Supreme Administrative Court regarding family foundations. Real estate sales. What about tax?

What did the Director of the National Tax Information think about the family foundation

The Director of KIS issued the interpretation on January 17, 2025 (reference number 0111-KDIB1-2.4010.700.2024.1.DK). He found the foundation's position incorrect. The authority indicated that the purchase of real estate, its rental and sale after 10 years does not fall within the permitted scope of business activities of a family foundation. The authority explained that if the foundation acquires real estate and assumes that it will sell it after some time, such circumstances lead to the conclusion that the purpose of establishing a family foundation should be fulfilled, i.e. securing the beneficiaries in the long run. The director of KIS stated that: the acquisition of real estate that will be sold by the foundation goes beyond the scope of permitted activities referred to in Art. 5 of the Act on Family Foundations.

– This interpretation resulted in: in the event of a sale of real estate by a family foundation, it would be obliged to pay income tax at a sanctioned rate of 25%. – explains Wojciech Pławiak, legal advisor, tax advisor and managing partner of Litigato.

So the dispute went to the courts.

What did the Provincial Administrative Court rule regarding the sale of real estate by a family foundation

The Provincial Administrative Court in Rzeszów overturned the individual interpretation of the Director of the National Court Register (judgment of May 22, 2025, reference number I SA/Rz 172/25). The court pointed out that in accordance with Art. 5 section 1 point 1 of the Act on Family Foundations, a family foundation may conduct business activities within the meaning of Art. 3 of the Act of March 6, 2018 – Entrepreneurs' Law (Journal of Laws of 2023, item 221) – only in the scope of sale of property, unless the property was acquired solely for the purpose of further sale. The court explained that this meant that As part of its permitted business activity, the foundation may sell property it owns, but it cannot be property (and therefore also real estate) acquired solely for the purpose of sale. “Exclusively” should be understood as “as soon as, solely, exclusively.” Therefore, it is an action whose sole purpose and sole cause is to sell a given product.

In practice, it is about purchasing goods only to sell them. In such a situation, the revenue (income) from sales would not be exempt from tax, but on the contrary – it would be subject to tax at a rate of 25%.

The court noted that the case in question was not about the purchase of real estate “solely for the purpose of selling it (e.g. at a profit), but it was indicated that the real estate would be subject to lease and could only be sold after 10 years. According to the Provincial Administrative Court in Rzeszów, such action does not fall within the concept of “purchasing property solely for the purpose of selling it”. The property will be rented for quite a long time, contributing to the foundation's income from rent. In such a case, it is not justified to state that the property, and in this case real estate, was acquired solely for the purpose of sale. According to the Provincial Administrative Court, there are at least two reasons for its acquisition. Firstly, in the short term, renting and obtaining rent, and in the long term, selling it (probably also at a profit).

What did the Supreme Administrative Court rule regarding the sale of real estate by a family foundation?

The tax authority filed a cassation appeal to the Supreme Administrative Court. The authority did not agree with the judgment of the Provincial Administrative Court in Rzeszów. Supreme Administrative Court in its judgment of February 18, 2026 (reference number II FSK 1010/25, final) dismissed the authority's cassation appeal.

The Supreme Administrative Court agreed with the arguments of the Provincial Administrative Court in Rzeszów and indicated that if a family foundation actually uses the property (e.g. rents it for many years), it cannot be said that it was bought solely to sell it immediately (i.e. for strictly speculative purposes). The same, as he explains Marta Aniszewska, legal advisor and manager at Litigato and representative in the casethe Supreme Administrative Court found that the sale of real estate by a family foundation, after a period of not less than 10 years from its acquisition, falls within the scope of permitted activities of a family foundation and thus may benefit from tax exemption (defined in Article 6(1)(25) of the CIT Act).

What does the Supreme Administrative Court's judgment mean for founders and family foundations?

The judgment of the Supreme Administrative Court in case no. II FSK 1010/25 is very favorable information for people using the institution of family foundations. The Supreme Administrative Court clearly confirmed that a family foundation may conduct its activities in an economically justified manner – invest, manage assets (including real estate), derive benefits from them, and at the appropriate time also sell them, while retaining the right to CIT exemption provided for by the Act.

The ruling clearly indicates that the mere fact of selling assets by a family foundation is not automatically treated as a circumvention of regulations or a manifestation of speculative activities. The actual use of the assets is assessed — if, for example, the property was used or rented for a long time as part of the foundation's activities, it cannot be considered that its acquisition was solely for the purpose of resale.

The Supreme Administrative Court's judgment confirms that a family foundation can be an effective and safe tool for long-term investing and succession planning. For entrepreneurs and people planning to establish a family foundation, this is a positive signal – with an appropriate organizational structure, you can combine asset protection and succession goals with reasonable asset management, without excessive tax risk when completing the investment.

Judgment of the Supreme Administrative Court of February 18, 2026 (reference number II FSK 1010/25, final)

Author: Łukasz Zalewski, journalist of the Law section of Business Insider Polska