The introduction of family foundations into the Polish system has attracted considerable interest, primarily due to the broad CIT exemption (Article 6(1)(25)). However, the practice of the Head of the National Revenue Administration shows that not every foundation structure will be accepted. In 2024\u20132025, a series of negative opinions on family foundations were issued, including DKP1.8082.3.2024, DKP1.8082.4.2024, DKP16.8082.14.2024). The conclusions from these decisions can be summarised in five practical \u201cred flags\u201d.<\/p>\n\n\n\n
I will outline one of them, where the case concerned a plan to use a family foundation to sell shares in a tax-efficient manner.<\/p>\n\n\n\n
\u00d8 The founders themselves indicated that if it were not for the Foundation\u2019s CIT exemption and the tax neutrality of the sale, they would not have carried out the transaction in this form.<\/p>\n\n\n\n
\u00d8 This was sufficient to conclude that the tax benefit was the main purpose of the transaction.<\/p>\n\n\n\n
\u00d8 The Family Foundation acted as an intermediary and had no real economic justification.<\/p>\n\n\n\n
\u00d8 Profits in the company were deliberately retained for three years in order to later transfer them advantageously through the sale of shares to an investor via the Foundation.<\/p>\n\n\n\n
\u00d8 The head of the National Revenue Administration considered this to be a pre-planned tax mechanism rather than succession or long-term asset management.<\/p>\n\n\n\n
\u00d8 The Foundation was to be used not for family succession, but solely for a one-off sale of shares, which goes beyond the statutory scope of the Family Foundation\u2019s activities (Article 5 of the Family Foundation Act).<\/p>\n\n\n\n
\u00d8 In the opinion of the authority, the action was contrary to:<\/p>\n\n\n\n
\u2013 Articles 30b and 30h of the PIT Act (taxation of the sale of shares with PIT and solidarity tax),<\/p>\n\n\n\n
\u2013 Article 6(1)(25) of the CIT Act (exemption for the Foundation, but not for transactions carried out \u201cunder the dictates\u201d of the founders).<\/p>\n\n\n\n
The decisive factor was that:<\/p>\n\n\n\n
\u00d8 The Foundation was treated as a tax vehicle (not a succession tool),<\/p>\n\n\n\n
\u00d8 The tax benefit was explicitly granted as the main objective,<\/p>\n\n\n\n
\u00d8 Artificiality and contradiction with the purpose of the statutes were demonstrated.<\/p>\n\n\n\n
Therefore, the Head of the National Revenue Administration could not issue a positive opinion and referred to Article 119y \u00a7 2 of the Tax Ordinance \u2192 refusal.<\/p>\n\n\n\n
1. Tax objective above all else<\/p>\n\n\n\n
If the documentation and structure indicate that the main purpose of establishing a foundation is to avoid taxation (e.g. contributing shares just before the sale and quickly disposing of them in the foundation), the Head of the National Revenue Administration applies the GAAR clause and refuses to issue an opinion. This was emphasised in several refusals, pointing to the lack of real succession or protection objectives.<\/p>\n\n\n\n
2. \u201cArtificial\u201d activities \u2013 an alarm signal<\/p>\n\n\n\n
The Head of the National Revenue Administration draws attention to structures that have little economic logic and many technical elements for optimisation: quick contributions, short-term transfers of assets, lack of actual activity of the foundation apart from the sale of contributed assets. Such arrangements are classified as artificial.<\/p>\n\n\n\n
3. \u201cOff-catalogue\u201d activities \u2013 25% CIT instead of exemption<\/p>\n\n\n\n
A foundation may only conduct activities within the scope of Article 5 of the Family Foundation Act. Going beyond this catalogue (e.g. classic trade in goods purchased solely for resale) means the application of a penalty rate of 25% CIT (Article 24r). The head of the National Revenue Administration consistently reminds of this risk.<\/p>\n\n\n\n
4. Leasing to related parties \u2013 no exemption<\/p>\n\n\n\n
Income from leasing to a beneficiary, founder or related company in which business activity is conducted does not benefit from the exemption (Article 6(8) CIT). The foundation must settle 19% CIT, although this tax may later be reduced by a 15% lump sum when benefits are paid (Article 24q(8)). The head of the National Revenue Administration accepts this mechanism, but warns that artificially transferring real estate solely to take advantage of the shield may be questioned.<\/p>\n\n\n\n
5. Hidden profits and marketability of transactions<\/p>\n\n\n\n
Payments \u201cunder the guise\u201d (overstated rents, free benefits for beneficiaries, financing of private expenses) are treated as hidden profits and are subject to a 15% lump sum. The authorities require market documentation (rent benchmarks, cost agreements) to prevent the exemption from being challenged.<\/p>\n\n\n\n
\u00d8 The CIT exemption works, but under strict control \u2013 any deviation from the succession objective may be challenged by the tax authorities.<\/p>\n\n\n\n
\u00d8 Long-term residential leases to unrelated parties are a safe scenario \u2013 this is also confirmed by positive security opinions (e.g. DKP3.8082.5.2024).<\/p>\n\n\n\n
\u00d8 The greatest risk concerns \u201cshortcut\u201d contribution and sale transactions \u2013 especially when the foundation becomes only a tax vehicle.<\/p>\n\n\n\n
\u00d8 Market documentation and a transparent benefits policy are key to defending the exemption.<\/p>\n\n\n\n
A family foundation remains an attractive tax and succession tool. However, the practice of the Head of the National Revenue Administration shows that \u201cshortcut optimisations\u201d will be rejected. The structure should be built on the basis of real family and business goals, well-documented marketability and in accordance with the catalogue of Article 5 of the Act. Otherwise, the risk of a protective opinion being refused (and, consequently, GAAR being applied) is very high.<\/p>\n\n\n\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Family foundation and tax optimization \u2013 discover 5 red flags that may lead the Head of the National Revenue Administration (KAS) to deny a protective tax ruling.<\/p>\n","protected":false},"author":5,"featured_media":37999,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"wp_typography_post_enhancements_disabled":false,"footnotes":""},"categories":[1],"tags":[1938,1939,1940],"class_list":["post-38345","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-fundacja-rodzinna-en","tag-gaar-en","tag-ryzyka-podatkowe-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/posts\/38345","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/comments?post=38345"}],"version-history":[{"count":2,"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/posts\/38345\/revisions"}],"predecessor-version":[{"id":38355,"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/posts\/38345\/revisions\/38355"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/media\/37999"}],"wp:attachment":[{"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/media?parent=38345"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/categories?post=38345"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moorepolska.pl\/en\/wp-json\/wp\/v2\/tags?post=38345"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}