It is one of the recurring questions in every succession conversation: should the family wealth go into a family foundation, or should we build a family holding?
Both structures organise a family business and make it easier to pass on to the next generation, but they do it in fundamentally different ways – different legal nature, different taxation, different level of control, different running costs. Below is a practical comparison to help you have an informed conversation with your advisor.
What a family foundation and a holding really are
The Polish family foundation, regulated by the Act of 26 January 2023, is a separate legal person whose purpose is to accumulate assets, manage them in the interest of the beneficiaries and provide benefits to them. Contrary to a common misconception it is not a philanthropic vehicle – its goal is to protect family wealth and ensure generational continuity, not to run a non-profit activity.
A family holding is a corporate structure – typically a holding company (sp. z o.o. or S.A.) owning shares in operating companies. A holding is not a separate type of entity in Polish law; it is simply a company whose main function is to hold and manage assets of other companies.
Taxation – this is where the differences are biggest
- Family foundation:
- As a rule CIT-exempt within the scope of permitted activity (Article 5 of the Family Foundation Act) – sale of assets, lease, rent, participation in companies, trading in securities.
- Benefits paid to beneficiaries and assets distributed upon dissolution – 15% CIT at the foundation level.
- On the beneficiary side: full PIT exemption for the so-called zero group (spouse, descendants, ascendants, siblings, stepchildren, stepfather, stepmother), 10% PIT for tax groups I and II, 15% PIT for all others.
- Activity outside the permitted scope – punitive 25% CIT.
- Family holding:
- Standard 19% CIT (or 9% for small taxpayers at the operating company level).
- Possible dividend exemption between EU/EEA companies (Article 22(4) of the CIT Act) or the Polish Holding Company regime – exemption on sale of subsidiary shares subject to conditions.
- Dividend to an individual: 19% PIT. Sale of shares: 19% PIT on the gain.
- Inheritance of shares is subject to inheritance and gift tax (with full exemption for the zero group, subject to formal requirements).
Control and flexibility
A foundation operates on the basis of its statute and a list of beneficiaries set by the founder. The management board runs the affairs, the supervisory board (mandatory above 25 beneficiaries) supervises, and the assembly of beneficiaries has limited powers. It is a structure that enforces discipline and limits the risk of asset dispersion – at the cost of decision-making speed.
A holding offers more operational freedom: amending the articles of association, restructuring, selling assets or bringing in an external investor are well-known and predictable processes. The downside is that shares are simply inherited – which means risk of fragmentation, family disputes and loss of control over the business.
Cost of setup and running
- Family foundation:
- Founding fund of minimum PLN 100,000 (assets contributed by the founder).
- Founding act in the form of a notarial deed.
- Registration in the Regional Court in Piotrków Trybunalski (the family foundation register).
- Mandatory full bookkeeping, annual financial statements, audit of assets every 4 years.
- Real setup cost with legal and tax support: typically PLN 15,000–40,000.
- Family holding:
- Share capital of a sp. z o.o.: minimum PLN 5,000.
- Registration in the National Court Register (S24 or traditional notarial form).
- Standard corporate accounting and reporting.
- Setup cost: from a few to a dozen or so thousand PLN, depending on structure.
Succession and generational transfer
In a family foundation the assets are not inherited – they stay in the foundation and beneficiaries receive benefits according to the statute. This is the greatest value of the construction: it protects the company from fragmentation and from disputes among heirs. The foundation also effectively addresses forced heirship claims – benefits paid by the foundation are credited against the reserved share.
In a holding, shares are inherited like any other asset. That is simpler but less predictable – a single heir with a different vision is enough to block strategic decisions. A holding works well where there is clear family alignment around the role of the business, or where you plan to sell the company at some point.
When foundation, when holding
A family foundation is the right choice when: you want to keep wealth in the family across generations, you hold diversified assets (real estate, shares, securities), you care about protection from fragmentation and inheritance conflicts, and you accept limited flexibility in exchange for security and preferential taxation of benefits.
A holding is the better fit when: you plan active business expansion, you are open to bringing in an investor or selling the company, you have clear family alignment on succession, or when the PLN 100,000 founding fund and the closed catalogue of permitted activities are unacceptable for you.
An increasingly common solution is a hybrid model: a family foundation as a shareholder of the holding. It combines long-term wealth protection with operational flexibility of the company – but requires careful structuring and a well-thought-out benefits policy.
Summary
A family foundation and a holding are two different tools, not competitors. The foundation protects wealth and organises succession; the holding provides operational flexibility and simplicity. The choice depends on the goal, the structure of assets and how you see the role of future generations in the company. Either way, this should be designed with a tax advisor and lawyer – a mistake at the structuring stage can be costly and hard to reverse years later.
Michał Gawlak
attorney-at-law
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