Cryptocurrencies have become a must-have for most investors over the last decade. This is largely due to Bitcoin and its rising price. Suffice it to say that its price didn't exceed $900 in 2016. Within five years, it rose to over $60,000. At the turn of 2024 and 2025, it surpassed $100,000. Investing in Bitcoin has therefore yielded above-average returns. In 2024 alone, the price increased by over 100%. Other cryptocurrencies, such as Ethereum and Solana, have also risen on the wave of Bitcoin's popularity. Currently, there are tens of thousands of different cryptocurrencies on the market. The popularity of this asset sometimes causes problems with properly settling sales tax. In today's Taxes and Taxes, we present how to file your taxes to avoid future difficulties.
Purchase = cost
Unlike stocks or bonds, the cost of earning income from investing in cryptocurrencies is recognized at the time of acquisition. This means that unless the cryptocurrency is sold within the same year, we will end the year with a surplus of tax-deductible costs over income equal to the expenses incurred to acquire the cryptocurrencies. Consequently, we must file a tax return even if we didn't sell any cryptoassets. However, we can offset the excess costs against income from the sale of cryptocurrencies in subsequent years. Excess costs are not the same as a tax loss (although they can be understood as such). However, a tax loss can be carried forward within five years; excess tax-deductible costs have no expiration date. Therefore, if we sell a given cryptocurrency after 10 years, we can still carry forward the costs we incurred.
Mining ≠ cost
Tax-deductible expenses are expenses incurred directly for the acquisition and sale of cryptocurrency. Tax authorities define acquisition as secondary acquisition, meaning the acquisition of existing units. Therefore, expenses incurred for so-called "mining" cannot be considered tax-deductible expenses, as this activity results in the acquisition of a new unit.
Sales abroad
Cryptocurrency-friendly destinations are a popular topic among investors. But how can you legally avoid paying cryptocurrency tax in Poland? According to international double taxation treaties, income from cryptocurrencies is taxed in the country of tax residence. This means that selling cryptocurrencies while on vacation in Dubai will still be taxed in Poland. To avoid any doubts, you should ensure not only that you obtain tax residency in a given country but also that you lose it in Poland. This typically involves a change of residence for at least six months and a relocation of your center of personal and economic interests.
Failure to pay out stock market profits
A frequently discussed issue for cryptocurrency traders is the obligation to file a tax return if the funds from the exchange have not been withdrawn. Legislators explicitly state that income from the sale of cryptocurrencies includes not only the money received but also the money left at one's disposal. This means that income is generated whenever cryptocurrencies are exchanged for fiat currency (official currency – legal tender). Withdrawal of funds to a bank account is irrelevant. At the same time, if the funds received from the sale are used to purchase another cryptoasset, both the income and the tax-deductible expenses are reported in the tax return.
CFD ≠ cryptocurrency
Regardless of the cryptocurrency itself, which can be purchased on an exchange or at a currency exchange, we can also purchase a contract for difference (CFD) based on the price of a given cryptocurrency. A CFD allows for income even if the price of the underlying asset (cryptocurrency) declines. However, it is a derivative instrument and should not be confused with cryptocurrency. Tax treatment for contracts and cryptocurrencies differs. A mistake, at best, will result in the obligation to submit a correction, and at worst, in the payment of interest and tax penalties.
More on this topic: Investing in futures, CFDs, options [stock exchange tax]
Next week, we'll publish our final article on the stock market tax. We'll explore ways to avoid paying the tax.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of February 24, 2025
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