Payment from trust fund profits is income from capital assets and has a separate tax base for taxation at a special rate of 15%. Payment from profits is not defined by legislation. However, it can be assumed that this is the payment of profits generated by assets in the trust fund (e.g. income from the lease of real estate in the trust fund).
Other income than payment from profits received by the beneficiary from the trust fund is so-called other income, which is subject to the standard income tax rate. Other income from the trust fund will be, for example, regular payment from assets meant to be divided between the beneficiaries. The income tax rate for natural persons is currently 15% and for legal entities 19%.
Double taxation may effectively occur in some cases. For example, in a situation where the founder places an interest in a company in the trust fund and wants the trust fund to pay out a share of the company’s profits to the beneficiary, this profit is effectively taxed several times. The company’s profit is first taxed by corporate income tax, then taxed by further corporate income tax on payment to the trust fund and finally taxed by personal income tax on the division of profits to beneficiaries by the trustee. However, the income of beneficiaries would not be subject to personal income tax if this income was exempt from taxation (see below).
Beneficiaries’ income from assets dedicated to the trust fund by relatives in direct line (parents, grandparents, children, and grandchildren), certain relatives in secondary line (siblings, uncles, aunts, nephews, and nieces), spouses and other persons specified by law is exempt from tax. Income from assets dedicated to the trust fund with a provision in the event of death (will) is also exempt from tax.