The cryptocurrency market capitalization already exceeds $2.5 trillion. Every few days, we hear about new Bitcoin records. The price on March 13, 2024, reached $73,150. It's no wonder, then, that this market attracts both long-term and speculative investors looking to make a quick profit. Virtual currencies have a value denominated in traditional currencies, and therefore offer the potential for profit. So how should income from cryptocurrency trading be taxed?
In Poland, cryptocurrency revenues are classified as "capital" income sources. A 19% tax rate applies to income, which is revenue less tax-deductible costs. Income corresponds to the price received for the cryptocurrencies sold. The cost of revenue is the purchase price and the costs of selling the cryptocurrency, such as commissions. Importantly, revenues and costs of generating revenues from cryptocurrency sales are not combined with other revenues and costs from capital gains, such as the sale of shares or stocks. If the costs of generating revenues from cryptocurrency sales were higher than revenue in the previous year, the loss can be offset this year, but only against cryptocurrency income. Similarly, if the costs in the current tax return are higher than revenue, they will reduce cryptocurrency income in the following year.
Income from cryptocurrency trading must be reported in the PIT-38 tax return. The 2023 tax return must be submitted to the appropriate tax office for your place of residence by the end of April 2024.
A bill regulating cryptocurrencies is currently being considered. However, the bill's provisions do not address tax issues.
Although the current income tax rate on cryptocurrencies in Poland is not the highest compared to other countries, the trend is toward tax liberalization. In countries such as Switzerland and Singapore, capital gains of individuals, including those from cryptocurrencies, are exempt from income tax. In the United Arab Emirates, this exemption also applies to capital gains earned in connection with business activities. Conditional tax exemptions are also common. In Poland, such an exemption applies, for example, to the sale of real estate after a five-year period. In the case of cryptocurrencies, if they are sold after a period longer than a year, tax is not payable in countries such as Portugal or Germany. In Slovakia, however, selling cryptocurrencies after 12 months allows for a lower tax rate of 7%.
Poland currently has no preferential tax treatment for cryptocurrencies. Unfortunately, we're nowhere near the top in the competition for the most friendly environment for cryptocurrency investors.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of March 15, 2024
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