Announcement of changes
In early August, the Minister of Finance announced the principles of a draft bill amending the Corporate Income Tax Act. The bill was intended to change the taxation of family foundations. According to the Ministry, family foundations are too often established not to secure assets and ensure the succession of family businesses, but solely to benefit from preferential taxation through aggressive tax optimization. Therefore, the proposed changes would include taxation of short-term rentals in family foundations, taxation of family foundations on participation in foreign tax-transparent companies and controlled foreign entities (CFCs), and imposing a three-year grace period on the sale of tax-exempt property.
Current status
The issue of short-term rentals is still a subject of tax disputes. On the one hand, family foundations benefit from tax exemptions for renting out property, but on the other, tax authorities believe that short-term rentals are not truly leases and should therefore be taxed at a punitive rate of 25%. However, in recent rulings, administrative courts have sided with family foundations, arguing that there is no basis for differentiating the tax consequences of leases defined in the Civil Code and short-term rentals.
More on this topic: Short-term rental in a family foundation
Similar to short-term rentals, cases concerning the taxation of family foundations in connection with their participation in tax-transparent companies (especially Luxembourg companies) also often end up in court. Tax authorities believed that, although such companies operate like investment funds, they are tax-transparent and do not fall within the statutory scope of a family foundation's activities (joining commercial companies, investment funds, cooperatives, and similar entities based in Poland or abroad, as well as participating in these companies, funds, cooperatives, and entities). In this case, courts often side with taxpayers, finding that the company's tax status is irrelevant when assessing whether a foreign company is a commercial company or not.
There is currently no doubt that family foundations do not pay tax on entities that meet the criteria for being considered foreign-controlled entities. Statutorily, they are exempt from taxation in connection with their participation in commercial companies, regardless of whether such companies are based in a tax haven or not.
However, it is controversial whether the disposal of foundation assets shortly after their contribution constitutes a taxable event. On the one hand, a foundation benefits from a tax exemption when disposing of property, provided the property was not contributed for the purpose of disposal. On the other hand, the exemption applies to the acquisition and disposal of securities, derivatives, and similar rights without any restrictions. Determining that the purpose of contributing assets was to dispose of them is difficult to establish and does not rest on clear premises. Opinions differ, for example, on whether an in-kind contribution by a family foundation in the form of acquired property is taxable or not. Tax authorities have historically held that it is. Contributing an in-kind contribution is a form of disposing of property. However, some administrative courts have held that since a family foundation can acquire securities, an in-kind contribution in exchange for company shares cannot be taxed.
Bill
On Friday, August 29th, a draft amending act was published. This bill introduces taxation on family foundations in the following areas:
- foreign controlled entity;
- income from unrealized profits (exit tax);
- lease of residential buildings and premises, excluding direct lease by a family foundation for residential purposes;
- disposal of property acquired from a related entity, if it occurs within 36 months of the end of the year in which it was acquired;
- shares in companies, funds and cooperatives conducting business activities, if they are not subject to income tax or benefit from exemption from taxation on their entire income.
According to the bill, the act is to enter into force on January 1, 2026. However, restrictions on the sale of property by a family foundation will apply to property acquired by it after August 31, 2025. Before it comes into force, the act must be voted on in the Sejm and Senate and signed by the President.
This article is for informational purposes only and does not constitute legal advice.
The law is current as of September 8, 2025.
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