides an internal control mechanism over the management board and a forum for managing intra-family conflicts.

The assembly of beneficiaries is a specific organ whose competences include, in particular, the approval of the foundation’s financial statements and decisions on matters expressly reserved to it in the statute. The scope of the assembly’s powers may be tailored by the founder to suit the specific family situation, allowing the corporate governance of the foundation to be precisely calibrated.

The statute – the foundation’s constitutional document

The statute of the family foundation, executed in the form of a notarial deed, is the foundation’s constitutional document. It must regulate, among other matters, the foundation’s purpose, the rules for maintaining the list of beneficiaries and the identification of beneficiaries (or categories of beneficiaries), the principles for granting and paying distributions, the structure and appointment of the foundation’s organs, and the rules for amending the statute and for dissolving the foundation.

The long-term effectiveness of the foundation as a succession tool depends critically on careful drafting of provisions addressing future family scenarios – including divorces, remarriages, the birth of further generations and conflicts among beneficiaries. Superficial or template-based statutes frequently become the source of serious legal complications and unforeseen tax exposure later in the foundation’s life.

The founding fund

The founder must contribute assets to cover the founding fund of the foundation, the value of which – as specified in the statute – may not be less than PLN 100,000. The founding fund may be covered both by cash and by other assets, including shares in companies, real estate, intellectual property rights or an enterprise within the meaning of the Civil Code.

The value of assets contributed to cover the founding fund is determined by reference to their market value at the date of contribution. After the foundation has been established, additional assets may be contributed to it, both by the founder and by third parties, including by way of donations or inheritance. Each such contribution must be reflected in the asset register (spis mienia), which has direct tax consequences for distributions subsequently paid to beneficiaries.

Permitted scope of business activity

A family foundation may conduct business activity exclusively within the closed catalogue set out in article 5(1) of the Family Foundation Act. This catalogue includes, among other items, the disposal of assets (provided they have not been acquired solely for resale), the leasing or other gratuitous or paid grant of use of assets, accession to and participation in commercial companies, investment funds, cooperatives and similar entities, the acquisition and disposal of securities, derivatives and similar rights, the granting of loans to specified categories of recipients, foreign exchange transactions, and certain types of agricultural and forestry activity.

The closed character of this catalogue requires careful analysis of the foundation’s intended business model already at the stage of drafting the statute. Income generated from activity falling outside the catalogue is taxed at a punitive 25% CIT rate – a substantial deterioration relative to the preferential regime applicable to in-catalogue activity.

From a foreign investor’s perspective, the most important provisions are those allowing the foundation to acquire and hold shares in commercial companies, both Polish and foreign. This makes it possible to use the family foundation as a holding company for the family’s entire corporate structure, centralising governance and rationalising dividend flows within the group.

Tax treatment of the family foundation

Subjective CIT exemption – tax-deferred accumulation

The family foundation is a CIT taxpayer but, as a general rule, benefits from a subjective CIT exemption in respect of income generated within the permitted scope of business activity. The construction is conceptually similar to the Polish Estonian-style CIT regime: the tax liability arises only at the moment a distribution is made to a beneficiary or assets are released upon dissolution of the foundation.

In practice this means that the family foundation may receive dividends from Polish and foreign subsidiaries, interest from loans and bank deposits, long-term rental income, proceeds from the disposal of securities or income from participation in investment funds – all without current CIT being payable. These funds accumulate within the foundation in their full amount, and their reinvestment in further assets does not trigger any tax liability at the foundation level.

Distributions – 15% CIT at the foundation level

When the foundation makes a distribution to a beneficiary or releases assets upon dissolution, it becomes liable to CIT at a rate of 15% calculated on the value of the distribution or assets. The taxable base is the value of the distribution, and the foundation may not reduce that base by deductible costs or depreciation.

The result is that – unlike a classical capital company, where profit is first subject to CIT and then the dividend distributed to shareholders is again taxed as capital gains – the aggregate tax burden on a distribution to a Group Zero beneficiary is 15%. For long-term family wealth this is a meaningful reduction relative to traditional dividend distribution models.

Beneficiary-level PIT – the role of family proximity

The PIT treatment of distributions in the hands of beneficiaries depends on the beneficiary’s family relationship to the founder, determined by reference to the categories used in the Inheritance and Donation Tax Act. Beneficiaries belonging to the so-called Group Zero in relation to the founder – that is, the spouse, descendants, ascendants, stepchildren, siblings, stepfather and stepmother – are fully exempt from PIT on distributions, irrespective of their amount.

Beneficiaries falling within Tax Group I or Tax Group II under the Inheritance and Donation Tax Act (for example parents-in-law, son- or daughter-in-law, nieces and nephews, the founder’s parents’ siblings) are taxed at a preferential 10% PIT rate. Other beneficiaries – including unrelated persons and more distant relatives – are taxed at 15% PIT.

Distributions from a family foundation are not subject to social security contributions or to the health insurance contribution, and they are not included in the base for the so-called solidarity levy (a 4% surtax applicable above PLN 1 million of annual income). For high-net-worth families this represents a meaningful reduction relative to traditional capital income channels.

Effective tax rates – at-a-glance summary

The combined CIT and PIT burden on distributions from a Polish family foundation can be summarised as follows (assuming the foundation is funded entirely by a single founder and the beneficiary stands in the indicated relationship to that founder):

Where the foundation has multiple founders, or where assets have been contributed by third parties, the PIT exemption (or the reduced 10% rate) applies only to that portion of a distribution which corresponds proportionally to the assets contributed by the relevant founder. This makes the structure of contributions, and a precise asset register, central to the achievable tax outcome.

Specific considerations for foreign investors

Foreign founder, internationally dispersed beneficiaries

Polish law imposes no nationality or residency restriction on the founder. A foreign investor with assets in Poland – whether shares in Polish companies, real estate, securities issued by Polish issuers or other property – may therefore validly establish a Polish family foundation and contribute Polish or foreign assets to it. Equally, the beneficiary group may include persons resident in any jurisdiction, which is particularly relevant where the family is geographically dispersed.

Distributions to non-resident beneficiaries

As a general rule, a Polish family foundation is a Polish tax resident with unlimited tax liability in Poland. Both the foundation-level CIT (15%) and any beneficiary-level PIT are settled within the Polish tax system, regardless of the beneficiary’s residency. Where the beneficiary is resident abroad, careful analysis of the applicable double tax treaty becomes essential.

Distributions made by a Polish family foundation do not always map cleanly onto the traditional treaty categories (dividends, interest, other income), which raises substantive interpretive questions. Each cross-border distribution scenario therefore warrants individual analysis combining Polish tax rules and the domestic tax law of the beneficiary’s state of residence – ideally supported, where appropriate, by an individual tax ruling issued by the Polish tax authorities.

Holding shares in Polish and foreign subsidiaries

The family foundation may hold shares in Polish and foreign capital companies, allowing it to operate as a family holding vehicle. Dividends received from Polish subsidiaries are covered by the foundation’s subjective CIT exemption.

In the case of dividends received from foreign subsidiaries, the relevant double tax treaties apply, as do – for EU-based subsidiaries – the rules implementing Council Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (the Parent-Subsidiary Directive). Withholding tax exemption on a dividend paid by an EU subsidiary requires verification of the applicable conditions, including the minimum shareholding period and the substantive economic activity (substance) requirements that the Polish implementing rules impose.

Cross-border succession and private international law

Once assets have been contributed to the family foundation, they cease to form part of the founder’s personal estate and do not pass through inheritance on the founder’s death. Distributions made by the foundation after the founder’s death are governed by the foundation’s statute, not by inheritance law.

In a cross-border context, particular attention should be paid to Regulation (EU) No 650/2012 of the European Parliament and of the Council on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession. The Regulation – applicable in most EU Member States – generally subjects the entirety of the succession to the law of the State of habitual residence at the time of death, with an option to choose the law of the State of nationality. Properly aligning the family foundation structure with these cross-border succession rules is one of the most important elements of wealth planning for the foreign investor.

With respect to the Polish forced heir reserve (zachowek), the Civil Code introduces a meaningful limitation – under article 994 § 1¹, the value of distributions received by a beneficiary from the family foundation, and of assets received upon its dissolution, is added to the estate for the purposes of calculating the reserve only within the scope set out in the statute. This creates room for effective wealth planning that mitigates the risk of claims from disinherited heirs, which is of particular value in complex family configurations.

Practical implementation – key recommendations

The statute as a long-term governance instrument

Drafting the statute of a family foundation requires careful design of mechanisms for situations that may arise across several generations. The statute should, in particular, precisely define the circle of beneficiaries and the criteria for acquiring or losing beneficiary status, the principles and procedure for paying distributions (including any conditions attached), mechanisms for managing conflicts among beneficiaries, and the rules for amending the statute after the founder’s death. Any of these matters left unaddressed may, years later, become the source of significant legal complications requiring costly judicial intervention.

Asset register and its tax implications

Each contribution of assets to the family foundation must be reflected in the asset register, which records the origin of each component of the foundation’s wealth. This has direct consequences for the taxation of subsequent distributions: where the foundation has multiple founders, or where third parties have contributed assets, the PIT rate applicable to distributions is determined proportionally to the relevant founder’s share in the total assets of the foundation.

From a tax planning perspective, it is important to ensure that all – or at least the predominant part – of the foundation’s assets originates from the founder whose immediate family will be the principal beneficiary group. In structures where the foundation receives assets from more than one founder or from third parties, the effective tax rate on distributions may be materially higher than the headline rates suggest.

Compliance and monitoring of the regulatory environment

Given the statutory review of the Family Foundation Act expected after 22 May 2026, and the announced resumption of legislative work on the tax regime, every family using a foundation as part of its wealth structure should implement systematic monitoring of regulatory developments. Decisions on significant restructuring or disposal of foundation assets in 2026 should be considered in light of the risk that a future amendment may introduce a lock-up period or other restrictions materially affecting the efficiency of comparable transactions in the new regime.

International groups – transfer pricing discipline

Where the family foundation forms part of an international corporate group and engages in transactions with related parties – in particular where it operates as a holding company controlling foreign subsidiaries – appropriate transfer pricing policies must be implemented. Related-party transactions exceeding the statutory thresholds require local transfer pricing documentation, and remuneration for services must be set on an arm’s-length basis. Failure to comply may not only trigger ordinary transfer pricing consequences but also expose the foundation to recharacterisation of the transactions as hidden profits subject to the 15% CIT.

Conclusions and strategic recommendations

The Polish family foundation is a powerful instrument for foreign investors planning the succession of wealth accumulated through investment activity in Poland or via Polish holding structures. The combination of a flexible legal architecture, a preferential tax regime and effective limitation of forced heir reserve claims places it in line with the most sophisticated international family wealth planning tools.

The current legal framework – stabilised in 2026 by the presidential veto of 27 November 2025 against the planned tax tightening – creates a window of relative regulatory certainty that warrants disciplined use to put long-term wealth structures in place. At the same time, the upcoming statutory review after 22 May 2026 and the announced return of legislative work on the regime require ongoing attention and the willingness to adapt wealth management strategies as the regulatory environment evolves.

Effective use of the family foundation requires an individually tailored design that takes account of the founder’s asset base, the beneficiary structure, the planned distribution policy and the international dimension of the family. The support of legal and tax advisers with significant experience in advising foreign investors remains essential to achieve the intended outcomes and to avoid tax exposures which – in the case of misclassified transactions or documentary shortcomings – can materially erode the benefits of the family foundation regime.

ABOUT ATL LAW

ATL Law is a Polish law firm specialising in comprehensive legal services for foreign investors active on the Polish market. We provide multilingual advice in corporate law, tax law, succession planning and employment law. We have substantial experience in designing family foundation structures for international business families, including the drafting of statutes, tax planning and obtaining individual tax rulings to secure long-term wealth strategies. We support our clients at every stage – from structural concept and implementation, through ongoing operations, to representation in tax proceedings and forced heir reserve disputes