Proposed changes to the taxation of family foundations

On 29 August 2025, the Ministry of Finance published draft amendments concerning the taxation of family foundations. The amendments are, in principle, of a tightening nature and reflect the assumptions announced several months ago.

The main change is the introduction of a 36-month grace period, which will apply from the end of the year in which the property was contributed to the family foundation, transferred free of charge or acquired from a related entity. If the family foundation disposes of this property before the end of the grace period, the income from this disposal will be subject to CIT at the general rate of 19%. CIT on the disposal of property will be deductible from 15% of the tax on payments made by the family foundation to beneficiaries.

Other changes include:

• taxation of short-term rentals conducted by a family foundation – at a CIT rate of 19%;
• extension of the provisions on controlled foreign corporations (CFC) and exit tax to family foundations;
• the inclusion of family foundation income from participation in tax-transparent entities that conduct business activities in taxation under general rules;
• expansion of the scope of cases that will result in loans granted by a family foundation being recognised as hidden profits – whereas previously, loans granted to a beneficiary that were not repaid on time or loans granted for a period of more than 10 years were recognised as hidden profits, from 1 January 2026 loans granted to the founder or a natural person affiliated with the beneficiary, founder or family foundation will also be considered hidden profits.

The transitional provision (Article 2 of the amending act) is not entirely clear. It seems that it should be interpreted in such a way that property contributed to a family foundation before 1 September 2025 should benefit from the protection of acquired rights, i.e. the 36-month grace period should not apply to the disposal of property acquired by family foundations before 1 September 2025. However, due to the fact that the changes are to apply from 1 January 2026, this would mean that the Act would still have retroactive effect.

The draft Act can be found here.