Can a Family Foundation Conduct Business Activity?

The Family Foundation Act introduces a closed list of the types of business activity that a foundation may conduct. A family foundation (fundacja rodzinna) may carry on business activity only in the following areas:

1. disposal of property, provided that the property was not acquired solely for the purpose of further disposal;
2. letting, leasing or making property available for use on another basis;
3. joining commercial companies, investment funds, cooperatives and entities of a similar nature with their registered office in Poland or abroad, and participating in these companies, funds, cooperatives and entities;
4. acquiring and disposing of securities, derivatives and rights of a similar nature;
5. granting loans:
   • to capital companies in which the family foundation holds shares,
   • to partnerships in which the family foundation participates as a partner,
   • to beneficiaries;
6. trading in foreign means of payment belonging to the family foundation for the purpose of making payments connected with the family foundation's activity;
7. production of plant and animal products processed by non-industrial methods, except for processed plant and animal products obtained within special branches of agricultural production and products subject to excise duty, provided that the quantity of plant or animal products from the foundation's own cultivation, breeding or rearing used to produce a given product is at least 50% of that product;
8. forestry.

Only in the above areas will a family foundation (in Polish) benefit from the tax exemption (income from this activity will not be taxed). If the scope of the business activity carried on is wider, the family foundation will pay tax at 25% of the tax base (for comparison, the income tax act generally provides for 19% of the tax base).