Five ways to protect your assets. The rich take advantage of such solutions

1. Holding companies (domestic and foreign)

The old brutal saying goes “if I don't know who the sucker is at the poker table, it's the person without a holding company.” When building structures for clients, we always divide companies into two basic types: operational, i.e. those conducting real business (e.g. factory, real estate rental, trade, services) and holding companies, which do not participate in risky activities, but hold shares and assets, collect profits from dividends and manage the group's assets.

Thanks to this structure, it is possible not so much to “avoid taxes” but to plan them effectively. Thanks to this, dividends can be accumulated and reinvested, operational risks are separated from the owner's assets, and the structure is more resistant to the bankruptcy of one company. The rich almost never keep all their businesses in one company.

Break-even point: Alwayswith at least 2-3 operating companies.

2. Trust (in English jurisdictions). Why do the rich use them?

A trust is one of the oldest wealth protection tools in the world. To put it simply: the owner transfers property under a special agreement to a trust, which is managed by an external trustee in accordance with very precise rules. The wealthy use trusts because it allows for complete anonymity.

Additionally, a trust is difficult to “defeat” legally, it allows for almost complete exclusion of property from our personal claims, and gives great flexibility in determining who and when uses the money. Importantly, a trust is an institution of Anglo-Saxon law and cannot be properly constructed under Polish law.

Break-even point:

– most often from PLN 10-20 million,

— especially with international assets or multi-jurisdictional families.

3. Private foundations: in Poland, family foundations (or their foreign equivalents, e.g. in Liechtenstein)

Why do the wealthy use them? Private foundation allows you to separate property from an individual. Assets (shares in companies, real estate, financial resources) cease to “belong” to a specific person and begin to be managed in accordance with the principles set out in the statute.

For wealthy people, it is a key tool to prevent the fragmentation of assets and a way to protect themselves against divorces, inheritance disputes and creditors. If we contribute the property to the foundation early enough, our personal debts do not apply to it. Additionally, it is a way of planning succession without will chaos. How does it work?

The founder dies with a zero account, which helps us avoid inheritance disputes. Additionally, it maintains control over the property even after it is formally transferred to the foundation. Importantly, the foundation is not used for everyday business, its role is to be a “hide” and a hat over the entire structure, including holding companies. Particularly profitable for “family” assets that are expected to last for generations. Despite the controversy, a family foundation in Poland remains a good solution for people without protection or who do not use aggressive optimization.

Break-even point:

– usually from PLN 1-5 million in asset value for a family foundation and from PLN 15 million for private foundations.

4. Using money within structures without paying it to PIT. How is this possible?

This is one of the most important differences between wealthy people and employed people. A full-time employee often gives you 40-50 percent. gross salary, and the millionaire has zero. How is this possible? A millionaire simply has no salary. The wealthiest people do not withdraw funds to private assets, which would be subject to personal income tax. They carry out expenses, investments and loans within companies.

Wealthy people around the world do not buy privately, but through companies: they invest in real estate as a special purpose vehicle, they borrow funds between group companies, they spend money as part of a business activity, they finance the development of new ventures without the need to pay a salary or dividend to an individual. Moreover, a company in another country allows you to freely include in the costs purchases that will be questioned in Poland.

In practice, this means that the capital remains in business circulation, and not in a private portfolio: thanks to this, there is no obligation to pay PIT on every zloty. This is not a loophole in the law, but conscious management of assets and risk, respecting regulations and financial logic.

5. Tax residence and jurisdictional diversification

Why do the rich benefit from this? The rich do not depend on one country for their entire life and wealth. There used to be mechanisms for tax optimization of payments from abroad for Polish residents. However, today, after COVID and remote work, changing residences is becoming more and more frequent.

The most frequently mentioned rule is business in country A, assets in country B and tax residence in country C. This is due to diversification and the fact that one country rarely meets all the conditions. Therefore, the richest often have companies in different countries, have assets outside the country of residence, and plan to change their residence well in advance.

Break-even point:

– usually from PLN 1-2 million of annual income or

— when conducting international business.

Summary

Wealthy people do not use these solutions because they have some secret knowledge. They are aware that At a certain level, law and structure cease to be an expense and begin to be an investment. The greater the assets, the greater the risk, the greater the importance of the structure, the less importance of simple solutions such as “will” or “one company”.

Author: Maciej Oniszczuk, president of the management board, managing partner of Oniszczuk & Associates