Family Foundation – Succession and Asset Management
We advise entrepreneurs and family businesses on establishing family foundations, particularly in connection with planned share sales. We assist in structuring asset management policies, beneficiary distribution mechanisms, and business continuity plans across generational shifts.
We analyze corporate ownership structures, founder circumstances, and intended asset allocations. On this basis, we draft foundation documentation and manage corporate reorganizations and asset contributions, addressing both legal and tax implications.
Scope of Advisory Services
Succession Planning and Reorganization
We examine company and capital group structures to define the optimal role for a family foundation. We align with the founder on control mechanisms, beneficiary scope, and asset distribution protocols. We also analyze scenarios where generational transitions or unforeseen events could disrupt business operations.
Legal and Tax Implications
We evaluate the implications of contributing shares, stock, real estate, securities, and monetary assets. We analyze the taxation of foundation activities and beneficiary distributions, accounting for income categories, founder relationships, and asset sourcing. Depending on the planned transactions, we also assess VAT and real estate tax exposure.
Articles of Association and Founding Documentation
We draft articles of association, foundation deeds (executed via deed inter vivos or by will), and internal governance regulations. We establish operational frameworks for the management board, supervisory board, and assembly of beneficiaries in accordance with statutory requirements.
In the articles of association, we define terms for granting benefits, decision-making thresholds, and asset disposal restrictions. We also prepare investment policies where required by the foundation’s operating model.
Registration and Asset Contribution
We handle registry court proceedings. We draft transfer documentation for shares, stock, and other assets, and support the compilation of asset inventories. We coordinate corporate and notary actions required to effect asset contributions.
Transactions Involving Family Foundations
We advise on share acquisitions and disposals conducted by family foundations. We draft M&A transaction documentation accounting for representation rules, statutory approvals, and corporate objectives. We also evaluate the tax consequences of sales and subsequent reinvestment of proceeds.
Preparing the Foundation for Transactions
We establish project timelines and fee structures for agreed scopes of work. We separate document preparation and foundation setup from formal court registration, the timing of which depends on court processing. Where a transaction must proceed prior to registration, we analyze operating as a family foundation in organization, including representation rules and tax implications.
Questions and Answers
What scope of business activities can a family foundation conduct?
The scope of permitted business activity is strictly defined by the Polish Family Foundation Act. Permitted activities include leasing and renting property, holding equity in companies and investment funds, and extending loans to specified entities. Proposed business activities must be verified against statutory lists and tax rules, as engaging in activities outside the permitted scope triggers penalty tax rates.
What are the tax implications of establishing a family foundation?
A family foundation enjoys statutory corporate income tax (CIT) exemption on permitted activities, allowing asset accumulation and reinvestment without immediate tax drag. However, tax obligations arise upon beneficiary distributions and specific statutory events. Tax outcomes must therefore be analyzed relative to specific asset classes, transaction structures, and distribution plans.
Do beneficiaries pay personal income tax (PIT) on distributions?
PIT liability depends on the beneficiary’s family relationship to the founder and the founder’s proportion of total contributed property. Founders and immediate family members qualify for PIT exemption subject to statutory conditions. Other beneficiaries are subject to PIT. Beneficiary tax treatment is legally distinct from the foundation’s corporate tax obligations.
How does a family foundation prevent asset fragmentation?
Upon contribution, legal ownership of assets transfers to the foundation. Asset management and beneficiary payouts are governed by the foundation’s articles of association and applicable legislation, consolidating wealth within a single structure. However, succession planning must account for forced heirship (reserved share) claims and foundation liabilities, as foundation setup does not extinguish pre-existing statutory claims.
Is the sale of shares by a family foundation tax-exempt?
Gains from share disposals qualify for CIT exemption provided statutory conditions are satisfied. Assessing eligibility requires reviewing share contribution timing, transaction rationale, and anti-abuse tax provisions (GAAR). Subsequent distributions of proceeds to beneficiaries require separate tax evaluation.
