Draft law on family foundation adopted by the government
The Council of Ministers adopted the draft Family Foundation Act at its last meeting. The draft is authored by the Ministry of Development and Technology.
The adopted draft has a new version, which was published on 8 November. The solutions it contains are intended to make family business succession more attractive.
As it can read in the justification of the draft, the aim of the family foundation will be to accumulate and manage assets. This will make it possible to carry out the succession process without the need to introduce changes to the organisational structure of the company or capital group.
– When analysing the draft, it is worth mentioning the tax solutions contained therein. Among other things, it provides that current income of the family foundation will benefit from a CIT exemption. The tax point will arise upon distribution of profit (as it is currently under the so-called ‘Estonian CIT regime’). Such profits will be subject to CIT at a 15% tax rate. The foundation will also be obliged to submit to the tax office a return on the amount of income (revenue) earned in the tax year – by the end of the third month of the year following the tax year, points out Marek Kończak, tax adviser, senior manager at Thedy & Partners.
It should be added that, in terms of PIT, income from a benefit received from the Foundation is included in the catalogue of income from other sources. The tax rate is to be 15%, however, an exemption from PIT will be applied to the income received by the founder or the beneficiary who is the closest person to the founder (what should be the most often case).
The new provisions are to enter into force three months after their announcement in the Journal of Laws.