A family foundation is a separate legal person to which the founder transfers assets — shares in companies, real estate, savings — so that it manages them in the interest of named beneficiaries and pays them benefits. Its core advantage is continuity: the assets are not split in inheritance, and the rules of their use are set by the founder up front in the statute. The institution was introduced by the Act of 26 January 2023 on the Family Foundation, together with special tax rules.
Who the family foundation is for
The solution is most often considered by:
- owners of family firms who want to avoid fragmenting shares among heirs and secure stable management for the company;
- people with a portfolio of rental properties who plan to pass it to their children;
- entrepreneurs running several companies who want a single entity holding the shares and reinvesting the dividends.
With modest assets or a single apartment, notarial, accounting and organisational costs usually exceed the benefits. A foundation makes sense when there is something to protect and someone to pass it to.
Key statutory rules
| Element | Rule |
|---|---|
| Founder | Only a natural person with full legal capacity; there may be several founders, unless the foundation arises from a will |
| Form of establishment | Founding deed or will — both in the form of a notarial deed; the statute also requires this form |
| Founding fund | Property of a value specified in the statute, no less than PLN 100,000 |
| Register | The Register of Family Foundations is kept by the District Court in Piotrków Trybunalski; legal personality arises on entry |
| Filing deadline | 6 months from drawing up the founding deed or opening the will — otherwise the foundation in organisation is dissolved |
| Bodies | Management board and beneficiaries' assembly; a supervisory board is mandatory where there are more than 25 beneficiaries |
The founder is not liable for the foundation's debts. The reverse relationship, however, exists to a limited extent: the foundation is jointly and severally liable with the founder for obligations incurred before its establishment, up to the value of the property brought in. Transferring assets to the foundation therefore does not protect against existing creditors.
What the foundation can do and what it cannot
A family foundation is not an ordinary commercial company. Under Article 5 of the Act, business activity is permitted only within a defined scope, including:
- disposing of property, provided it was not acquired solely for resale;
- leasing, letting and otherwise making property available;
- participation in companies, investment funds and cooperatives;
- trading in securities and similar instruments.
Operational activity — e.g. selling services or trading — is therefore carried out in subsidiaries, while the foundation remains their shareholder.
Taxation in 2026
Foundation level
The CIT Act exempts the family foundation from tax within the permitted scope — with exceptions, e.g. for revenue from letting property used in the activity of the founder, a beneficiary or a related party. Tax arises only on payout: on benefits for beneficiaries, on property transferred upon dissolution of the foundation and on so-called hidden profits, the rate is 15%. Activity going beyond the catalogue in Article 5 of the Act on the family foundation is taxed at 25%, with no right to exemptions. The foundation files the annual return electronically by the end of the third month of the following year.
Beneficiary level
Under the PIT Act, benefits received by the founder and their closest family — spouse, descendants, ascendants, stepchild, siblings, stepfather and stepmother — are exempt. Other persons in tax group I or II pay a flat tax of 10%, and more distant beneficiaries — 15%.
Example: the foundation holds shares in a sp. z o.o. and receives a dividend from it. The dividend in the foundation is not taxed as long as it stays there and is reinvested. When the foundation pays out PLN 100,000 as a benefit to the founder's daughter, it will pay PLN 15,000 of CIT, and the daughter — as a member of the closest family — will not pay PIT. This shift of the moment of taxation is the main tax benefit of the foundation.
Setting up the foundation step by step
- Analysis of assets and goals — what will go into the foundation, who is to be a beneficiary, what are the tax effects of contributing particular items.
- Statute and property list — the statute specifies, among others, the aim, beneficiaries, rules of the beneficiaries' list and duration; the property list identifies the components of the founding fund and their value.
- Notarial deed — drawing up the founding deed, from which the foundation in organisation exists.
- Appointment of the management board and collection of written consents of body members.
- Filing with the register in Piotrków Trybunalski — the court fee for filing is PLN 500 (under the Act on court costs in civil cases), for subsequent entry applications — PLN 250.
- Contributing property and accounting — the foundation keeps full books of account and draws up financial statements.
Most common mistakes
- Contributing property without analysing the effects — e.g. transferring items from a business may trigger tax at the founder's level.
- Too general a statute, which does not resolve how management board members are to be replaced after the founder's death.
- Payouts to the family in the form of loans not repaid on time or granted for at least 10 years, or free use of property — the CIT Act treats them as hidden profits.
- The foundation carrying out activity outside the catalogue and unknowingly entering the 25% rate.
If the assets include a firm run as JDG, the first stage is often a change of legal form — we describe it in our article on conversion of JDG into a sp. z o.o.
How Good Balance can help
We help assess whether a family foundation is the right succession tool, draw up the statute, property list and application to the register, and after registration we run full accounting and tax settlements for the foundation. Details are on the page on foundation registration.