Contributed Assets – 36 Months – 19% CIT
The draft amendment to the Polish Act on Family Foundations introduces a rule under which the sale of assets contributed by the founder within 36 months from the date of contribution will be subject to 19% Corporate Income Tax (CIT).
The purpose of this change is to limit potential abuses. In practice, however, it may significantly affect the way family foundation assets are managed.
Why Is This a Problem?
The proposed amendment introduces a long “freezing” period for assets contributed to a family foundation.
A practical issue may arise, for example, if the founder passes away shortly after contributing assets to the foundation and the family is subsequently forced to sell part of those assets.
Moreover, calculating the 36-month period from the end of the calendar year in which the contribution was made may extend the effective taxation period to nearly four years. Such a solution creates uncertainty regarding the tax consequences of undertaken transactions.
It is also worth noting that in the first version of the proposed amendments, the new rules were intended to apply to assets contributed after August 31, 2025. This approach has since been abandoned, and the cut-off date has been moved to December 31, 2025.
Rental Activity – Exemption – Taxation
According to the planned amendments, the scope of taxation of rental activities conducted by family foundations will be expanded.
Until now, short-term rental activity was considered a permitted activity of family foundations and benefited from tax exemption.
The new regulations significantly narrow the scope of this exemption. Once the amendments enter into force, the exemption will apply only to:
- rental intended exclusively for residential purposes,
- long-term rental of residential buildings, residential units, or parts thereof,
- conducted directly by family foundations.
Why Is This a Problem?
After the amendment, income derived from short-term rentals or accommodation services will become taxable.
To avoid taxation, it will be necessary to meet the statutory exemption conditions mentioned above. Additionally, the burden of proof that a building, unit, or part thereof is rented directly and exclusively for residential purposes will rest with the family foundation.
Family foundations that have so far provided short-term rental services will need to review and potentially modify their existing business model.
Planned Effective Date
The amended regulations are scheduled to enter into force on January 1, 2026.