Recalibrating the Polish Family Foundation: An Analysis of the Tax Amendment Bill of August 5, 2026

Robert Nogacki, Attorney-at-Law (radca prawny), Managing Partner, Kancelaria Prawna Skarbiec

The analysis reflects the state of the law and of the legislative record as of August 16, 2026.

Abstract. Eight and a half months after the presidential veto of the first attempt to tighten the taxation of Polish family foundations, the Ministry of Finance has returned with a second bill, published on the Government Legislation Centre’s platform as item UD447 of the Council of Ministers’ legislative agenda and dated August 5, 2026. The bill raises the distribution-stage tax from 15 to 19 percent, introduces a thirty-six-month holding requirement for contributed assets, confines the rental exemption to strictly residential leasing, subjects foundations to the controlled foreign company and exit tax regimes, expands the hidden-profits catalogue, and, unusually for this legislative saga, contains two taxpayer-favorable measures. This Article situates the bill within its genealogy, namely the veto of November 27, 2025 and the statutory review of June 11, 2026; reconstructs its architecture provision by provision; and assesses it against the constitutional principle of the protection of transactions in progress. The bill, it is argued, is legislatively cleaner than its vetoed predecessor yet economically harsher, and its central defect is the absence of a transitional rule preserving the 15 percent rate for earnings accumulated before 2027.

 

Introduction

On August 13, 2026, the Government Legislation Centre published a draft statute, dated August 5, 2026, amending the Personal Income Tax Act and the Corporate Income Tax Act with respect to family foundations (Council of Ministers’ legislative agenda, item UD447). The publication marks the second act of a regulatory drama whose first act ended abruptly on November 27, 2025, when President Karol Nawrocki refused to sign an amending statute adopted by the Sejm on October 17, 2025 (Sejm Paper No. 2040), invoking what he characterized as a breach of the principle of citizens’ trust in the State. The new bill is scheduled to enter into force on January 1, 2027.

Any serious appraisal of the August bill must read it against two antecedent documents: the reasons accompanying the veto, and the governmental review of the Act of January 26, 2023 on the Family Foundation (ustawa o fundacji rodzinnej, Journal of Laws item 326, as amended; hereinafter the “Family Foundation Act”), which the Council of Ministers was statutorily obliged to conduct under Article 143 of that Act and which it completed in draft form on June 11, 2026. Only against that background does it become apparent what the drafters corrected, what they aggravated, and what they left conspicuously unsaid. This Article proceeds in four movements: Part II traces the legislative genealogy; Part III reconstructs the bill’s architecture; Part IV offers a systemic assessment; and Part V considers the transitional calculus the bill imposes upon existing foundations before Part VI concludes.

 

From Veto to Bill: The Legislative Genealogy

The sequence of events repays careful reconstruction, because the new bill is intelligible chiefly as a response to it. The 2025 amending statute would have curtailed the foundation’s tax preferences with effect, in part, for assets contributed after August 31, 2025, that is, after the date on which the draft was first published rather than the date on which the statute would have entered into force. In an analysis published immediately after the veto, this author argued that the President’s invocation of a supposed three-year guarantee of regulatory stability lacked any normative anchor, and that the statute’s genuine infirmity lay elsewhere: in its intertemporal technique, specifically its quasi-retroactive reach and its want of grandfathering clauses. The same analysis cautioned that rejecting the reform outright, rather than repairing it, would not end the dispute but merely transfer it to a forum in which the rules are written by the examining authority.

That forecast has, at least in part, materialized. Pending new legislation, the revenue administration proceeded under the general anti-avoidance rule of Article 119a of the Tax Ordinance (Ordynacja podatkowa). By the end of 2025, the Head of the National Revenue Administration had issued seventy-seven opinions finding a justified suspicion of tax avoidance in arrangements involving family foundations, a striking figure when set against the approximately two hundred thirty GAAR proceedings initiated in total since the clause’s introduction in 2016: a single legal institution thus accounts for roughly one-third of the State’s entire anti-avoidance docket. To this must be added the opinion of the Council for Counteracting Tax Avoidance of May 29, 2025, which concluded that the distribution of profits generated by the paradigmatic scheme, the contribution of shares to a foundation followed by their prompt disposal, satisfies the statutory predicates for applying the GAAR.

Meanwhile, the review mandated by Article 143 supplied the empirical record the debate had lacked. Over the Act’s first three years, 9,723 registration applications were filed with the registry court (917 in 2023, 3,309 in 2024, and 5,497 in 2025), with 3,893 applications still pending at the close of 2025. According to the dedicated annual returns (CIT-8FR), foundations reported exempt income of PLN 5.39 billion in 2023, PLN 12.44 billion in 2024, and PLN 15.27 billion in 2025, against tax due of merely PLN 25.5 million, PLN 67.2 million, and PLN 126.8 million respectively. The Ministry of Finance further determined that in approximately 44 percent of foundations the circle of founders coincides with the circle of beneficiaries. The review also sketched, expressly for “broad discussion” only, a radical three-stage taxation model comprising an entry charge on contributed assets, current taxation of selected income streams, and a redesigned distribution stage with the foundation acting as a personal income tax remitter.

The August bill takes the narrower path. It contains neither an entry charge nor any dismantling of deferral for dividends and capital gains; it is, in substance, a recalibration of the vetoed package, supplemented by a rate increase. It also answers the veto’s formal premise: the three-year period on which the President relied expired on May 22, 2026, the Article 143 review has been performed, and the new provisions are framed to operate pro futuro. Whether the bill answers the veto’s substantive premise is a separate question, to which the discussion of the 19 percent rate will return.

 

The Architecture of the August Bill

The bill amends the Corporate Income Tax Act of February 15, 1992 (ustawa o podatku dochodowym od osób prawnych, consolidated text Journal of Laws of 2026, item 554, as amended; the “CIT Act”) and the Personal Income Tax Act of July 26, 1991 (consolidated text Journal of Laws of 2026, item 592, as amended; the “PIT Act”). Six of its measures tighten the regime; two relax it.

 

A. The Distribution-Stage Rate Rises from 15 to 19 Percent

The simplest and broadest change replaces the 15 percent rate in Article 24q(1) of the CIT Act with a rate of 19 percent. That tax is borne by the foundation itself upon providing, or placing at a beneficiary’s disposal, a benefit; upon transferring property in connection with the foundation’s dissolution; and upon conferring benefits in the form of hidden profits. The beneficiary-level rules remain untouched: full personal income tax exemption for the so-called zero group of closest relatives, 10 percent for the extended family, and 15 percent for unrelated persons. The combined burden on a distribution to the closest relatives therefore rises from 15 to 19 percent, on a distribution to the second group from roughly 25 to roughly 29 percent, and on a distribution to unrelated beneficiaries from roughly 30 to roughly 34 percent of the benefit’s value.

The explanatory memorandum justifies the increase as an alignment with the taxation of capital income earned directly by natural persons. For dividends, the alignment is complete: 19 percent in the direct scenario against 19 percent at the foundation’s exit, with the deferral advantage remaining on the foundation’s side of the ledger. For gains on the disposal of shares, the foundation’s edge narrows from eight to four percentage points, since the direct route bears 23 percent once the 4 percent solidarity levy is added, whereas the foundation route bears 19 percent upon distribution. Deferral thus becomes the construct’s sole material tax advantage, which, one might observe, is congruent with its succession-oriented raison d’être. The Regulatory Impact Assessment prices the rate increase alone at PLN 479 million over ten years.

The change will apply to every foundation, existing ones included, and to every distribution made on or after January 1, 2027, irrespective of when the distributed earnings were generated. The bill contains no transitional provision segregating earnings accumulated through the end of 2026. This is, it will be argued, the bill’s most serious structural defect, and Part IV returns to it.

 

B. The Thirty-Six-Month Holding Requirement

A new Article 6(8)(2) of the CIT Act withdraws the exemption from income derived from the disposal of property that was contributed to the foundation, transferred to it gratuitously, or acquired by it from a related party (at a capital-affiliation threshold of at least 5 percent), whenever the disposal occurs before the lapse of thirty-six months counted from the end of the calendar year in which the contribution, transfer, or acquisition took place. The method of computation means that the effective holding period ranges from thirty-seven to forty-eight months, depending on the month of contribution.

The explanatory memorandum leaves no doubt as to scope: the test embraces property of every kind, expressly “all asset components,” including shares, bonds, fund certificates, real estate, and works of art. The operative criterion is not the asset’s category but its provenance. Only property acquired for consideration from unrelated parties remains outside the test; the foundation may therefore trade freely in a portfolio built with contributed cash, whereas a securities portfolio contributed in kind is quarantined on the same footing as a contributed tenement house.

Income falling within the exclusion is taxed under the general rules, that is, at 19 percent with deductible costs. Notably, no double taxation of the same income arises: the already-operative Article 24q(8) and (9) of the CIT Act permits the distribution-stage tax to be reduced by the amount of tax paid under the general rules in the circumstances of Article 6(8), capped at the distribution-stage liability and conditioned on the general-rules liability not having become time-barred. The sanction for a premature disposal is accordingly the loss of deferral, together with the need to fund the tax out of current liquidity, rather than a cumulation of two charges.

The transitional provision is pivotal. Under Article 3(1) of the bill, the thirty-six-month test applies exclusively to property contributed, gratuitously transferred, or acquired from a related party after December 31, 2026. Property already held by foundations, and property contributed through the end of 2026, remains permanently outside the test. This is a textbook grandfathering clause, of precisely the kind this author has urged since the first draft appeared in 2025, and it is a lesson visibly learned from the veto: the 2025 statute reached back to property contributed after the draft’s publication date rather than after the statute’s entry into force.

One caveat is obligatory. Statutory neutrality for pre-2027 contributions confers no immunity from the general anti-avoidance rule. The scheme of contributing assets with a predetermined, prompt sale in view was, and remains, the principal target of the Head of the National Revenue Administration’s opinions and of the Council’s opinion of May 29, 2025. Whoever treats the coming months as an invitation to transactional arbitrage will merely exchange statutory risk for GAAR risk, and the latter tends to be the costlier of the two.

 

C. Rental Income: An Exemption Confined to Strictly Residential Leasing

The restructured Article 6(8)(1) of the CIT Act reorders the taxation of rental income in three subparagraphs, drafted in deliberate parallel. Subparagraph (a) continues the existing exclusion for leases of an enterprise, an organized part of an enterprise, or assets serving the business of a beneficiary, a founder, or a related party, now with the affiliation threshold fixed at 5 percent. New subparagraph (b) withdraws the exemption from income on the letting of residential buildings and dwellings unless they are let directly by the foundation and exclusively for housing purposes, with the burden of proving that circumstance placed, by express statutory command, on the foundation. New subparagraph (c) extends the exclusion to premises intended for round-the-clock accommodation.

The consequences operate on two tiers. Commercial letting that still falls within the catalogue of permitted activity under Article 5 of the Family Foundation Act, for instance the letting of commercial premises or the letting of apartments to an operator who sublets them onward, loses the exemption and becomes currently taxable at 19 percent, subject to the crediting mechanism described above. By contrast, activity bearing the hallmarks of hotel and accommodation services, including aparthotels, condo hotels, and serviced short-term rentals, is classified by the explanatory memorandum as lying outside the permitted catalogue altogether: the “lease” of Article 5(1)(2) is to be understood in its elementary form, unaccompanied by ancillary services, and services within Division 55 of the Polish statistical classification attract the punitive 25 percent rate under Article 24r of the CIT Act, with no credit available.

Two features merit particular attention. First, the word “directly” in subparagraph (b) forecloses intermediated models: institutional letting to a private-rented-sector operator is not a letting made directly for the end tenant’s housing purposes. Second, a statutory reversal of the burden of proof against the taxpayer is a rarity in income taxation and sits uneasily with the evidentiary principles of Articles 122 and 187 of the Tax Ordinance; it is reasonable to expect this fragment to become a principal battleground of the consultation. For completeness, the comparative arithmetic deserves stating: a natural person taxes private rental income at a lump-sum rate of 8.5 to 12.5 percent of revenue, so that from 2027 the family foundation will arguably become the single most expensive form of holding commercial real estate available in the Polish system.

 

D. Transparent Entities, Controlled Foreign Companies, and Exit Taxation

A new Article 6(8)(3) withdraws the exemption from the foundation’s income derived from participation in partnerships lacking legal personality and in other entities whose revenues, costs, income, or losses are attributed to the foundation for tax purposes. The explanatory memorandum names the targets candidly: structures interposing a United States limited liability company or a Luxembourg special limited partnership (SCSp), through which business exceeding the Article 5 catalogue was conducted under the foundation’s umbrella without current taxation at any level. Entities that are themselves corporate income taxpayers, including Polish investment funds, remain outside the exclusion because they fail the transparency predicate. One drafting discrepancy requires correction in the further proceedings: the memorandum announces that the exemption will be preserved for participation in purely passive transparent vehicles, yet no such carve-out is discernible in the operative text as proposed.

In parallel, Article 6(6) of the CIT Act is amended so that the foundation’s entity-level exemption will no longer extend to the tax on income of controlled foreign companies (Article 24a) or to the tax on unrealized gains (Article 24f), alongside the building-revenue tax and the distribution-stage tax already excluded today. The foundation’s career as a CFC blocker thus comes to an end: the income of low-taxed foreign subsidiaries controlled by a foundation will be taxed currently at 19 percent at the foundation’s level, complete with the attendant recordkeeping and the CIT-CFC return, while the extension of exit taxation closes the scenarios of migrating assets beyond Polish jurisdiction.

 

E. Loans and Written-Off Receivables as Hidden Profits

The hidden-profits catalogue of Article 24q(1a) of the CIT Act presently captures, in points 5 and 6, only loans extended to beneficiaries: the installment due in a given year and unpaid by the return-filing deadline, and loans granted for ten years or longer. The bill extends both points to loans made to the founder and to parties related to the beneficiary, the founder, or the foundation, with point 5 reaching all related parties and point 6 reaching related natural persons; the 5 percent affiliation definition is simultaneously extended to the entire catalogue. In practical terms, an installment on a loan to the foundation’s own portfolio company that remains unpaid past the CIT-8FR filing deadline will constitute a hidden profit taxed at 19 percent, notwithstanding that lending to companies in which the foundation holds shares remains permitted activity under Article 5(1)(5) of the Family Foundation Act.

New point 7 goes further still: the value of receivables owed by the founder, a beneficiary, or a related party that are forgiven, become time-barred, or are written off as uncollectible, including loan receivables, will itself constitute a hidden profit. The ratio legis is transparent enough, since a loan that no one intends to repay is a gift in costume. The provision, however, draws no distinction between simulated uncollectibility and the debtor’s genuine insolvency. The bankruptcy of a subsidiary, an event that impoverishes the foundation, will generate a tax on the very receivable the foundation has lost; this amounts to taxing a loss, without any counterpart to the documented-uncollectibility mechanism familiar from Article 16(1)(25) of the CIT Act. The consultation submission on this point rather writes itself.

 

F. Crypto-Assets and the 25 Percent Punitive Rate

The amendment to Article 24r(1) settles that the punitive 25 percent rate applicable to activity exceeding the Article 5 catalogue also embraces the tax of Article 22d of the CIT Act, namely the tax on income from the disposal of virtual currencies. The memorandum characterizes the change as merely declaratory of the existing legal position, thereby closing the dispute over the concurrence of the two provisions: a family foundation trading in crypto-assets will pay 25, not 19, percent. For founders contemplating contributions of this asset class, the signal could scarcely be plainer.

 

G. Two Taxpayer-Favorable Measures

The bill also contains elements that deserve to be recorded with approval, and their inclusion is arguably no accident of drafting but a considered attempt to alter the presidential calculus. The first concerns personal income tax: Article 21(1)(157) of the PIT Act will operate through a newly defined concept of a “member of the founder’s family,” encompassing, beyond the present zero group, the descendants of the founder’s siblings. Nephews and nieces, taxed today at 10 percent, will enjoy the full exemption in the proportion attributable to the given founder. This removes a genuine obstacle to joint foundations established by siblings who have inherited a divided estate from their parents: hitherto, each sibling had to weigh a separate foundation, because a joint one meant taxation of the co-founders’ children. The exemption will apply to benefits received after December 31, 2026, in existing foundations as well.

The second element is an adjustment window for real estate. Until December 31, 2027, a foundation may return to the founder residential properties and accommodation premises that the founder contributed or transferred gratuitously before January 1, 2027, free of the distribution-stage tax and of the punitive rate, exempt from inheritance and gift tax where effected by way of donation, and without personal income tax where effected in another form. Significantly, the period of the foundation’s ownership counts toward the founder’s five-year period under Article 10(1)(8) of the PIT Act. Three limitations apply: the return may be made only to the founder, only in respect of properties within the newly excluded categories, and only in respect of assets originating from that very founder. The drafters thereby concede, if only implicitly, that part of the foundation population will lose the economic rationale for holding rental apartments, and they allow it a year for an orderly evacuation of that asset class.

 

IV. A Systemic Assessment

Intellectual honesty requires stating the opposing case at its strongest before criticizing the bill. The abuses invoked by the drafters are not a fiscal phantasm. This author has described them without euphemism in the veto analysis: transactional arbitrage on contributed assets, short-term rental of hotel-grade substance operating within an exemption designed for ordinary leasing, transparent and Luxembourg structures, and the foundation as a receptacle sheltering profits from the CFC regime. The concentration of GAAR practice on a single institution, seventy-seven opinions against roughly two hundred thirty proceedings in nine years, confirms that the problem is systemic rather than anecdotal. The direction of the intervention is therefore defensible; what must be judged is its execution. And in execution the bill exhibits one fundamental virtue, two serious defects, and several workmanship flaws.

 

A. Retained Earnings and the Missing Transitional Rule

The virtue is intertemporal: the thirty-six-month test operates prospectively only, upon property contributed from 2027 onward. It is all the more jarring that the identical logic was not applied to the rate. A foundation that spent three years accumulating earnings in reliance on a 15 percent exit charge will pay 19 percent on those very earnings if the distribution occurs after December 31, 2026. This is not retroactivity stricto sensu, since the taxable event, the distribution, lies in the future; it is, however, a retrospective reach into the consequences of asset decisions taken under the aegis of a different promise, and thus precisely the interference with transactions in progress that the Constitutional Tribunal requires to be weighed under Article 2 of the Polish Constitution, and that the President made the fulcrum of the November veto.

The remedy is simple and, given that foundations keep full accounting records, evidentially workable: a transitional provision assigning the 15 percent rate to earnings generated through December 31, 2026, coupled with an ordering rule for distributions. The bill’s paradox is that grandfathering was granted where it costs the budget little and withheld where it would cost something real. If any single element is to decide the fate of the presidential signature, it is this one: absent protection for retained earnings, the bill reenacts the very grievance from which this entire history began.

 

B. A Holding Test Without a Safety Valve

The second defect is the absence of any exception from the holding requirement for disposals that are compulsory or otherwise independent of the foundation’s volition. A squeeze-out of minority shares, a compulsory redemption, an expropriation, a disposal effected in restructuring proceedings, and, not least, a sale forced by the need to satisfy a forced-share claim (zachowek), for which the foundation may be liable by operation of the Family Foundation Act itself: each of these events will trigger current taxation, although none bears any resemblance to tax arbitrage. To this must be added the computation of the period from the end of the calendar year, which stretches the quarantine to as long as forty-eight months. The Regulatory Impact Assessment defends the test’s proportionality by analogy to the two-year holding periods of the Polish holding company regime and of the alternative investment company; it is difficult to imagine an argument that more effectively undermines its own thesis, given that the invoked benchmarks are half as long.

 

C. Numbers That Resist Reconstruction

The craftsmanship of the accompanying documents likewise deserves the hostile reader’s attention. The Regulatory Impact Assessment prices the package at PLN 4,379 million over ten years, of which PLN 309 million from base broadening is to arrive as early as 2027. Yet the thirty-six-month test, the principal base-broadening instrument, applies only to property contributed from 2027 onward and therefore cannot generate material revenue in its first year; the structure of the estimate is nowhere disclosed. Further, the June 11 review reports that 3,205 MDR-1 mandatory disclosure filings involving family foundations were made between March 15, 2023 and February 16, 2026, whereas the bill’s explanatory memorandum states 320 for the identical period. The divergence is tenfold, and one of the two figures is necessarily wrong; where data are deployed to justify legislative intervention, they ought at a minimum to agree between documents of the same legislative process. Rzeczpospolita observed on August 14 that the memorandum never indicates how many operating foundations actually abuse the preferences. Finally, the calendar: the bill underwent no pre-consultation, and the public consultation is scheduled for twenty-one days in the third quarter, at the height of the holiday season, while the review itself was consulted from December through May. The Assessment adds that no evaluation of the statute’s effects is envisaged; for an enactment born of a statutory review, that is a denouement not devoid of charm.

 

D. What the Bill Omits, and Why the Omission Matters

Equally significant is what the bill does not contain. There is no entry charge on contributed assets, no current taxation of dividends or of gains on market-acquired holdings, and no trace of the review’s three-stage model with the foundation as a personal income tax remitter and a component-based splitting of disposal gains. The explanatory memorandum expressly reaffirms the neutrality of contributions and the deferral of taxation as constructional premises. The institution’s core has survived: the family foundation remains a vehicle in which dividends from family companies and gains on long-term investments compound untaxed until distribution. It must be remembered, however, that the three-stage model was not rejected but adjourned for “broad discussion.” The thesis advanced in November therefore stands: a predictable correction, even a severe one, is preferable to a regulatory vacuum filled by task-force audits and the general clause. The condition of that correction’s fairness, though, is the completion of the transitional provisions discussed above.

 

V. The Transitional Calculus for Existing Foundations

For founders and boards, the bill compresses a series of decisions into the final months of 2026, and the rational responses can be stated in six propositions. First, as to contributions: assets contributed by December 31, 2026 will remain permanently outside the holding test, which makes the coming months the natural window for long-planned contributions, particularly of securities portfolios and real estate; the window is narrowed, however, by the registry backlog for newly formed foundations (3,893 pending applications at the end of 2025 imply many months of waiting) and by the GAAR wherever a contribution precedes a planned disposal. What belongs in a foundation is what is meant to remain there for generations, not what is meant to be sold in the spring.

Second, as to distributions: benefits provided by December 31, 2026 will be settled at 15 percent, so that, where the statutory and liquidity conditions are met, accelerating already-planned distributions by a few months yields four percentage points; this is a purely calendrical decision. A precautionary variant deserves note: should a transitional rule for pre-2027 earnings emerge in the parliamentary proceedings, the haste will prove unnecessary, which counsels taking distribution decisions after, not before, the close of the consultation.

Third, as to loans: the portfolio of loans to the founder, to beneficiaries, and to related companies requires an audit before year-end, encompassing repayment schedules set against the CIT-8FR filing deadline, procedures for monitoring and documenting collection, and a review of agreements concluded with related natural persons for terms of ten years or longer; where write-offs of related-party receivables are commercially unavoidable, it appears more rational to effect them before point 7 enters into force.

Fourth, as to real estate: the housing stock must be inventoried against subparagraphs (b) and (c), distinguishing units let directly and exclusively for housing purposes from units operating through intermediary operators or in short-term formats; operator models call for contractual restructuring or a costing of current taxation at 19 percent, hotel-grade assets for a comparison of the 25 percent rate with a transfer of the activity to a company, and dwellings the foundation should no longer hold for a planned use of the return window through the end of 2027, together with an evidentiary file, since the burden of proving the housing purpose will rest on the foundation.

Fifth, as to foreign and transparent structures: interests in limited liability companies, SCSp vehicles, and domestic partnerships require restructuring decisions before 2027, and foreign subsidiaries a screening against the CFC predicates, namely effective taxation, substance, and the composition of passive revenue, while foundations holding mobile assets should factor exit taxation into any relocation plans.

Sixth, as to the consultation itself: the three-week window in the third quarter is the sole moment at which the family-business community can advance the two postulates on which the quality of this amendment turns, the 15 percent rate for earnings generated through 2026 and safety valves within the holding test for compulsory disposals.

 

VI. Conclusion

The bill of August 5, 2026 is the second, more circumspect rendition of the same design: legislatively cleaner, because it operates prospectively and rests on the Article 143 review, yet economically harsher, because it raises the price of exit to 19 percent for everyone, including those who built their structures in reliance on 15. Two questions will determine the final verdict: whether protection for pre-2027 retained earnings emerges in the course of the proceedings, and whether the enactment of this version closes the debate over the review’s three-stage model or merely postpones it. For practice, the conclusion is already unambiguous. The family foundation will remain the finest instrument the Polish legal system offers for succession measured in generations. It will cease to be an instrument for anything else. That, one suspects, was the intention all along.

This Article reflects the state of the law and of the legislative record as of August 16, 2026. The bill has not yet entered public consultation, and its final wording may change. The author’s firm is preparing a consultation submission and conducts adjustment audits for family foundations.