According to data from the Family Foundations Register, maintained by the District Court in Piotrków Trybunalski, a total of 448 such entities were registered by the end of December last year. Additionally, 828 applications were generally filed with the average review process for each taking between 14 to 180 days. It’s worth noting that the law only came into effect in May 2023. Experts are surprised by the large number of registrations, while others argue that there could be even more, if barriers such as the extended procedural time and costs were eliminated. The Registry of entities is not fully electronic, which could simplify part of the process.
A Family Foundation is a new institution that allows for managing a company’s assets as part of a so-called succession. It is particularly beneficial when there are multiple or minor heirs. The company’s creator or main shareholder can conduct the process, and transferring the assets to the foundation allows for preserving wealth, even when not all heirs are interested in managing the firm.
“Entrepreneurs considering succession, or startup founders, may see Family Foundations as an attractive tool for creating a lasting organizational structure, which also provides the possibility for effective taxation,” comments tax consultant Ewa Flor.
According to the District Court in Piotrków Trybunalski, which maintains the Family Foundations Register, there were 448 registered in 2023. Experts find this to be a surprisingly high number.
“Family Foundations represent an innovative and flexible solution that brings many tax benefits. Despite their growing popularity, there are still areas of uncertainty regarding their operation,” says Marek Niczyporuk, legal advisor and tax adviser from the Ars Aequi law firm.
The number of registrations could still increase, experts claim. Last year, the average time for reviewing an application to establish a family foundation ranged from 14 to 180 days.
“The financial threshold of PLN 100,000 as a minimum endowment does not reflect the level of operating costs for a family foundation. The long-term cost could be a significant barrier,” says Agnieszka Krysik, legal advisor and president of the Family Foundation Operator, chair of the BCC Commission for Family Business Center Club.
The formalities are complex. The founder must submit a declaration of establishment of a family foundation before a notary, prepare its statutes, transfer assets to the founding fund with a value of at least PLN 100,000, establish foundation entities, and file a petition for registration.
“The introduction of a detailed statute, determination of the foundation’s goals, establishment of statutory entities or conditions of operation may pose a challenge to applicants. The need to adapt to precise regulations and prepare a complex statute may require some legal knowledge and commitment from the founders,” says Ewa Flor, tax consultant.
“Education is crucial to popularize this solution. This is still a new succession tool and this factor alone should decide on the establishment of a family foundation,” adds Ewa Flor.
