Trusts are analogous to a private foundation. They are used in common law countries; for example, they can be set up in the Isle of Man, Malta and the United Kingdom. Trusts can be understood as a legal relationship, derived from the Anglo-Saxon system, which affects the relations that exist between three entities: the creator of the trust, his trustee and the beneficiary. The creator (settlor), as the owner of the assets, brings them to a trust, vesting their management with the trustee and making him the legal owner of the assets – from the moment of establishing the legal relationship.

The named beneficiaries are those who are entitled to the benefits arising out of the trust, on the basis of terms and conditions specified in the trust deed. In practice, it is often permitted to appoint a supervisor (the equivalent of a supervisory board in a company). Given that a professional trustee is most often a company in which the management may change, and a trust is a solution that is intended to function for a long time, it should benefit from an additional level of security of the interests of the beneficiaries, i.e. in the form of a supervisor – a collegial body comprised of 3-4 individuals who are personally known to and trusted by the creator of the trust.

It is acceptable that the creator is also the beneficiary. The trust is a legal institution which has not been regulated under Polish civil or tax law. As such, this kind of mechanism has not been used very frequently in Polish tax structures. This, in turn, means that are very few tax rulings pertaining to trusts. Assuming that the trust will be exclusively an organised and legally selected (e.g. according to British law) asset without legal capacity, the legal transfer of the asset to a trustee by way of the trust should not give rise to any tax consequences in Poland. A different tax classification would take place if the trust was to take the form of a separate legal entity (with or without separate legal personality). In this case, legal ownership of the assets may be transferred. Although civil and tax laws in Poland do not regulate the mechanism described immediately above, case law on tax points to a doctrine, according to which no tax consequences would arise under this interpretation. By virtue of such controversies, the lack of tax laws and only a small number of relevant judgments, we advise Clients to obtain a tax interpretation before the trust is used for the legal transfer of assets.

When a subsidiary of the trust, or the trust itself makes a cash payment (i.e. without any legal title) through the trust or its subsidiaries into the account of the beneficiaries (being Polish residents), which are managed by Polish and foreign financial institutions, this will give rise to income on the part of the beneficiary, which will increase the total taxable income of that beneficiary, taxed at 18% or 32%. By reference to the law on the exchange of tax information, the Directive on taxation of savings income and foreign exchange law, there is a high probability of detecting such transactions by the tax authorities in Poland, even if not otherwise declared. However, with the proper arrangement of the legal relationships it is possible to use the income tax exemption for immediate family members, benefits in kind and other gratuitous services from persons falling into tax groups I or II, within the meaning of the laws on inheritance tax. Ultimately, it would be prudent to confirm the availability of an exemption on a case by case basis by way of obtaining a tax interpretation.

If you are interested in creating a trust, please contact our office at – email:, tel.: +48 22 625 06 98