POLAND Law and Practice Contributed by: Piotr Augustyniak, Nash Concept Ltd
tions serve philanthropic rather than succession pur - poses and are discussed in 10. Charitable Planning . 3.2 Recognition of Trusts The trust is not an institution of Polish law, and Poland is not a party to the Hague Trusts Convention. There is no domestic mechanism for creating a trust, and Polish substantive law does not divide ownership into legal and beneficial titles; a Polish court confronted with a trust will characterise the relationship under its conflict-of-laws rules and give effect to the foreign proper law so far as Polish public policy permits. In practice, the trustee is treated as the owner of the trust assets, and the entitlements of beneficiaries are analysed as obligations of the trustee. The consequences are principally practical. Trust structures encounter difficulties in land and company registers, banking documentation and probate pro - ceedings involving Polish assets; tax law, by contrast, recognises trusts, which are expressly addressed in the controlled-foreign-entity definitions, mandatory disclosure rules and beneficial ownership register, where trustees of foreign trusts with a Polish nexus are required to file. For Polish-resident families, the avail - ability of the domestic family foundation has removed most reasons to accept these frictions, and existing trusts are increasingly restructured or complemented by domestic vehicles. 3.3 Taxation of Trusts, Foundations and Similar Entities Located in Other Jurisdictions Foreign foundations, trusts and comparable arrange - ments are expressly included in the Polish controlled- foreign-entity rules. Where a Polish resident founder or beneficiary holds, formally or factually, rights to profit or control, the entity’s income may be attributed to that person and taxed currently at 19%, subject to the carve-out for entities conducting genuine economic activity in the EU or EEA. A Polish resident serving as trustee, protector or board member of a foreign entity creates a further risk: since corporate tax residence is determined by the place of actual management, an entity effectively directed from Poland may itself become a Polish taxpayer on its worldwide income. Distributions to Polish-resident beneficiaries occupy uncertain ground at the boundary between income tax
and the inheritance and donation tax. The prevailing administrative practice treats gratuitous receipts from a foreign foundation or trust as donations taxable by reference to the acquirer’s relationship to the entity – typically tax group III, at 12% to 20% – although rul - ings that look through to the settlor, and rulings apply - ing income tax instead, also exist. Prudent practice is to establish the tax treatment through an individual ruling before any distribution is made. The planning consequence is largely negative: for Polish residents, foreign structures rarely improve on the domestic fam - ily foundation, and the genuine opportunities lie in pre- immigration review (see 1.4 Pre-Immigration and Exit Planning ) and in the EU/EEA substance carve-out for families with genuine foreign operations. 3.4 Tax Consequences of Fiduciary and Beneficiary Roles In the domestic family foundation, the accumula - tion of roles is contemplated by the statute itself: the founder may sit on the management board, may be a beneficiary and may reserve extensive powers in the statute, and none of this, as such, produces adverse tax consequences. The pressure points are specific rather than structural: dealings between the founda - tion and the founder or beneficiaries are policed by the hidden-profits rules, under which loans, services and similar advantages may attract the 15% charge, and arrangements primarily serving a tax purpose remain exposed to the general anti-avoidance rule. For foreign entities, the overlap of roles has heavier consequences. A settlor or beneficiary who also con - trols the entity as fiduciary strengthens the attribu - tion of its income under the controlled-foreign-entity rules, supports the argument that the entity is man - aged from Poland, and, in extreme cases, invites the administration to disregard the entity as a nominee arrangement, taxing the assets as if still owned by the individual. These questions are handled in practice by keeping management genuinely abroad, document - ing the independence of fiduciaries, an seeking indi - vidual rulings where the family’s circumstances make an overlap of roles unavoidable.
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