Crypto taxes in Poland

Alla Taburova

Lawyer

Reviewer: Bohdan Popovchenko

Article outline

Poland has been one of the most attractive countries for crypto-based startups. The explanation for this is quite simple: soft regulations in the field of cryptocurrencies and a comparatively softer stance on cryptocurrencies as an industry.

Starting from 01st November 2021, the turnover of virtual assets acquired the status of a regulated activity in Poland. Companies dealing in virtual assets must be registered by the state in a separate registry of cryptocurrency enterprises and obtain the appropriate license. Registration of entrepreneurs in the register is carried out in accordance with the requirements established by Polish legislation.

Cryptocurrency regulation in Poland

The main regulator of Poland’s digital market is the Financial Inspectorate of Poland (KNF). The above authority does not set specific rules for cryptocurrencies. The main reason: Poland, like many European countries, is oriented towards the international European legal framework MiCA.

Summarising the above, it can be concluded that the KNF regulator monitors only the availability of the right cryptocurrency license, compliance with the requirement to combat money laundering (AML) and customer verification (KYC).

In turn, the Office for Competition and Protection of Consumer Rights (UOKiK) deals with the protection of investors’ rights. Its employees monitor the market for the presence of fraudulent projects, exchanging information about possible scams with EU regulators.

Despite the fact that the international European legal framework of MiCA refers to the general regulation, the amount of taxes and their amount is determined individually by each jurisdiction, taking into account its accounting standards.

What is the definition of crypto in Polish tax law?

Crypto and virtual currency refer to digital representations of value that can be exchanged in economic transactions for legal payment and accepted as an exchange that can be saved in electronic form or be transmitted, or how you can trade electronically.

In Polish law, crypto or virtual currency is understood as a digital representation of value that is not:

legal tender issued by the National Bank of Poland, foreign central banks or other public authorities,
an international unit of account established by an international organisation and adopted by individual countries that are members of this organisation or cooperate with it,
electronic money,
financial instrument,
bill or check

and in turn, can be sold as legal tender and accepted as a medium, and can be stored or transmitted electronically or sold in electronic commerce.

Crypto or virtual currency represents a property value similar to property rights, movable property, real estate, means of payment, financial instruments, securities or currency values.

Crypto taxes in Poland for individuals

The cryptocurrency tax for businesses operating under the Poland VASP license is 19%. There is no specific tax threshold in Poland. This means that all income received from cryptocurrencies, regardless of the amount, is taxed at a rate of 19%.

Cryptocurrency regulation for businesses in Poland

To successfully register a company and conduct commercial activities under the Poland crypto license, the following requirements must be met:

no criminal record requirements,
professional qualification requirement.

Only persons who meet both of the above requirements will be included in the register of activities in the field of virtual currencies.

Taxpayers trading cryptocurrency are not required to pay taxes in advance (Poland uses a progressive income tax table with two levels).

Taxation of cryptocurrencies in Poland

In Poland, the taxation of cryptocurrencies has a clear and completely transparent approach. Income received from the sale of virtual currencies is considered income from monetary capital and is subject to a flat tax rate of 19%. This taxation covers various cryptocurrency activities such as trading, exchange, mining, and participation in initial coin offerings (ICOs). Tax liability arises when cryptocurrencies are sold based on the difference between the sale price and the purchase price, resulting in income or capital loss.
However, despite the above, it is worth emphasising that specific rules for all transactions related to cryptocurrency are not fully established (settled). And the above introduces some uncertainty. To ensure accurate compliance with tax laws, we recommend that you seek the advice of a specialist or experienced tax advisor. The rules regarding virtual currencies may change from one tax year to the next, but the taxpayer’s responsibility for reporting their income and transactions remains. Also, the tax regulations are unique to each jurisdiction, which means it’s crucial to examine the taxation policies of your selected destination. Whether you plan to obtain a crypto license in the Czech Republic or a crypto license in El Salvador, the authorization process comes with a unique set of tax policies and legal obligations that require thorough preparation. High-class specialists who monitor the latest changes in legislation are part of FINTECH HARBOR CONSULTING and are always ready to provide you with sound advice.

Taxes on mining and staking of cryptocurrencies

Mining rewards are not taxed upon receipt. Tokens obtained as a result of mining have a base value of 0 zloty. This means that once you convert it into fiat money, the entire amount received will be taxed at a flat rate of 19%. Staking rewards are taxed similarly to mining rewards.

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ICOs and token sales

In general, ICOs and token sales are allowed in Poland, as there is no provision in the law that directly prohibits such offers or sales. In Poland, there is no special regulation regarding ICOs and token sales. The only document issued by the official government body on ICOs and token sales is the “Statement of the KNF (Polish Financial Supervisory Authority) on the sale of so-called coins or tokens (initial token offerings (ITO) or initial coin offerings (ICO).” In this statement, KNF points out the risks associated with investing in ICOs and ITOs. It also highlights that while ICOs and ITOs are generally unregulated, depending on their structure, they may be subject to some existing regulations. Especially some coins and tokens can be qualified as financial instruments.

Tokens obtained through airdrops and forks

Such tokens are not subject to tax upon receipt. They can even be converted into other cryptocurrencies without immediate tax consequences. However, it is important to remember that when converted into fiat money they receive a value of PLN 0, which results in taxation.

How to calculate the tax base?

To calculate the tax base, you should start from the income received. Income arises when selling cryptocurrency, as well as when paying with virtual currency for anything other than virtual currencies: goods or services. Deductible expenses include: documented expenses directly incurred when purchasing cryptocurrencies, as well as expenses associated with their sale. In addition to the above-mentioned expenses should also be included documented expenses paid to organisations that act as intermediaries in the sale of these currencies. Regardless of whether you earned income in the current tax year, all expenses incurred in that tax year must be reported on your annual return.

How much is the tax on cryptocurrency income in Poland?

According to generally accepted global tax rules: income will always be taxed in the same way as capital gains. In turn, cryptocurrencies in Poland are taxed at a rate of 19%.

What kind of declaration should I file?

In the case of virtual currencies, you must fill out and submit Form PIT-38 (in any case, FINTECH HARBOR CONSULTING recommends monitoring the latest changes in legislation or contacting us for legal advice). By the way, A PIT-38 can be filed in paper or electronic form. Income from this type of activity should not be combined with income from business activities or other sources of income. In this case, virtual currencies are reflected separately.

Do I need to show the purchase of cryptocurrency in the personal income tax?

The short answer is YES! The purchase of cryptocurrency is subject to mandatory inclusion in the tax return. According to common practice not only in Poland but also in most countries, violation of tax laws – failure to include cryptocurrency in the tax return may result in a fine.

What is the DAC 8 tax?

What is the DAC 8 tax? The Directive on Administrative Cooperation (DAC), which implements the Organization for Economic Co-operation and Development (OECD) rules on crypto-asset reporting and amendments to the Common Reporting Standard (CRS), is referred to as DAC8. The above Director was agreed by the Council of the European Union on May 16, 2023 during the meeting of the Council on Economic and Financial Affairs. DAC8 introduces requirements for cryptoasset reporting related to transactions made by European Union (EU) resident clients of cryptoasset reporting service providers. In addition to the aforementioned DAC8, it also expands the scope for the exchange of previous international rulings to those relating to individuals in certain situations and introduces the possibility of exchanging information obtained under the DAC for non-tax purposes.