A family company, its position on the market and the trust it enjoys, often represents the work of many generations. However, transferring the company to other generations is often a difficult moment.
Meanwhile, data from the Family Business Institute indicate that in the perspective of the nearest 5 years in the hands of the next generation will pass approx. 57% family businesses. With only 8.1% the successors of entrepreneurs declare their willingness to run the company created by parents.
This means that in a few years a large part of family businesses can go into foreign hands, thus losing a special, long-established bond between business and its owners.
Taxation of family foundations
The aim of the project is to solve the problem of the succession of family companies. We are aware that tax issues are an important factor in making business decisions. That is why we want no negative tax consequences for the entrepreneur to be associated with the establishment of a family foundation. On the contrary, we assume that taxation paid by the foundation of funds will involve some facilities
- explains Deputy Minister of Finance Jan Sarnowski.
The rules of taxation for family foundations will be as follows:
The property transferred to the foundation by the funder, intended to meet the objectives of this foundation, will not be revenue within the meaning of the Corporate Income Tax Act (CIT).
The transfer of property to the family foundation by the funder will not involve tax burdens.
The operation of the family foundation will be taxed on general principles.
The income of the funder and the beneficiary from the so-called zero group, obtained from the family foundation, will not be subject to income tax on individuals (PIT).
In case of liquidation of the Foundation:
Its benefits or property will be subject to inheritance and donation tax.
Those closest to the funder (marriage, successors, forerunners, stepchildren, siblings, stepdad and stepmother) will be exempt from tax if the property transferred to the foundation by the funder is the subject of the benefit.
Other recipients of benefits will pay a tax of 19% the tax base. For comparison, currently such revenue (e.g. revenue from other sources referred to in Article 10(1)(9) PIT) could be taxed even at a rate 32%, not counting 4% the solidarity contribution.
In particular, the Ministry of Finance wants to ensure the safety of the application of this solution, in order to avoid, on the one hand, the use of foundations by unfair taxpayers and not complicate the tax system with anti-abuse regulations.
That is why we are particularly interested in participating in the consultation process of the project as wide a range of family businesses as possible and their organisations. We want to work together with the market to develop a solution that will protect the family's business and effectively secure it for future generations
- adds Sarnowski.
Functions of the family foundation
The creation of the foundation will be possible by drawing up a founding act or will with the notary. The family foundation will be a legal person based in Poland. The most important issues related to its functioning, the founder will be able to include in the statutes.
The Foundation will be able to be equipped with widely understood assets, within the meaning of the Civil Code, e.g. money, securities, movable property and real estate, shares or shares. The Founder will also have a great deal of freedom to define the governance rules of this entity.
The circle of beneficiaries will be determined by the funder. These may be natural persons, such as family members of an entrepreneur who wants to secure the future. They may also be public benefit organisations with which the funder's mission feels particularly connected.
Family foundations are a proven response to the problems of succession. Such institutions have been active in Austria, the Netherlands, Germany, Switzerland and Sweden for many years. Entrepreneurs who want to secure their assets in succession are looking for convenient solutions. The Family Foundation Act gives them the same tool in Poland and prevents capital outflows abroad
- explains Deputy Minister of Finance.
External consultation
The Ministry of Finance and Labour Development and Technology is now launching an external consultation. Opinions and comments may be made over the coming years 30 days. As a result of an agreement between the Ministry of Finance and the Ministry of Labour Development and Technology, the public consultation process of the Act will be coordinated by the MRPiT.
According to the assumptions of the bill, the bill could go to parliament in the second half 2021 a Act to enter into force in the beginning 2022