A family foundation is a solution that allows you to secure assets, plan succession, and organize the rules for transferring funds to future generations. It can be useful not only for owners of large companies but also for individuals who own real estate, shares in companies, or investment capital.

Gemini Advisor supports clients throughout the entire family foundation establishment process: from analyzing financial and tax situations, through concept preparation, to registration and ongoing service.

If a family foundation engages in permitted activities and does not make any payments, its income tax may amount to 0%. This is a solution provided for by law, not a legal loophole.

What is the main tax benefit?

One of the most important advantages of a family foundation is the ability to reinvest funds without current income tax, as long as the foundation's activities fall within the statutory catalog of permitted activities.

This concerns, among other things:

• management and lease of property,
• securities trading,
• joining capital companies,
• providing loans to companies in which the foundation has shares,
• granting loans to beneficiaries of a family foundation.

As long as the foundation does not pay benefits to beneficiaries, it may accumulate and reinvest capital without current income tax on permissible activities.

Who should consider establishing a family foundation?

A family foundation can be a beneficial solution in several typical situations.

Business owner planning to sell their company

Selling shares in a limited liability company by an individual may be subject to income tax and solidarity levy. If the shares are held by a family foundation, the sale may be more tax-advantageous, as the foundation's income from such a transaction may be exempt.

Landlord

Leasing is one of the forms of permitted activity for a family foundation. Rental income can remain within the foundation and be reinvested without current income tax, as long as no benefits are distributed to beneficiaries.

Partner in a limited liability company

A family foundation can be a shareholder of a company and receive dividends. This allows for more structured asset planning for future investment of profits.

Active investor

A family foundation can invest in, among other things, securities, bonds, and shares in companies. This allows capital to be reinvested within a single structure, in accordance with adopted succession principles.

When does the tax appear?

A family foundation is not a completely tax-free solution. Taxes primarily arise when benefits are paid out to beneficiaries or when the foundation engages in activities beyond the statutory catalog.

• 0% – for permitted family foundation activities, if no benefits are paid out.
• 15% CIT – when paying benefits to beneficiaries.
• 0–20% PIT – on the beneficiary's side, depending on the degree of kinship with the founder.
• 25% CIT – for activities exceeding the permitted scope.

What can a family foundation do?

The act defines a catalog of activities that a family foundation may carry out as part of its permitted business. These include, among others:

• rent, lease, or making property available on another basis,
• acquisition and disposal of securities and derivative instruments,
• joining commercial companies, investment funds and cooperatives,
• providing loans to companies in which the foundation has shares,
• granting loans to beneficiaries of a family foundation,
• disposal of property, unless acquired solely for resale,
• turnover of foreign means of payment for the foundation's activities,
• Participation in domestic and foreign companies and funds.

What benefits does a family foundation offer besides tax advantages?

A family foundation serves not only tax optimization. Its primary purpose is to organize assets and succession rules.

Succession without chaos

The foundation allows you to specify who will receive benefits and under what terms. This way, assets do not have to be divided randomly or in a manner contrary to the founder's wishes.

Asset protection

Assets contributed to a family foundation are separate from the founder's private assets. This can reduce the risks associated with succession, family disputes, and uncontrolled fragmentation of assets.

Capital reinvestment

Income from permitted activities can remain in the foundation and be allocated to further investments. This allows for the building of a long-term asset structure.

Family protection

The foundation may pay benefits to family members in accordance with the rules set out in its statutes. It may also operate after the founder's death.

What does the process of establishing a family foundation look like?

Establishing a family foundation requires analysis, document preparation, and registration. It's advisable to carry out the process in several stages.

1. Plan and strategy First, you should check if a family foundation will be beneficial in your specific situation. The analysis should cover assets, family structure, planned investments, and tax implications.
2. Family."[1] The next step is to establish the rules for distributions, the role of beneficiaries, how the foundation will operate after the founder's death, and the principles for appointing the foundation's bodies.
3. Status and notary Next, the family foundation's statute and deed of incorporation are prepared. These documents require the form of a notarial deed.
4. Registration The final stage is submitting the application to the family foundation registry. A foundation in organization can operate even before being entered into the registry.

Is a family foundation a good solution for everyone?

Not everyone with assets should automatically set up a family foundation. This solution works best where there is a need for long-term asset protection, succession planning, or reinvestment of capital within a single structure.

Before making a decision, it is worth analyzing the financial, family, and tax situation. Only on this basis can it be assessed whether a family foundation will be the right tool.