The entry into force of the Family Foundation Act opened up new possibilities in the management of family wealth. The primary role of the foundation is to accumulate and protect that wealth and to manage it for the benefit of the beneficiaries.
Family foundations and CIT
One of the key advantages of a family foundation is that, as a rule, it pays no CIT. This exemption, however, applies only to specific activities – those falling within the scope of permitted activity, described in detail in the Family Foundation Act – which constitutes a closed catalogue of activities exempt from CIT.
If, on the other hand, the foundation undertakes activities going beyond the permitted catalogue, it must reckon with the punitive 25% CIT on other activity.
One of the categories of permitted activity is the rental or lease of assets, or making them available for use on any other basis.
Disputes over the nature of rentals – the devil is in the detail
In theory, then, since the legislature permits family foundations to carry on rental activity, the form that rental takes should be irrelevant.
However, the Director of the National Fiscal Information (KIS) has consistently pressed a different position, according to which short-term rental does not fall within the catalogue of a family foundation’s permitted activity.
In support of this position, the tax authorities point out that traditional, long-term rental is characterised by the following:
- agreements are concluded for longer periods,
- payments are made on a recurring basis,
- tenant turnover remains low,
- there is a higher degree of formality.
This interpretation significantly restricts the ability to make effective use of the foundation’s assets – where real estate forming part of those assets is let on a short-term basis, typical of apartments or hotels, among others.
A breakthrough – favourable administrative court judgments
In their rulings, the provincial administrative courts (WSA) have begun to challenge the existing interpretation of the concept of so-called “permitted activity” in the context of family foundations – an interpretation favourable to the tax authorities.
These are the judgments of:
- the WSA in Gdańsk dated 19 June 2024 (I SA/Gd 219/24),
- the WSA in Wrocław dated 26 March 2025 (I SA/Wr 807/24),
- the WSA in Bydgoszcz dated 9 April 2025 (I SA/Bd 107/25) and 5 August 2025 (I SA/Bd 315/25).
In each of these rulings the courts held unequivocally that there are no grounds for differentiating the tax consequences of rental within a family foundation solely on the basis of the duration of the agreement. Even if short-term rental is not a “classic” rental, it still falls within the statutory concept of “making assets available for use on another basis”.
Practical implications for family foundations
The judgments cited provide a solid argument that a family foundation can avoid CIT in the case of short-term rentals as well.
Although the rulings cited are not yet final and may be appealed to the Supreme Administrative Court, they mark out a new and decidedly more favourable position.
For the owners of family foundations, this means a real opportunity to make wider use of real estate – including properties located in typically tourist destinations – to generate income without the fear of a heavy tax burden on short-term rentals.
This, in turn, opens the way to growing the foundation’s wealth in a more flexible and, at the same time, more effective manner.
How we can help
We will be happy to advise you on how best to unlock the potential of real estate within your family foundation – both in the context of rentals and in that of broader wealth planning. Real estate is our speciality.
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