Free online invoicing software
with KSeF support
Family foundations are increasingly popular in Poland as a tool for asset management and succession planning. One key aspect of their activity is trading in shares and other securities, with specific tax implications. Below we provide details of the tax rules for securities transactions by family foundations.
Family foundation: trading in shares and securities
Accounting that understands your business
Leave your email address and receive guides supporting your business’s growth once a week
Sale of company shares: tax neutrality
An important feature of family foundations' investment activity is that selling company shares, regardless of where those companies are based, is tax-neutral. A foundation thus incurs no tax liability on income from such transactions. Family foundations can therefore manage assets freely without fearing additional tax costs.
Dividends on shares held by a family foundation: different tax rules
Dividend taxes are charged in the country where the paying company is based. The rules are as follows: - **Dividends from Polish companies** are exempt from CIT, so the family foundation pays no additional tax on this income. - **Dividends from US companies** are taxed at 15%, provided the foundation submits the appropriate identification form (W-8BEN for sole entities or W-8BEN-E for others). Without it, withholding tax is 30%.
Trading in securities: permitted and prohibited activity and CIT exemption
Family foundation managers should know which securities are permitted and which are prohibited to avoid unnecessary tax liabilities. 1. **ETFs (exchange-traded funds)**: trading is permitted and exempt from CIT. 2. **Government and corporate bonds**: these may be traded without tax. 3. **Cryptocurrencies (Bitcoin, Ethereum etc.)**: trading is prohibited and subject to 25% CIT. 4. **Forex (currency trading)**: this is also prohibited and subject to 25% CIT. Foundations may only acquire and dispose of currencies for other permitted activities.
Contributing assets to a family foundation and making payments: what are the tax effects?
Contributing assets, such as shares worth PLN 200,000, to a foundation and subsequently trading them creates no tax liability. However, the taxation of payments matters: - **Payments during the foundation's operation**: 15% CIT is charged on the entire amount paid. - **Payments upon dissolution**: tax is calculated on income; the acquisition cost, or “tax value of assets”, is deducted from their market value on the date of dissolution. CIT paid previously cannot be deducted upon dissolution.
In dissolution, sold assets are included in costs at their tax value. CIT previously paid while the foundation operated does not affect settlement when it closes.
If this article interests you, explore our services for family foundations and find out how we can help:
Summary
Managing investments through a family foundation requires detailed knowledge of tax rules to avoid unforeseen burdens. Profits from trading in shares, ETFs and bonds can be managed without additional taxes, while cryptocurrency and Forex trading is subject to 25% CIT. Importantly, tax paid during the foundation's existence is not deducted on dissolution, potentially affecting payment and investment strategy.
**Interested in a family foundation?** See our offer and learn more about effective asset management. Contact us for further information: visit our contact page.
More information about family foundations:
Interested in this article?
Enter your email address and once a week you will receive practical materials and tips to help you grow your business.
Book a free consultation
Grow your business with accounting combined with advisory services:
or
