Contributing Shares to a Polish Family Foundation and Liquidating the Underlying Company
Promise, Peril, and the Emerging Jurisprudence of Artificiality
A construction that appears flawless in the abstract – which is precisely why the Polish tax authorities have learned to recognize it.
The proposition is seductive in its elegance. A taxpayer holds a limited liability company (spółka z ograniczoną odpowiedzialnością, hereinafter “sp. z o.o.”) whose assets consist of real property, term deposits, or an investment portfolio. The company has served its original purpose but continues to generate compliance costs – accounting, commercial registry filings, annual financial statements, corporate income tax returns. The taxpayer establishes a family foundation (fundacja rodzinna, hereinafter “FR”), contributes the entirety of his shares in the company to the foundation, and subsequently causes the company to be dissolved and liquidated. The foundation receives the liquidation surplus free of corporate income tax – by virtue of its blanket CIT exemption – and the taxpayer, now in his capacity as beneficiary, withdraws funds at an effective rate of 15%, rather than the 19% personal income tax that would have attached to a direct liquidation distribution. Moreover, the taxpayer retains sole discretion over the timing of the withdrawal. The result is a lower rate, a deferral mechanism, and unilateral control over the moment at which the tax obligation crystallises.
What, one might ask, could possibly go wrong?
I. Why This Scheme Has Achieved Ubiquity
The “contribute-shares, liquidate-company, distribute-through-foundation” construction is not the invention of any single adviser. It appears across dozens of practitioner articles, AI-generated legal analyses, and even certain professional publications of otherwise reputable provenance. Its proliferation is attributable to a straightforward cause: each constituent element of the scheme, examined in isolation, is legally unimpeachable.
The contribution of shares to a family foundation finds express statutory authorisation in Article 5(1)(3) of the Act on Family Foundations of 26 January 2023 (Dz.U. 2023, item 326; hereinafter the “FR Act”), which permits the foundation to hold participations in commercial-law companies. The transfer of shares in a sp. z o.o. to the FR is tax-neutral at the foundation level, the foundation being subject to the blanket CIT exemption under Article 6(1)(25) of the Corporate Income Tax Act of 15 February 1992 (hereinafter “PDOPrU”).
The liquidation of the sp. z o.o. results in the distribution of a liquidation surplus to the shareholder – here, the FR. At the foundation level, the receipt of liquidation proceeds constitutes an incident of “participation in a company” within the meaning of Article 5(1)(3) of the FR Act. The foundation incurs no CIT liability on the surplus received.
The distribution to a beneficiary is subject to 15% CIT levied on the foundation itself (Article 24q(1)(1) PDOPrU). Where the beneficiary belongs to the so-called “Group Zero” – a category encompassing the founder, the founder’s spouse, descendants, ascendants, and siblings – the distribution is exempt from personal income tax under Article 21(1)(157)(b) of the Personal Income Tax Act of 26 July 1991 (hereinafter “PDOFizU”).
Each element, taken alone, is lawful, doctrinally supported, and uncontroversial. The difficulty arises not from any deficiency in the individual components, but from the sequence in which they are assembled and the tempo at which the assembly is executed.
II. The Jurisprudential Landscape: Two Judgments That Redefine the Risk Calculus
The year 2025 produced a pair of Provincial Administrative Court (Wojewódzki Sąd Administracyjny, hereinafter “WSA”) judgments that have fundamentally altered the analytical framework within which this construction must be assessed. These are not decisions addressing exotic tax-avoidance schemes. They concern precisely the architecture described above: family foundations deployed as vehicles for the re-characterisation of the tax regime applicable to existing assets. For a comprehensive treatment of the GAAR clause in Poland and the tax avoidance proceedings framework, see our separate analyses.
A. WSA Gdańsk, 5 August 2025 (I SA/Gd 432/25)
The facts were as follows. A founder who had extended loans to companies in which the FR held shares proposed to assign the resulting receivables – both principal and accrued interest – to the family foundation by way of cesja wierzytelności (assignment of claims). The economic consequence was transparent: interest income that had theretofore constituted PIT-taxable revenue of the founder would, post-assignment, flow to the FR under the Article 6(1)(25) CIT exemption. The tax obligation would materialise only upon distribution to a beneficiary – and the founder, through the foundation’s charter (statut), would retain sole discretion over the timing of any such distribution.
The court’s conclusion was unequivocal. The family foundation was characterised as – the formulation now carries the weight of judicial authority – “an instrument for deferring the creation of a tax obligation in respect of funds originally due to the founder.”
The opinion of the Head of the National Revenue Administration (Szef Krajowej Administracji Skarbowej, hereinafter “Szef KAS”), which underpinned the court’s reasoning, articulated the point with even greater directness: the economically rational course of action would have been for the companies to pay the loan interest directly to the founder – the party who had, after all, advanced the funds – without the interposition of the family foundation. The routing of those payments through the FR served no economic function other than the generation of a tax advantage.
The court emphasised that the establishment of a family foundation ought to serve, above all, the accumulation and management of assets and the facilitation of succession – not the introduction of an intermediary entity designed to enable tax optimisation. This proposition, though it may read as self-evident, now possesses the force of adjudicative authority.
B. WSA Poznań, 15 April 2025 (I SA/Po 782/24)
This judgment bears even more directly upon the contribute-and-liquidate paradigm. The founder proposed to transfer to the FR the aggregate of rights and obligations (ogół praw i obowiązków) in several partnerships – a transaction that would have triggered the dissolution of those partnerships by operation of law – and subsequently to avail himself of the FR’s preferential tax treatment upon distributions to beneficiaries.
The court upheld the tax authority’s refusal to issue a binding ruling (interpretacja indywidualna), identifying three features of particular analytical significance.
First, the court found that the family foundation was to be deployed as an instrument for the appropriation of tax privileges incidental to the foundation’s legal form – not as a vehicle for genuine succession planning.
Second, the court applied a deceptively simple logical test that merits close attention: if the ultimate objective was the liquidation of the companies, the founder could have accomplished that objective directly, without interposing the family foundation at all. If one’s purpose is to eliminate a corporate vehicle, the creation of a new entity on the path to that elimination is not merely unnecessary – it is, absent a tax motivation, inexplicable. Where the destination is dissolution, the family foundation is not a road but a detour, and the only reason to take a detour is the scenery along the way – which, in this instance, consists entirely of tax preferences.
Third, the court observed that the succession and asset-protection dimensions – which constitute the ratio legis of the family foundation as an institution – were scarcely addressed in the ruling request. The application was preoccupied with tax consequences to the virtual exclusion of all else.
III. The Anatomy of Artificiality: Why “Administrative Simplification” Fails as a Justification
The most frequently invoked rationale for liquidating a sp. z o.o. after contributing its shares to an FR is “structural simplification” – the elimination of a redundant corporate vehicle. The argument, on its face, possesses a certain intuitive plausibility: if the company’s sole assets are real properties that could be managed directly by the foundation, why maintain the corporate shell?
The difficulty is that this argument, when subjected to rigorous analysis, establishes precisely the proposition it purports to refute.
If the taxpayer’s genuine objective is the elimination of a superfluous entity, the most efficient path to that objective is the liquidation of the company without the creation of a new entity. The shareholder receives the liquidation surplus, discharges a 19% PIT liability, and from the following day operates within a simplified structure. If the shareholder subsequently wishes to establish a family foundation and contribute the real property to it – nothing prevents this. That sequence achieves both stated objectives: simplification (through the dissolution of the company) and succession (through the subsequent establishment of the foundation).
The reversal of this sequence – foundation first, share contribution second, corporate liquidation third – does not constitute simplification. It constitutes substitution: one entity (the sp. z o.o.) is replaced by another (the FR), with the sole material difference between the ante and post states residing in the applicable tax regime. This is precisely the condition that Article 119c § 2(3) of the Tax Ordinance Act of 29 August 1997 (hereinafter “OrdPU”) identifies as a hallmark of artificiality: “elements leading to the achievement of a state identical or similar to the state existing prior to the transaction.”
The WSA Poznań formulated the point with characteristic directness: “Rather than engaging the family foundation in the described transactions, the objectively less complicated course of action would have been the prior liquidation of the companies and the contribution of the assets thereby received by the founder to the foundation.” The court performed the rationality test on behalf of the taxpayer. The result admits of no ambiguity.
IV. When the Construction Is Defensible
Nothing in the foregoing analysis suggests that a family foundation may not hold shares in a sp. z o.o., nor that a company owned by an FR may never be dissolved and liquidated. The proposition is considerably more precise than that: sequence and tempo are determinative.
The family foundation is established with a genuine succession purpose. The charter identifies specific beneficiaries by name or by ascertainable category, provides for multigenerational wealth transfer, and establishes governance mechanisms that transcend the formula “distribute to the founder upon demand.” The charter is not a formality; it is the primary evidentiary record of purpose.
The shares in the sp. z o.o. are contributed as a component of the foundation’s long-term portfolio, not as a transitory stage preceding liquidation. The foundation assumes its role as shareholder; the company continues its operations – rental management, real-estate administration, investment activity – and dividend distributions flow to the FR in the ordinary course of business. This pattern of activity constructs the operational history that constitutes the most effective defence against an allegation of artificiality. For the relationship between the family foundation and a holding structure, see our separate analysis.
The liquidation of the company occurs after a period of genuine operation under FR ownership – not as a predetermined element of the initial scheme, but as a response to a subsequent change in circumstances. The disposal of all rental properties, the consolidation of a multi-entity portfolio, a strategic reorientation of the foundation’s investment policy – these are rationales that withstand scrutiny.
The documentary record is not exclusively preoccupied with tax consequences. The Szef KAS, in the opinion underlying the Gdańsk judgment, noted that the ruling request “focused on the payment of interest to the Foundation” while “the succession and asset-protection dimensions were scarcely addressed, notwithstanding that they constitute the essence of the family foundation as an institution.” Where the only question a taxpayer poses to the authorities is “will I pay less tax?”, the taxpayer has, in effect, supplied the answer to the question the authorities have not yet asked.
V. The Threshold That Many Overlook: “Reasonable Suspicion”
One further element warrants attention, for it materially alters the risk calculus. In order for the tax authority to refuse the issuance of a binding ruling under Article 14b § 5b(1) of the Tax Ordinance, it need not prove that tax avoidance has occurred. The statutory threshold is “reasonable suspicion” (uzasadnione przypuszczenie) – an argued prediction that tax avoidance may be present.
The WSA Poznań defined this standard with precision: “A suspicion – unlike proof – does not require certainty as to a given conclusion.”
The practical implication is sobering. Even where the taxpayer is confident in the soundness of the structure, the authority may decline to issue a ruling on the basis of the transaction’s architecture alone. And absent a favourable ruling, the taxpayer possesses no protective shield. The taxpayer is left with a structure that no administrative body has endorsed, in an environment where the emerging case law points in an uncomfortable direction.
VI. The Real Question
The Polish family foundation is, arguably, the most significant succession-planning instrument that the Polish legislature has introduced in the past two decades. But like any powerful instrument, it demands proper deployment. The question is not whether one may contribute shares to an FR and subsequently liquidate the underlying company. As a matter of technical law, one may.
The question is whether the manner in which one does so appears to constitute succession planning – or tax engineering.
The distinction between these two characterisations does not reside in the text of any statute. It resides in the sequence of transactions, in the tempo of their execution, in the documentary record that accompanies them, and – above all – in whether the family foundation is an end in itself or merely a waystation on the road to a lower tax burden.
The jurisprudence of 2025 has delivered an unambiguous answer as to which side of that line the “establish, contribute, liquidate” paradigm occupies. It is an answer worth reading before one begins to act.
—
This article is provided for informational purposes only and does not constitute legal or tax advice. Any structure involving a Polish family foundation requires individualised legal analysis taking into account the specific factual circumstances, commercial objectives, and tax profile of the founder.
Kancelaria Prawna Skarbiec specialises in the establishment and administration of family foundations, succession planning, and GAAR risk analysis.
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.
