In Poland, the deadline to file annual tax returns is April 30, 2018. This year, Polish authorities have notified taxpayers that they must file taxes on any cryptocurrency trading and gains.
“In connection with the obligation to file a tax return for 2017, we would like to remind you that in PIT [personal income tax] you should also show revenues from the sale or exchange of cryptocurrencies, such as bitcoin, Litecoin and ether,” wrote the Polish Finance Ministry.
What this boils down to is that revenue from cryptocurrency trading is subject to the graduated Polish income tax, plus a myriad of other requirements. According to international tax advisory network KPMG, in Poland, annual income between 0 and 85,528 PLN ($25,244.44) is subject to 18 percent tax. Income above the 85,528 PLN threshold is subject to a tax of 15,395.04 PLN plus32 percent of any excess over 85,528 PLN.
One particularly confounding section of the ministry’s guidance details a 1 percent tax on civil law transactions (PCC). This would mean that the transfer of property rights (read: the purchase of cryptocurrency) triggers a 1 percent tax on the market value of the transaction.
Per the Finance Ministry, revenues from trading cryptocurrency (“kryptowaluty”) may be reported as revenue derived from either property rights or from non-agricultural business (depending on the nature of the associated activity). The non-agricultural business classification apparently requires that trading activity is compensated, continuous, and organized. The tax rate for non-agricultural businesses in Poland is not immediately apparent.
The ministry explained that business expenses related to cryptocurrency trading must meet a series of conditions in order to be tax deductible and noted that transaction records from cryptocurrency exchanges cannot be utilized as “accounting evidence” for the purpose of tax deductions. Perhaps the ministry is concerned about standardized documentation. However, this approach has raised concerns that traders will not be able to deduct their costs – and could face massive tax liabilities (even larger than their holdings) due to high turnover.