Are your family foundations at risk? Wealth managers issue urgent tax warning!

As the Polish government grapples with a new law aimed at keeping the wealthy’s money within the country’s borders, uncertainty looms over the future of wealth management in the region. The law, introduced in May 2023, stirred up a flurry of activity with the establishment of over 3,000 family foundations in Poland. However, recent signals from the government hint at potential changes to tax rules that could affect the financial landscape for the rich.

1. Flow of Money: What was once a steady flow of money into the foundations has now slowed to a mere trickle. Lawyers and fund managers are wary as a senior government official raised concerns about the terms of the legislation. This change of pace has left many questioning the credibility of the government as a reliable partner in financial matters.
2. Economic Growth: Despite Poland’s economic growth outpacing many of its European Union counterparts since joining the bloc in 2004, successful entrepreneurs in the country have resorted to relocating assets to tax havens. This trend is evident in the ongoing family succession battle between billionaire Zygmunt Solorz and his children, now overseen by a court in Liechtenstein.
3. Tax Preferences: Deputy finance minister Jarosław Neneman’s skepticism toward wealth individuals benefiting from tax preferences under the family foundations act has cast a shadow of doubt over the future of these structures. The lack of clarity from the finance ministry on potential changes only adds to the apprehension among wealth managers and investors.
4. Business Confidence: The changing tax regulations in Poland, almost on an annual basis, have eroded business confidence in the country. The uncertainty surrounding taxation and financial planning has left many questioning the stability and predictability of the financial environment.

Polish billionaire Rafał Brzoska, founder of Europe’s largest parcel locker company InPost, expressed concerns about the repercussions of the government’s potential policy shifts. He highlighted the risk of losing the assets to foreign countries if the tax environment in Poland becomes unfavorable.

As the future of wealth management in Poland hangs in the balance, it is imperative for both the government and investors to find common ground to ensure a stable and predictable financial landscape. The success of the new law hinges on transparency, clarity, and trust between all parties involved. Only through cooperation and understanding can Poland continue to attract and retain wealth within its borders.