Hi there guys,
Straight to the point.
What the Polish Ministry of Finance has published lately may be horrifying to those traders, who made lots of transactions in 2017. I really think that the MFâs official publication concerning cryptocurrencies in Poland (yes, weâre in EU guys
) is against common sense - hope our CryptoNation can judge as well. Do we have here any lawyers? 
Such anti-crypto regulations may be in the line with the infamous action funded by the Polish Central Bank (NBP) and Financial Supervision Committee (KNF) [source] and current Polish PM Morawieckiâs opinion [source].
Cryptocurrencies are considered due to Polish MF as a⌠property rights and each transaction (no matter if it was profitable) shall be taxed 1% of the value of a trade!!!
Whatâs more, even the smallest transaction has to be declared in the PCC-3 declaration and the 1% tax is to be paid within 14 days from the day of the transaction. If you havenât done this in 2 weeks, you are perceived as a potential tax criminal. I donât need to explain here that while you buy 1 BTC on exchange, usually these are multiple transactions until the full order of 1 BTC is fulfilledâŚ
Common problem would also appear with the reliable form of documentation of incurred costs for trading cryptocurrencies. Extracts and lists of transactions may not be considered sufficient. Letâs say we hypothetically trade BTC for a whole month generating a financial turnover of PLN 1 000 000, but without earning a single grosz from revenue (PLN 1 mln), we will not deduct a PLN 1mln of costs and we will be forced to pay a tax - with an example of a flat rate (19%) for businesses one would have to pay PLN 190 000.
Experts from cryptocurrency field in Poland openly admit that such strict regulations will develop into tax debts among thousands of students [source via dr Krzysztof Piech] or future tax emigration. 1% tax on transaction can totally eliminate daytrading and arbitrage between exchanges. Dr Piech also admits that MFâs publication looks like the most oppressive approach towards cryptocurrencies in the world and in many cases people will have a tax scale which exceeds 100% without having the upper limit. [source] Declaring hundreds and thousands of PCC-3 1% transaction tax papers for each individual would completely block Polish tax offices.
Another expert claims that cryptocurrencies do not necessarily have to be recognised as property rights:
First publications attempting to classify cryptocurrencies in legal terms really indicated that they are property rights, but now the doctrine is heading towards the recognition that cryptocurrencies are not property rights. The Polish cryptocurrency environment will have to push this position in order to avoid tax on civil law transactions (PCC). [source via dr SĹawomir Mentzen]
Your tax deadline is at the end of April each year in Poland.
Here is my free translation from the official note from MF [source], which appeared on 4th of April 2018 for the first time:
Tax consequences in trading cryptocurrencies - Income Tax, Value Added Tax, Tax on Civil Law Transactions
*** The annual tax return should also show revenues from the sale or exchange of cryptocurrencies, such as bitcoin, litecoin or ether.**
*** We point out effects of trading cryptocurrencies in individual income tax, in goods and services and civil law transactions.**
Income tax from individuals (PIT)
In connection with the obligation to file a tax return for 2017, we would like to remind you that in PIT you should also show revenues from the sale or exchange of cryptocurrencies, such as bitcoin, litecoin and ether.
The Personal/Individual Income Tax Act [1] provides that income derived from this is subject to taxation on general terms.
The way to tax cryptocurrencies, showing in the appropriate tax return depend on the source in which the income was obtained and on the form of taxation chosen by the taxpayer running a non-agricultural business.
Source of income
Revenues from trading a cryptocurrency may be classified as a revenue from:
or
Revenue
Trading cryptocurrencies generate revenue in such cases:
Revenue from property rights referred to in art. 18 of the PIT Act
Revenue from the sale of cryptocurrency by a contract of sale or exchange - eligible for revenue from property rights referred to in Article 18 of the PIT Act - is created at the moment of receiving or placing at the disposal of the taxpayer money (fiat currency), another cryptocurrency, commodity or the service [5].
Revenue from business activity referred to in Article 10 para. 1 point 3 of the PIT Act
Revenues in business are deemed receivables, even if they have not actually been received. At the same time, the date of the revenue from business activity [6] is the date of sale of the property right - that is, the day of sale or conversion of a given cryptocurrency - no later than the day of invoice or settlement of the receivable.
The cost of obtaining revenue
The costs of obtaining revenues are costs incurred in order to achieve revenues or to maintain or secure a source of revenue [7].
Such costs then shall be any expenses, which together meet the following conditions:
It is worth noting that the tax book of revenues and expenditures is a simplified and formalised form of recording economic events, which is why the taxpayer:
The inability to record data from revenues and expenses in the tax revenue and expenditure ledger - because the taxpayer does not have the required form in order to document it - does not automatically mean that they can not be recognised as revenue and tax deductible expenses under the PIT. Therefore, if the taxpayer otherwise documents reliably the occurrence of tax revenue or the tax expense, he should take this into account during the tax year in the current tax advance as well as in the annual income tax settlement:
Other rules for accounting and documentation of tax deductible costs are for taxpayers who keep accounting books, in accordance with the provisions of the Accounting Act [10], because:
Income
Income from trading cryptocurrencies qualified for:
or
The contract for the sale and conversion of cryptocurrency, which is a property right, is subject to the tax on civil law transactions (PCC) [16]. In this case of a sales contract, the obligation to pay this tax - in the amount of 1% of the market value of the acquired property right / cryptocurrency - concerns the buyer. At the exchange agreement, the obligation to pay tax - in the amount of 1% of the market value of the property right, from which a higher tax applies - concerns jointly the parties to the transaction.
Excluded from taxation of PCC [17] is a contract of a sale or exchange of cryptocurrencies subject to Value Added Tax - in so far as it is subject to VAT, or if at least one of the parties to the transaction is exempt from VAT for doing so.
Goods and Services Tax (VAT)
Activity in the scope of purchase and sale of so-called cryptocurrency is subject to VAT as a paid provision of services [18]. For VAT purposes, the concept of currencies used as legal tender includes also the so-called cryptocurrency [19].
This means that the sale and exchange of cryptocurrencies into traditional currency and vice versa, as well as the exchange of one cryptocurrency for another, if it is subject to VAT, uses the VAT exemption.
Therefore, it should be remembered that as a rule, the taxpayer has no right to deduct VAT on purchased goods and services related to extraction and purchase / sale of cryptocurrencies [20].
The VAT tax obligation arises when the cryptocurrency is sold / exchanged into a fiat currency, as well as when one cryptocurrency is exchanged for another.
In addition to such badly written tax guidelines towards blockchain technology there is another
- The National Tax Administration (KAS) has demanded detailed data about clients from cryptocurrency exchanges. The demand determines:
@peter, if you can make any remark in your videos about current tax situation in Poland, the whole Polish crypto community would be thankful for life! Fo shoâ bro
Straight to the point.
What the Polish Ministry of Finance has published lately may be horrifying to those traders, who made lots of transactions in 2017. I really think that the MFâs official publication concerning cryptocurrencies in Poland (yes, weâre in EU guys
) is against common sense - hope our CryptoNation can judge as well. Do we have here any lawyers? Such anti-crypto regulations may be in the line with the infamous action funded by the Polish Central Bank (NBP) and Financial Supervision Committee (KNF) [source] and current Polish PM Morawieckiâs opinion [source].
Cryptocurrencies are considered due to Polish MF as a⌠property rights and each transaction (no matter if it was profitable) shall be taxed 1% of the value of a trade!!!
Whatâs more, even the smallest transaction has to be declared in the PCC-3 declaration and the 1% tax is to be paid within 14 days from the day of the transaction. If you havenât done this in 2 weeks, you are perceived as a potential tax criminal. I donât need to explain here that while you buy 1 BTC on exchange, usually these are multiple transactions until the full order of 1 BTC is fulfilledâŚ
Common problem would also appear with the reliable form of documentation of incurred costs for trading cryptocurrencies. Extracts and lists of transactions may not be considered sufficient. Letâs say we hypothetically trade BTC for a whole month generating a financial turnover of PLN 1 000 000, but without earning a single grosz from revenue (PLN 1 mln), we will not deduct a PLN 1mln of costs and we will be forced to pay a tax - with an example of a flat rate (19%) for businesses one would have to pay PLN 190 000.
Experts from cryptocurrency field in Poland openly admit that such strict regulations will develop into tax debts among thousands of students [source via dr Krzysztof Piech] or future tax emigration. 1% tax on transaction can totally eliminate daytrading and arbitrage between exchanges. Dr Piech also admits that MFâs publication looks like the most oppressive approach towards cryptocurrencies in the world and in many cases people will have a tax scale which exceeds 100% without having the upper limit. [source] Declaring hundreds and thousands of PCC-3 1% transaction tax papers for each individual would completely block Polish tax offices.
Another expert claims that cryptocurrencies do not necessarily have to be recognised as property rights:
First publications attempting to classify cryptocurrencies in legal terms really indicated that they are property rights, but now the doctrine is heading towards the recognition that cryptocurrencies are not property rights. The Polish cryptocurrency environment will have to push this position in order to avoid tax on civil law transactions (PCC). [source via dr SĹawomir Mentzen]
Your tax deadline is at the end of April each year in Poland.
Here is my free translation from the official note from MF [source], which appeared on 4th of April 2018 for the first time:
Tax consequences in trading cryptocurrencies - Income Tax, Value Added Tax, Tax on Civil Law Transactions
*** The annual tax return should also show revenues from the sale or exchange of cryptocurrencies, such as bitcoin, litecoin or ether.**
*** We point out effects of trading cryptocurrencies in individual income tax, in goods and services and civil law transactions.**
Income tax from individuals (PIT)
In connection with the obligation to file a tax return for 2017, we would like to remind you that in PIT you should also show revenues from the sale or exchange of cryptocurrencies, such as bitcoin, litecoin and ether.
The Personal/Individual Income Tax Act [1] provides that income derived from this is subject to taxation on general terms.
The way to tax cryptocurrencies, showing in the appropriate tax return depend on the source in which the income was obtained and on the form of taxation chosen by the taxpayer running a non-agricultural business.
Source of income
Revenues from trading a cryptocurrency may be classified as a revenue from:
- property rights [2]
or
- non-agricultural business [3], if a cryptocurrency is traded as part of an activity that meets certain conditions [4]: it is profit-making oriented, it is carried out on taxpayerâs own behalf in an organised and continuous manner (and there are no premises indicated in Article 5b (1) of the PIT Act).
Revenue
Trading cryptocurrencies generate revenue in such cases:
- selling cryptocurrencies (conversion of cryptocurrencies into fiat currency, e.g. zĹoty (PLN), euro (EUR), US dollar (USD),
- exchanging cryptocurrency for another cryptocurrency or good or service. The exchange of cryptocurrencies should be treated as a form of its payable disposal, in the same way as the exchange of any other property rights, for example receivables.
Revenue from property rights referred to in art. 18 of the PIT Act
Revenue from the sale of cryptocurrency by a contract of sale or exchange - eligible for revenue from property rights referred to in Article 18 of the PIT Act - is created at the moment of receiving or placing at the disposal of the taxpayer money (fiat currency), another cryptocurrency, commodity or the service [5].
Revenue from business activity referred to in Article 10 para. 1 point 3 of the PIT Act
Revenues in business are deemed receivables, even if they have not actually been received. At the same time, the date of the revenue from business activity [6] is the date of sale of the property right - that is, the day of sale or conversion of a given cryptocurrency - no later than the day of invoice or settlement of the receivable.
The cost of obtaining revenue
The costs of obtaining revenues are costs incurred in order to achieve revenues or to maintain or secure a source of revenue [7].
Such costs then shall be any expenses, which together meet the following conditions:
- they were actually incurred in order to achieve revenue or to maintain or secure the source of revenue, i.e. they are in a cause-and-effect relationship with the revenues earned,
- they were not listed in Article 23 of the PIT Act, containing a catalog of expenses not recognised as tax deductible costs,
- they are properly documented.
It is worth noting that the tax book of revenues and expenditures is a simplified and formalised form of recording economic events, which is why the taxpayer:
- can make entries in it only on the basis of strictly defined documents [8], such as invoices or bills. For these reasons, documents in the form of, for example, extracts from the history of exchange transactions from the internet cryptocurrency exchange or bank account statements with transaction history do not constitute accounting evidence within the meaning of the regulations and revenues+expenditures documented only in this way can not be recorded in tax book of revenues and expenditures,
The inability to record data from revenues and expenses in the tax revenue and expenditure ledger - because the taxpayer does not have the required form in order to document it - does not automatically mean that they can not be recognised as revenue and tax deductible expenses under the PIT. Therefore, if the taxpayer otherwise documents reliably the occurrence of tax revenue or the tax expense, he should take this into account during the tax year in the current tax advance as well as in the annual income tax settlement:
- expenses on the purchase of cryptocurrency are recognised as tax deductible when incurred, i.e. âup to dateâ, so on the date of purchase and at the purchase price,
- when settling the costs of obtaining revenues from trading cryptocurrency there is no legal basis for using the FIFO method [9].
Other rules for accounting and documentation of tax deductible costs are for taxpayers who keep accounting books, in accordance with the provisions of the Accounting Act [10], because:
- the provisions of the Act do not contain a catalog of accounting documents that may form the basis for entries in accounting books, but only define its basic elements [11]. For these reasons, for example, bank statements confirming the purchase or sale of cryptocurrencies with the attached printout from the transaction made from the exchange profile of the person, supplemented by the signature of the person who made the transaction on behalf of the unit, may be considered as accounting evidence within the meaning of the Act,
- there is a division of costs into indirect (deducted on the date they are incurred) and direct (deducted at the moment of closely related revenue);
- provisions [12] provide the choice of the FIFO method to determine the value of expenditure of specific goods.
Income
Income from trading cryptocurrencies qualified for:
- property rights is taxed according to general principles according to tax scale [13] and reported in the PIT-36 tax return, in part D.1. or D.2., in line 7: Copyrights and other rights [14],
or
- non-agricultural business, is combined with other income from this source of revenue. In this case the income (or loss) on this account should be shown in the statement:
- PIT-36, if for this source of revenue a form of taxation was chosen on general principles according to the tax scale,
- PIT-36L, if the form of taxation with 19% tax rate has been chosen for this source of revenue [15].
The contract for the sale and conversion of cryptocurrency, which is a property right, is subject to the tax on civil law transactions (PCC) [16]. In this case of a sales contract, the obligation to pay this tax - in the amount of 1% of the market value of the acquired property right / cryptocurrency - concerns the buyer. At the exchange agreement, the obligation to pay tax - in the amount of 1% of the market value of the property right, from which a higher tax applies - concerns jointly the parties to the transaction.Excluded from taxation of PCC [17] is a contract of a sale or exchange of cryptocurrencies subject to Value Added Tax - in so far as it is subject to VAT, or if at least one of the parties to the transaction is exempt from VAT for doing so.
Goods and Services Tax (VAT)
Activity in the scope of purchase and sale of so-called cryptocurrency is subject to VAT as a paid provision of services [18]. For VAT purposes, the concept of currencies used as legal tender includes also the so-called cryptocurrency [19].
This means that the sale and exchange of cryptocurrencies into traditional currency and vice versa, as well as the exchange of one cryptocurrency for another, if it is subject to VAT, uses the VAT exemption.
Therefore, it should be remembered that as a rule, the taxpayer has no right to deduct VAT on purchased goods and services related to extraction and purchase / sale of cryptocurrencies [20].
The VAT tax obligation arises when the cryptocurrency is sold / exchanged into a fiat currency, as well as when one cryptocurrency is exchanged for another.
In addition to such badly written tax guidelines towards blockchain technology there is another
- The National Tax Administration (KAS) has demanded detailed data about clients from cryptocurrency exchanges. The demand determines:- Marking of the cryptocurrency exchange user and providing data on the person corresponding to the given user
- E-mail, bank account numbers, personal data of unverified users
- Indication of the history of cryptocurrency transactions, payments to the account and withdrawals from the website including userâs names, dates of transactions and userâs public address
- Indication of users who have used virtual currency withdrawals using ATMs without using a card
- Cryptocurrency public address of an exchange
- List of cryptocurrency public addresses of users with a reference to user markings
- A list of transactions made on the exchange, including crypto public addresses of users participating in particular transactions, broken down into addresses from which they were made and to whom transactions were made.
[source]
@peter, if you can make any remark in your videos about current tax situation in Poland, the whole Polish crypto community would be thankful for life! Fo shoâ bro
