At present there are no precise regulations on the taxation of cryptocurrency in Poland. In the future, however, taxes will be paid on profits generated by virtual currencies. The government has tabled a legislative proposal to this effect. Due to the lack of regulations so far, the income of persons trading in crypto currencies could even be taxed at the rate of 32 percent, so many companies trading in virtual currency have relocated their activities to other countries. Since January 2019, revenues from cryptocurrency trading have been allocated according to revenues from cash capital (EStG-PL) or revenues from investment income (KStG-PL). The income from the sale of virtual currency against payment is taxed at 19 percent.
Cryptocurrency taxes for natural persons in Poland
According to the tax authorities, income from the sale of a virtual currency represents income from property rights and is therefore subject to a 1 percent tax on civil actions (PCC) on the purchase or exchange contract. In the period between 13 July 2018 and 30 June 2019, the PCC will no longer be taxed on taxpayers who purchase or exchange cryptocurrencies. The new regulations apply to legal entities and natural persons who sell a virtual currency against payment (sale of a cryptocurrency), exchange a virtual currency for a legal tender, commodity, service or property right (other than a virtual currency) or settle other liabilities using virtual currencies.
It should be noted that the decision not to levy the PCC will only apply until 30 June 2019.
Cryptocurrency regulations for businesses in Poland
Operating expenses due to a paid sale of virtual currency, are documented expenses incurred directly for the purchase of cryptocurrency and costs of selling the virtual currency.
Mining also incurs taxes
In the future, independent miners will also have to pay taxes on the profits they have made with cryptocurrency. The tax base depends on the type of economic activity. This includes the profits made from the sale of your traded crypto currency. However, cryptocurrency traded on behalf of other companies or individuals is taxed at the value of their compensation.
At present, taxpayers trading in cryptocurrency do not have to pay taxes in advance. Poland currently uses a progressive income tax table with two levels. This means an annual income of up to 85,528 zloty (around 20,000 euros), 18 percent, and for anything that exceeds this limit, 32 percent.
Government statements on cryptocurrencies in Poland
In July 2017, the National Bank of Poland and the Financial Supervision Commission warned against investing in virtual currency. For Poland, cryptocurrency is not to be regarded as legal tender. At the same time, however, it was established that trading in virtual currencies was not a contravention of Polish or European law. At the beginning of this year, the Polish government then introduced a tax on cryptocurrency. In addition, all crypto traders are obliged to tax their profits made with virtual currencies. Accordingly, all revenues are to be attributed to personal income tax.
This announcement by the government triggered immediate protests by the crypto community. At first an online petition was started, which caused some demonstrators from the crypto scene to gather in front of the building of the Ministry of Finance. The Polish tax office sat down with the protesters and agreed to revise the draft. The aim is to decide on appropriate regulatory and tax policy methods. The lifting of the tax liability is initially only temporary and it remains to be seen what will be changed.
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The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. For detailed information on crypto regulations we recommend contacting a certified legal advisor in the specific country.
As this blog post refers to international crypto laws, the content will only be available in English.