Taxation of cryptocurrencies in Poland: current overview and key provisions

1. Personal Income Tax (PIT)

Since 2019, clear rules for taxation of income from cryptocurrency operations have been in effect in Poland:

• Tax rate: 19% of the income received (the difference between income and taxable expenses)
• Considered expenses: costs for acquiring cryptocurrency through exchanges or exchange points
• Documentation: it is necessary to keep all supporting documents ( invoices, transaction statements )
• Loss Limitation: there is no possibility to offset losses from cryptocurrency transactions against income from other sources.
• Tax declaration: income from cryptocurrency operations is reported in the annual PIT-38 declaration, submitted by April 30 of the following year.

2. Value Added Tax (VAT)

Based on the ruling of the European Court ( case C-264/14), operations with cryptocurrencies are exempt from VAT. The court recognized bitcoin and other cryptocurrencies as means of payment, which excludes the need to pay VAT when:

• Exchange of cryptocurrency for traditional fiat currencies
• Exchange of fiat currencies for cryptocurrency
• The use of cryptocurrency as a means of payment

3. Tax on civil law transactions (PCC)

Important legislative change: Since 2019, Poland has abolished the taxation of cryptocurrency transactions under civil law transactions. Previously, each transaction with cryptocurrency was taxed at a rate of 1% of the market value, which created a significant tax burden for active traders.

4. Taxation of Cryptocurrency Mining

Income from mining ( extraction) of cryptocurrency is taxed depending on the nature of the activity:

• Entrepreneurial activity: income is taxed at the general rate or at a fixed rate of 19%
• Personal use: income from the subsequent sale of mined cryptocurrencies is subject to taxation

5. Documentation and Reporting Requirements

Mandatory accounting for cryptocurrency transactions:

• Detailed accounting of all cryptocurrency transactions
• Keeping purchase and sale confirmations
• Calculation of the tax base based on documented transactions

The lack of proper documentation may lead to:

• Inability to account for expenses in taxation
• Increasing the tax base
• Potential tax audits

6. Prospects for Cryptocurrency Regulation in Poland

Currently, work is underway in Poland to further improve the regulatory framework for cryptocurrencies:

• Implementation of the EU MiCA Directive (Markets in Crypto-Assets): Polish legislation is being adapted to pan-European standards for the regulation of crypto-assets.
• Licensing of service providers: according to new legislation, cryptocurrency companies must obtain licenses from the Polish Financial Supervision Authority (KNF)
• Development of the anti-money laundering system: strengthening requirements under AML legislation for the cryptocurrency sector

These changes are aimed at ensuring greater transparency in the cryptocurrency market while maintaining the competitiveness of the Polish fintech sector within the European Union.