Poland Plans 4pp CIT Hike on Family Foundations and a 3-Year Asset Lock-up

Poland's Finance Ministry Revives Family Foundation Tax Overhaul

Poland's Ministry of Finance has returned with a second attempt to overhaul the taxation of family foundations, after an earlier version was vetoed by the president nearly a year ago. At the heart of the new proposal, listed under legislative work number UD447, is a plan to raise the corporate income tax (CIT) rate on benefits paid to beneficiaries from 15% to 19%. That higher rate would also apply to hidden profits and assets transferred upon the foundation's dissolution.

The ministry argues that some founders misuse family foundations — originally designed to ensure orderly wealth succession across generations — purely to defer, avoid or reduce taxes. Officials specifically cite artificial cash-circulation schemes between the foundation and its founder or related entities, the transfer of assets just to sell them under a preferential tax regime, and the use of tax-transparent foreign vehicles to run an operating business while technically staying outside the law.

Beyond the CIT hike, the draft introduces a three-year lock-up on foundation assets: selling within 36 months would trigger a tax penalty. It also aims to close the loophole of conducting business through transparent entities and, as a pro-business gesture, extends personal income tax (PIT) exemption to descendants of the founder's siblings — a move that acknowledges many Polish family firms were built by siblings rather than just spouses.

What the Proposed Changes Mean for Polish Family Businesses

The Return of a Contentious Proposal

Tax advisor Anna Turska-Tomczykowska, managing partner at Tomczykowski Tomczykowska, points out that the general direction matches the earlier legislative push that was passed by parliament but then vetoed. However, she notes the new version is softened in some areas while introducing important fresh elements — most notably the increase in the tax rate on benefit payouts.

The Real Pain Point: CIT Hike

Raising the CIT rate from 15% to 19% on benefits, hidden profits and dissolution proceeds is, in the expert's view, the single most painful change for taxpayers. For a foundation distributing regular benefits, this can materially raise the tax cost, making the structure less attractive as a pure tax-planning tool. While 4 percentage points may seem small, it marks a 26.7% increase in the effective tax rate on those outflows.

Evolutionary, Not Revolutionary

Turska-Tomczykowska highlights what is absent: there is no proposal to tax assets contributed to the foundation at entry, no ongoing CIT on foundation income, and no shift of the tax burden directly onto beneficiaries. That restraint suggests the ministry is opting for an evolutionary path rather than a game-changing overhaul — a signal that could improve the bill's chances of passing this time.

Broader Succession Equity

Extending the PIT exemption to descendants of siblings who are founders is widely seen as a positive step. It tackles a genuine inequality in many family businesses that were built through sibling collaboration rather than solely through marital pairs. From a succession-planning perspective, it removes a sticking point that has existed since the original law came into force.

What Asset Holders Should Consider Now

• Foundations with planned asset sales should assess whether they fall within the proposed 36-month holding period; accelerating or delaying transactions might affect tax outcomes once the law takes effect.
• Family business owners receiving benefits may need to recalculate net proceeds under a 19% CIT rate instead of 15%; buffers for tax payments should be adjusted accordingly.
• If the structure uses transparent entities to conduct operational activity, a compliance review is urgent — the ministry is explicitly shutting that door.
• Families with sibling-founders who previously faced unequal treatment can soon factor the expanded PIT exemption into their succession planning, potentially simplifying division of wealth.