A family foundation offers an elegant solution for families with international ambitions and assets. However, when dealing with income from foreign sources – investments in securities listed on foreign exchanges, real estate abroad, or income from foreign business activities – complex tax and asset management questions arise.
When Do Foreign-Source Incomes Require Special Attention?
Poland has an extended definition of tax residency. If family members spend more than 183 days per year in Poland or have their center of vital interests here, they may be considered Polish tax residents. This means that income from around the world is subject to Polish taxation.
A family foundation, despite being a legal entity, does not shield you from foreign taxes. However, its structure enables strategic planning of financial flows.
Foreign Income Taxation Within a Family Foundation
When a family foundation receives income from foreign sources, it must:
- Settle taxes in the source country – often through withholding tax at source
- Avoid double taxation – through tax treaties (DTA agreements)
- Properly classify income – whether as dividends, interest, royalties, or capital gains.
Poland has concluded DTAs with most countries worldwide, allowing tax credits and reducing double taxation burden.
Foreign Real Estate and Family Foundation
Many families own real estate abroad – vacation or investment properties. When a property is located abroad, rental taxation typically occurs in the country of property location, regardless of the legal structure of ownership.
However, a family foundation can:
- Protect assets from creditors and inheritance disputes
- Facilitate management and transfer of property to future generations
- Enable tax planning through foundation location in tax-neutral jurisdictions.
Strategy for International Portfolios
For families with foreign-source income, a family foundation offers:
- Transparency and Legality – no gray areas, full compliance with Polish and international tax law
- Structural Efficiency – unified management of assets from multiple jurisdictions
- Asset Protection – separation of foundation ownership from personal inheritance matters
- Flexibility – ability to tailor foundation conditions to family needs and international obligations.
Conclusion
A family foundation is not a tax panacea – but it is a solid foundation for families who want to professionally manage international assets. The key is cooperation with an experienced tax and legal advisor who understands both Polish law and regulations in countries where you have interests.
If you’re planning an international asset structure, consider a family foundation as part of your long-term strategy.
Michał Gawlak
attorney-at-law
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