We keep the Family Foundation’s books of account so that you gain security

As of 22 May 2023, the possibility of creating the so-called family foundations has become available in Poland. This legal form, which has been present in many countries for a long time, is something completely new in Polish legislation – hence, on the one hand, the great interest in this legal form and, on the other hand, many questions and doubts regarding this topic.

• Full regulatory compliance – we ensure that the books of account are kept in accordance with the Accounting Act and the Family Foundations Regulations.
• Specialisation in family foundations – we are familiar with the specifics of foundation operations, which guarantees the accuracy and effectiveness of our services.
• Tax optimisation – we help minimise the tax burden, including CIT and benefit payments to beneficiaries.
• Professional financial statements – we prepare and review all the required documents to comply with legal requirements and to be legible to audit authorities.
• Asset valuation support – we deal with the professional valuation of the foundation’s assets, crucial for its operation and management.
• Flexibility and individual approach – we tailor the scope of services to the specific needs of each foundation.
• Security of assets – we are committed to financial transparency, which promotes the protection and effective management of funds raised.
• Reporting for the founder and beneficiaries – we provide clear and transparent reports so that founders and beneficiaries have a complete overview of the foundation’s financial situation.
• Compliance with new regulations – we keep abreast of changes in the law relating to family foundations and adapt the accounting to current requirements on an ongoing basis.
• Save time and minimise errors – we take over accounting responsibilities, freeing the founder from complex formalities.
• Audit support – we prepare the foundation for possible tax inspections and audits, ensuring the complete documentation.
• Dedicated account manager – each client receives a personal specialist who is familiar with the specifics of their foundation.
• Modern technology solutions – we use advanced accounting tools to make the work fast and accurate.
• Support in settlements with beneficiaries – we assist in recording and correctly taxing benefits paid to beneficiaries.
• Comprehensive service – in addition to accounting, we offer tax consultancy, legal assistance and support in foundation management.

Benefits from setting up a family foundation

Generally speaking, the family foundation aims to:

• protect the family assets and manage them in accordance with the founder’s wishes;
  It is worth noting here that the assets contributed to the foundation will not be encumbered by any claims against the founder arising after the foundation has been set up (except for maintenance obligations);
• ensure succession and continuity of operation in the event of the founder’s death (bypassing succession procedures, avoiding accidental, non-optimal successions).

Legal and tax issues in a family foundation

• In a family foundation, the founder entrusts the family assets (the foundation fund must not be less than PLN 100,000) to the foundation to manage.
• The foundation itself has legal personality, a management board and decision-making bodies. It may carry out business operations within the scope of the law.
• The beneficiaries, which is usually the family of the founder (but may also be the founder themselves, a non-profit organisation, any natural person) benefit from the funds paid by the foundation.

How to set up a foundation on a family business?

A family foundation can be set up through:

• the articles of association;
• the will.

Taxation of a family foundation – what do you need to know?

Crucially, the family foundation is proving to be a very tax-advantageous solution. Key tax benefits include:

Deferral of CIT payment	15% CIT on distributions	PIT exemption for beneficiaries
In the case of a family foundation, as with the Estonian CIT, the obligation to pay CIT only arises when benefits are paid to beneficiaries. Until the benefits are paid, the family foundation can trade assets without deducting the profits made from income tax – and this significantly increases financial liquidity.	When paying benefits to beneficiaries, the foundation pays 15% CIT.	When the funds are disbursed to the beneficiaries, the beneficiaries are exempt from PIT as long as they belong to the so-called “zero group” with respect to the founder, i.e. the immediate family (spouse, descendant, ascendant, stepchild, sibling, stepfather/ stepmother) or pay 15% PIT (other beneficiaries).

However, it is worth noting that a family foundation is not able to replace, for example, a company, due to the fact that the scope of its activity is strictly defined by law.

The above description gives a broad overview of the main aims and objectives of the family foundation. It is worth looking into this topic, as setting up a family foundation may prove to be a good way for you to secure your assets and guarantee the sustainable and stable development of your business over a multi-generational horizon.

Choose effective family foundation accounting

Crucially, however – when deciding to set up a family foundation – it is worth entrusting this to professionals. This is the only way to guarantee that the whole process will be carried out smoothly and in accordance with all regulations and deadlines.

At Efekta Accounting Office, we have specialists in the field of accounting, tax advisers and also work closely with law firms. We offer our clients comprehensive support and, in the case of family foundations, a full service:

• setting up a family foundation;
• the accounting service of the family foundation and complete accounting and legal support during its lifetime.

By choosing to work with us, you are guaranteed a top-quality accounting service. Make an appointment for a free consultation.

Questions and answers

How much income tax is payable by a family foundation in Poland?

A family foundation is in principle exempt from corporate income tax (CIT). However, when benefits are paid to beneficiaries, the foundation is liable to pay 15% CIT on the value of these benefits. In addition, beneficiaries may be required to pay inheritance and gift tax, the rate of which is 19% on the tax base.

Who are the bodies of the family foundation?

The family foundation operates through the following bodies:

• Management Board: responsible for managing the foundation’s affairs and representing it.
• Beneficiaries’ assembly: the body in which participate the beneficiaries entitled to do so under the statutes.
• Supervisory Board: a supervisory body whose appointment is mandatory when the number of beneficiaries exceeds 25.

Does the foundation pay corporate income tax?

The family foundation is a CIT taxpayer, but enjoys a subjective exemption from this tax. This exemption does not apply in the case of business activity outside the scope permitted by the Family Foundation Act.

Who is the beneficiary, the founder?

• Founder: a natural person with full legal capacity who sets up a family foundation by donating assets to it and defining its objectives and operating principles.
• Beneficiary: a natural person or a non-governmental organisation carrying out public benefit activity for the benefit of which the foundation provides benefits in accordance with the provisions of its statutes.

How to settle the revenue of a family foundation?

A family foundation is exempt from CIT on its revenue, except when it conducts business activity beyond the permitted scope. When benefits are paid to beneficiaries, the foundation is liable to pay 15% CIT on the value of these benefits.

Is CIT the biggest benefit of setting up a family foundation?

The subjective exemption from CIT is an important benefit, but not the only one. A family foundation enables effective management of family assets, their protection from fragmentation and intergenerational succession planning. In addition, beneficiaries can benefit from the foundation’s benefits, which promotes family and business goals.

Can the EFEKTA Accounting Office audit the tax issues of a family foundation?

Yes, EFEKTA Accounting Office can audit the tax issues of a family foundation, offering comprehensive support in the area of bookkeeping and analysis of the compliance of the foundation’s operations with the law, including the Accounting Act.

As part of the audit, EFEKTA assesses, among others, the correctness of the CIT-related settlements, verifies that the foundation correctly gathers and records its revenue and expenses. An important part of the audit is also the valuation of the foundation’s assets and the preparation and verification of the financial statements, which are mandatory for every entity covered by the Accounting Act.

EFEKTA Accounting Office provides support at every stage of a family foundation’s operations, helping to optimise financial and tax processes and ensuring full compliance with legal regulations. Using an audit service is a guarantee of a reliable and comprehensive assessment of the foundation’s tax situation.

Do you want to learn more? Read the following Family Foundations Act of 26 January 2023