The Polish Family Foundation as a Tax Planning Vehicle
When Asset Protection Becomes Impermissible Avoidance
I. Introduction
The Polish family foundation (fundacja rodzinna), introduced by statute in 2023, was designed principally to facilitate intergenerational wealth transfer and the orderly succession of family enterprises. Recent administrative determinations by the Head of the National Revenue Administration (Szef Krajowej Administracji Skarbowej, hereinafter “KAS”), however, reveal an emerging doctrinal boundary between permissible tax planning and impermissible avoidance under Poland’s General Anti-Avoidance Rule (“GAAR”). A series of denials of protective opinions (odmowa wydania opinii zabezpieczającej) issued in December 2024 demonstrates the authorities’ willingness to scrutinize family foundation structures that appear designed primarily to secure tax advantages rather than to effectuate genuine succession planning.
II. The December 2024 Denials: A Doctrinal Framework Emerges
A. The Interposition of a Foundation as an Artificial Intermediary
In its denial dated December 18, 2024 (Ref. No. DKP1.8082.4.2024), the KAS examined a proposed transaction in which the founders intended to contribute their aggregate rights and obligations (ogół praw i obowiązków) in commercial partnerships to a family foundation, whereupon the foundation would dispose of those interests and distribute the resulting proceeds to its beneficiaries. The KAS concluded that this sequence of transactions constituted impermissible tax avoidance.
Central to the authority’s reasoning was the determination that the family foundation would function merely as a superfluous intermediary entity. The KAS found that the foundation’s participation in the disposition was motivated solely by the more favorable tax treatment applicable to the sale of partnership interests by a foundation, as compared to the tax consequences that would obtain were the founders to execute the transaction directly. As the KAS observed, “the legislative purpose underlying the Family Foundation Act was to strengthen comprehensively the legal instruments available for succession planning—not to facilitate the creation of intermediary entities or financial vehicles for the planned disposition of equity interests.”
The KAS placed particular emphasis on the taxpayers’ conduct with respect to a limited partnership (spółka komandytowa) that had acquired corporate income tax status. Following this tax status change, the partners had refrained from making any distributions from the partnership. Only upon the foundation’s anticipated disposition of the partnership interests would any monetary distribution to the ultimate beneficiaries occur. The KAS characterized this pattern as follows:
The applicants failed to present a persuasive business rationale explaining why, from the moment [the partnership] became a CIT taxpayer—when any profit distribution would be subject to partner-level taxation—they effectively ceased making profit distributions and sought de facto to effect such distributions only through the disposition of equity interests via the Family Foundation…. Considering the strategy adopted by the parties, which entailed withholding profit distributions for three years in an amount exceeding [redacted] PLN, followed by the intention to distribute such profits only through the disposition of equity interests via the Family Foundation, one may conclude that executing the transaction in this manner constituted intentional and premeditated conduct—the establishment of the Family Foundation was directly correlated with the desire to consummate the disposition of equity interests.
Substantially similar reasoning informed the denial issued on December 16, 2024 (Ref. No. DKP1.8082.3.2024).
B. Temporal Proximity as Indicia of Artificiality
The denial dated December 19, 2024 (Ref. No. DKP1.8082.7.2023), addressed a transaction in which the founders proposed to transfer shares in a limited liability company (spółka z ograniczoną odpowiedzialnością) to a family foundation, with the foundation disposing of those shares shortly thereafter. The KAS articulated the following principle:
The immediate sale of shares in a capital company through a family foundation, followed by the distribution of monetary proceeds to the foundation’s beneficiaries, may give rise to the inference that the family foundation has been utilized exclusively for transactional purposes—namely, to dispose of such shares with a reduced tax burden.
Particularly probative in this matter was the evidence that the founders had contemplated the disposition of their shares for a considerable period prior to establishing the foundation. Upon formation of the foundation, they contributed the shares by way of gift, and—as noted—the disposition occurred shortly thereafter. The KAS reasoned:
In the present matter, the Applicants, notwithstanding their longstanding efforts directed toward the sale of shares in the limited liability company, established a family foundation and, shortly after its formation, elected to contribute those shares by way of gift (the disposition transaction having been in preparation well before the foundation’s establishment, and thus not encompassing any succession-related objective). Approximately two months later, they disposed of the shares—conduct that does not appear consistent with the behavior of a rational actor, absent the motivation of securing a tax advantage.
III. Distinguishing Permissible Planning from Aggressive Avoidance
The analytical framework emerging from these denials suggests that the temporal sequence of transactions assumes critical significance. Where founders have contemplated the disposition of assets for an extended period, subsequently establish a family foundation, and almost immediately dispose of contributed interests, the KAS is prepared to characterize such conduct as artificial—undertaken solely to obtain a tax benefit.
The following factual circumstances appear particularly probative of impermissible avoidance:
- The foundation functions solely as a transactional intermediary in the disposition of equity interests, lacking independent economic substance or purpose.
- Partners or shareholders systematically deferred profit distributions over an extended period, with the apparent intention of realizing accumulated value through the foundation structure.
- Minimal temporal separation exists between the foundation’s establishment and the disposition of contributed assets.
- The founders had formulated disposition plans prior to—and independent of—the foundation’s creation, suggesting that succession planning was not the animating purpose.
It bears noting that the Ministry of Finance, cognizant of the potential for abuse, is reportedly developing legislative amendments to address perceived deficiencies in the current regulatory framework governing family foundations.
IV. Conclusion
Significantly, in prior protective opinions, the KAS has repeatedly confirmed that family foundations established for the purpose of ensuring intergenerational succession or effectuating efficient management of family assets do not raise concerns under the GAAR. For entrepreneurs contemplating the utilization of a family foundation, it is therefore essential to articulate a genuine business purpose and to structure transactions in a manner that mitigates the risk of GAAR application.
The demarcation between permissible optimization and impermissible avoidance emerges with reasonable clarity from the authorities’ recent determinations: a family foundation must serve bona fide succession objectives rather than function merely as a transactional vehicle designed to secure favorable tax treatment. Where the factual record suggests the latter characterization, taxpayers should anticipate heightened scrutiny and the potential denial of protective relief.
Robert Nogacki – licensed legal counsel (radca prawny, WA-9026), Founder of Kancelaria Prawna Skarbiec.
There are lawyers who practice law. And there are those who deal with problems for which the law has no ready answer. For over twenty years, Kancelaria Skarbiec has worked at the intersection of tax law, corporate structures, and the deeply human reluctance to give the state more than the state is owed. We advise entrepreneurs from over a dozen countries – from those on the Forbes list to those whose bank account was just seized by the tax authority and who do not know what to do tomorrow morning.
One of the most frequently cited experts on tax law in Polish media – he writes for Rzeczpospolita, Dziennik Gazeta Prawna, and Parkiet not because it looks good on a résumé, but because certain things cannot be explained in a court filing and someone needs to say them out loud. Author of AI Decoding Satoshi Nakamoto: Artificial Intelligence on the Trail of Bitcoin’s Creator. Co-author of the award-winning book Bezpieczeństwo współczesnej firmy (Security of a Modern Company).
Kancelaria Skarbiec holds top positions in the tax law firm rankings of Dziennik Gazeta Prawna. Four-time winner of the European Medal, recipient of the title International Tax Planning Law Firm of the Year in Poland.
He specializes in tax disputes with fiscal authorities, international tax planning, crypto-asset regulation, and asset protection. Since 2006, he has led the WGI case – one of the longest-running criminal proceedings in the history of the Polish financial market – because there are things you do not leave half-done, even if they take two decades. He believes the law is too serious to be treated only seriously – and that the best legal advice is the kind that ensures the client never has to stand before a court.
