Family Foundation After the Presidential Veto. Can We Expect Changes After 3 Years of Operation?

The presidential veto halted changes to family foundation taxation - but not for long. The June 2026 government review has reopened the debate. Find out how to prepare.

If you operate or are planning to establish a family foundation, you may have assumed over the past few months that no changes were coming anytime soon. In late November 2025, the President vetoed an amendment that would have tightened the taxation of foundations from January 2026. The rules indeed did not change. However, the statutory review of the functioning of the family foundation, published on 12 June 2026, has reopened the debate — with public consultations closing as early as 25 June 2026. The presidential veto has not stopped legislative initiatives for long.

How Is a Family Foundation Taxed Today?

To understand what is at stake, it helps to recap the current model. A family foundation is, as a rule, exempt from corporate income tax (CIT) on income from permitted activities. Tax at the rate of 15% arises only when a benefit is distributed to a beneficiary. If the beneficiary is the founder or a close family member, the benefit is additionally exempt from personal income tax (PIT). This mechanism makes the foundation an attractive vehicle for accumulating and reinvesting assets, with tax effectively deferred until funds are distributed from the foundation.

What Did the President Veto and Why?

The amendment passed by the Sejm on 17 October 2025 targeted several issues at once. The most significant was a three-year lock-up period: selling an asset contributed to the foundation within 36 months of the end of the year of contribution would forfeit the exemption and trigger 15% CIT. The second point was the exclusion of short-term rentals and hotel-like services from permitted activities. The third was bringing family foundations within the scope of controlled foreign corporation rules and exit tax provisions. The fourth was an expanded list of hidden profits — ranging from personal use of foundation assets to loan write-offs for beneficiaries.

The President justified the veto on the grounds of a breach of the principle of legitimate expectations. The argument was straightforward: foundations had been promised stable rules, yet the change came less than two years after families had transferred assets into them. Formally, the veto does not close the matter permanently — the Sejm can override it by a three-fifths majority — but that scenario appears unlikely given the current balance of power. For now, the existing rules remain in force.

Findings of the Review of the Family Foundation

The Family Foundation Act requires the government to review its functioning after three years. The Ministry of Economic Development and Technology, together with the Ministry of Finance, published such a review on 12 June 2026 and sent it to public consultation, which runs until 25 June. This is not yet a bill — it is a policy document — but its message is unambiguous.

The government has put numbers on the table. In 2025, foundations shielded PLN 15.3 billion in income from taxation, resulting in a PLN 2.9 billion shortfall to the budget. Given that scale, it is hard to assume the topic will simply go away. The review revives familiar demands from the vetoed amendment — from lock-up periods to taxing short-term rentals. It also floats a concept not previously on the table: reversing the taxation model — instead of tax at the foundation level, the taxpayer would be the beneficiary, subject to PIT on the benefit received. For anyone who designed their structure around the current, favourable model, that would be a change of rules mid-game.

No New Law Does Not Mean No Risk

The most common mistake after the veto is assuming that since the rules have not changed, there is nothing to worry about. That conclusion is wrong for two reasons. First, the tax authorities already have tools that operate independently of the amendment: the general anti-avoidance rule, the power to reclassify transactions, and the ability to refuse to issue a binding ruling. Second, both the vetoed bill and the June review constitute a public map of the areas the authorities treat as abuse. A quick sale of contributed assets, short-term rentals, and personal use of foundation property are clearly marked on that map.

There is also another side to this story. In cases involving short-term rentals, administrative courts are currently siding with foundations and see no basis for differentiating the tax treatment of standard rentals from those charged per night. This is a real argument in a dispute with the tax authorities. However, building a long-term strategy on it may be a risky decision when the legislature is explicitly moving to close that door.

How to Prepare for Possible Changes?

As long as the rules remain unchanged, a well-structured family foundation remains one of the best succession vehicles in the Polish legal order. It is nonetheless prudent to manage one — or plan its establishment — as if the announced changes were already in force. In practice, this comes down to a few decisions:

• Document the date and source of each asset contributed. If a lock-up period returns, the date from which it runs will be decisive.
• Exercise caution with short-term rentals and hotel-like activities. They currently enjoy the exemption, but they are the first target of any future amendment.
• Treat personal use of foundation assets (car, property, yacht) as a high-risk area. This is the classic example of a hidden profit that the authorities scrutinise most closely.
• Do not build your structure around a quick, "tax-free" sale of contributed assets. That model is currently the most exposed — both legally and reputationally.
• Monitor the legislative process. The review consultation closes on 25 June 2026.

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Asset decisions made today have a time horizon measured in years, and the direction in which the legislature is heading is already clearly visible. Those who factor it into their planning now will save themselves a costly correction when the changes return in the form of an enacted statute.

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