4.07 Crypto taxation in Poland

​​Every year in Poland, more and more people are investing in cryptocurrencies. This involves, among other things, the obligation to pay the appropriate tax. In this lesson, you will learn about the tax obligations of investors in Poland.

 

Content

• How are cryptocurrencies defined under Polish tax law?
• How are revenues from cryptocurrency trading qualified?
• How much do I have to pay?
• Will I receive a PIT from zondacrypto?
• How do I calculate the tax base?
• Which return should I file?
• What if the purchase of cryptocurrencies was not reported in the tax return?
• How to account for profits from the affiliate programme in the form of cryptocurrencies that zondacrypto users receive?
• How are airdrops or forks taxed?
• What is DAC 8?

 

How are cryptocurrencies defined under Polish tax law?

The Personal Income Tax Act in Article 5a(33) refers to the definition of virtual currency contained in Article 2(2)(26) of the Anti-Money Laundering and Countering the Financing of Terrorism Act. According to this provision, virtual currency is understood to be a digital representation of value that is exchangeable in economic transactions into legal tender and accepted as a means of exchange, and can be electronically stored or transferred, or can be electronically traded.

At the same time, this digital representation of value is not:

• a legal tender issued by the NBP, foreign central banks or other public authorities,
• an international unit of account established by an international organisation and accepted by individual countries belonging to or cooperating with that organisation, 
• electronic money within the meaning of the Act of 19 August 2011 on payment services, 
• a financial instrument within the meaning of the Act of 29 July 2005 on trading in financial instruments, 
• a bill of exchange or a cheque.

 

How is revenue from trading in cryptocurrencies qualified?

According to tax law, revenue from trading in cryptocurrencies qualifies as revenue from monetary capital. 

Disposal of virtual currency against payment is understood (according to Article 17(1f) of the Personal Income Tax Act) as:

• exchange of virtual currency for legal tender (sale of cryptocurrency for fiat, e.g. for PLN) - the amount of income will be the value of funds received as a result of the sale; 
• goods, services or property rights other than virtual currency - the amount of income will be the value of the goods purchased, e.g. the cost of the service received;
• settlement of other liabilities with virtual currency - the value of the revenue should correspond to the value of the liability settled.

Thus, the sale does not only include the conversion of virtual currency into fiat currency, but also into goods, services or property rights, among others.

The exchange of cryptocurrency does not create a tax liability. If a taxpayer purchases BTC for PLN and then purchases ETH for BTC or exchanges it for stablecoin (e.g. USDT), no income arises.

 

How much do I have to pay?

Cryptocurrencies are subject to 19% tax. Note that there is no further tax threshold in this case.

When accounting for cryptocurrencies, we cannot take advantage of any tax benefits, nor do the tax-free amount provisions apply. Any income, even the smallest one, is taxed at 19%.

 

Will I receive a PIT from zondacrypto?

No, because the exchanges through which you make your purchase or sale transactions have no statutory obligation to prepare information for taxpayers and the tax authorities.

 

How do I calculate the tax base?

The tax base is income (i.e. revenue - deductible costs).

Income arises when you sell cryptocurrencies on an exchange, in an exchange office or on the open market, as well as if you make a payment with virtual currencies for something other than virtual currencies: a good, a service or a property right.

Deductible expenses are documented expenses that have been directly incurred for the purchase of cryptocurrencies, as well as expenses related to their sale. This also includes documented expenses that have been paid to entities that mediate the sale of these currencies.

Regardless of whether or not you have earned income in a given year, all costs incurred in a given tax year should be reported in your annual return. 

You cannot include in costs the expenses incurred for:

• the purchase of excavators,
• the purchase of electricity used for digging,
• conversion of a cryptocurrency into another cryptocurrency. 

 

Which return should be filed?

Use form PIT-38 (for income earned in 2022, this will be form 16). Income from this type of activity should not be combined with business income or other sources of income. In practice, this means that income from trading in virtual currencies should be accounted for separately from other sources (in a listed space on the PIT-38 form).

 

Purchase and sale of cryptocurrencies in the same tax year:

In 2022. Jan bought PLN 10,000 worth of BTC and PLN 2,000 worth of LTC on zondacrypto, making a total of £12,000.

In the same year, Jan decided to sell them - BTC for PLN 20,000 and LTC for  PLN 5,000 - totalling PLN 25,000.

In summary, Jan received income of PLN 25 000 with deductible costs of PLN 12 000. 

The taxable income in this case will be PLN 13 000 (PLN 25 000 - PLN 12 000). Therefore, Jan will have to pay tax in the amount of PLN 2,470 (19% * PLN 13,000 = PLN 2,470).

 

Purchase of cryptocurrency (no sale):

If Jan only made a purchase of cryptocurrencies in 2022 of £25,000 and did not sell any of the cryptocurrencies, he should enter £25,000 in boxes 35 and 38. This would also be an expense to be accounted for in the following calendar year.

 

Rewriting the previous year's loss (no cryptocurrency transactions in the relevant tax year):

When filing the PIT-38 form for 2023, John would enter the loss of PLN 25,000 (deductible expenses incurred in previous years and not deducted in the previous tax year) in box 36. 

If he still has a loss in the current year and again has expenses left to account for in the next year (box 38), he should do the same in the next tax year. The loss from box 38 should be rewritten in subsequent years until the revenue from the sale of cryptocurrencies exceeds the costs of purchasing virtual currencies.

 

What if the purchase of cryptocurrencies was not reported in the tax return?

According to Polish law, the purchase of cryptocurrencies must be included in the tax return. Failure to comply with this obligation may incur a penalty for failure to report the purchase. However, we are able to successfully get out of such a situation by filing a so-called "active regret", i.e. a voluntary admission of a tax violation.

 

How do we account for the profits from the affiliate programme in the form of cryptocurrencies that zondacrypto users receive?

The moment we receive them, nothing happens. On the other hand, when we sell them (we acquired them for PLN 0), the entire value of the sale to the traditional currency will be taxed - only the cost will not be recognised. 

 

How are airdrops or forks taxed?

If we convert the virtual currency we receive into another currency, no tax liability arises. If, on the other hand, we make a sale - an exit to a traditional currency or a purchase of goods or services using these specific currencies, then such an obligation already arises.

 

What is DAC 8?

Draft of DAC 8 directive concerns the tax transparency rules for crypto-asset transactions.

The European Commission has presented a proposal to amend Directive 2011/16/EU on administrative cooperation in the field of taxation. The aim of the amendment is to introduce rules that would require cryptocurrency service providers to report the transactions made by their EU clients (including the value and number of transactions made). This would be intended to help tax authorities track cryptocurrency trading and revenue earned, thereby reducing the risk of tax fraud and evasion. 

In 2020, the European Commission also presented a proposal for a regulation on the cryptocurrency market. The aim of the MiCA is to create a uniform and harmonised legal framework in this area across the European Union. While the MiCA should allow for greater scrutiny of the cryptoasset market, the Commission believes that it will not provide sufficient information for tax assessment purposes. DAC 8 is in principle intended to be aligned with the definitions that are set out in the MiCA. 

The DAC 8 proposal includes extending the scope of the automatic exchange of information between Member States to include, inter alia, crypto-asset service providers by requiring them to report on the income received by users. 

Given the global nature and fast-changing environment of cryptocurrencies, the European Parliament has advocated an international approach to the topic, which the DAC Directive 8 would help with. 

The initiative aims to ensure a level playing field across the Union.

The planned date of entry into force of DAC Directive 8 is set for 1 January 2026.

If in doubt, consult your tax advisor, as the information in this lesson is for informational purposes and is not an official source of tax advice.