Donating a business to a family foundation is exempt from VAT

The institution of a family foundation was introduced into the Polish legal system in 2023 and has been constantly gaining popularity since then. By definition, a family foundation is intended to facilitate easier collection of funds and their succession by members of the founder’s family. In practice, this is a solution that offers many tax benefits.

Contributing business to a family foundation and VAT

As a family foundation is a relatively new solution in Polish law, some provisions are still unclear, which necessitates asking the tax authorities for clarifications.

Recently, a taxpayer running a sole proprietorship submitted such an inquiry. In the future, he intended to contribute his own business to the family foundation of which he would be the founder. Importantly, all assets that were to be contributed were related to the business activity, and input VAT was deducted upon their acquisition.

The taxpayer asked the authority whether making a donation in the form of an enterprise to a family foundation will be subject to VAT and whether the family foundation will be obliged to correct the calculated goods and services tax, at the same time pointing out that the foundation will continue its business activities to the same extent, in which it was conducted until the taxpayer submitted it.

Contribution of activities to a family foundation is exempt from VAT

The authority, in the interpretation of November 27, 2023 No. 0111-KDIB3-1.4012.598.2023.4.ICZ, agreed with the taxpayer’s position that the family foundation will not be obliged to correct the input tax because the company’s donation to the foundation is within the meaning of the Civil Code, the sale of an enterprise which is not subject to VAT.

The position of the authority was also supported by specialists in the field of tax law, pointing out, among others, that VAT corrections are made if there is a change in the purpose of the acquired property, which did not happen in the described case.

The issue of issues related to family foundations still raises many interpretation doubts. Over time, more and more issues will be explained to taxpayers, and the institution itself will most likely become more and more popular. We can only wait for further tax-payer-friendly interpretations.


Maciej Szkutnik

Specialist in the field. Taxes


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