Some people buy crypto for its utility, some people buy it for the trends, but most people are in for the monstrous gains. A while back, that was a good thing. People got to keep what they made as there were no taxes, but as the crypto industry progressed and amassed global adoption, regulatory bodies stepped in and upped their tax game.
As an investor, you’ve got to maintain proper records and file your taxes in time to steer clear of trouble and if you haven’t done your taxes before let us tell you, the tax rates aren’t modest. Here in Poland, you pay a 19% upfront tax on all crypto gains regardless of what kind of transactions you’re involved in.
But here’s the caveat, you can use some clever strategies to avoid crypto taxes in Poland and our conversation today is all about that. But before we dive into that, let’s understand crypto taxation in Poland in a bit more detail.
How is Crypto Taxed in Poland?
Crypto taxes are levied on the conversion of crypto into fiat or if you've spent your crypto in exchange of any goods or services. Accordingly, the method is straightforward, as explained below:
- each buy generates "tax deductible costs" which are aggregated on an annual basis.
- each sell generates "tax revenues" which are aggregated on an annual basis
At the year end, if tax deductible costs are in excess of tax revenues then loss will be reported and carried forward to the next year. If it’s otherwise, then you pay a 19% tax on excess tax revenues.
Mining rewards and staking tokens are taxed at the full amount upon conversion to fiat, despite having a cost basis of 0 PLN. Gifts, donations, and inheritance involving crypto assets are likely subject to Polish gift and inheritance tax based on the fair market value at the time of the tax event, considering the relationship between the donor and recipient. It's advisable to seek advice from a tax professional due to potential ambiguity in specific tax laws surrounding crypto transactions in Poland.
Strategies to Avoid Crypto Taxes in Poland
- HODL Your Assets
Note that crypto gains are only taxed when they’re realised, which essentially means that any gains you’ve made on crypto are not taxable unless you sell your assets. Most countries with high volumes of investment in crypto offer an exemption to people holding their assets for more than a year, but unfortunately there’s no such provision in Poland.
However, you can hold on to your assets to avoid immediate tax liabilities.
- Use Tax Loss Harvesting
Tax Loss Harvesting is one of the most popular strategies amongst investors and traders to avoid paying more taxes. Certain countries like Poland allow investors to offset their crypto losses against their gains to help them lower their tax liabilities.
In Poland, you can offset your crypto losses against your gains to lower your tax base and pay fewer taxes. You can even carry your losses forward as long as you have expenses that can be accounted for in the subsequent year.
- Convert Your Assets into Stable Coins
Trading one crypto for another does not attract tax liabilities in Poland. You can use this rule to avoid paying crypto taxes. When selling your crypto assets, convert them to stablecoins like USDC. This helps you realise your gains without having to pay any taxes.
In fact, you can use the USDC tokens to make your next purchase instead of using fiat.
Conclusion:
While these strategies allow you to save up on your tax bill, they don’t lie outside the view of the tax authorities. They may at any moment make amendments to the tax guidelines and stop you from using these strategies, so it would be best to stay updated on any new rules or guidelines. Moreover, if you find these strategies too complicated, you can use our tax tool Kryptos that automatically employs these strategies while making your tax reports.
Step | Form | Purpose | Action |
---|---|---|---|
1 | 1099-DA | Reports digital asset sales or exchanges | Use to fill out Form 8949. |
2 | Form 1099-MISC | Reports miscellaneous crypto income | Use to fill out Schedule 1 or C. |
3 | Form 8949 | Details individual transactions | List each transaction here. |
4 | Schedule D | Summarizes capital gains/losses | Transfer totals from Form 8949. |
5 | Schedule 1 | Reports miscellaneous income | Include miscellaneous income (if not self-employment). |
6 | Schedule C | Reports self-employment income | Include self-employment income and expenses. |
7 | Form W-2 | Reports wages (if paid in Bitcoin) | Include wages in total income. |
8 | Form 1040 | Primary tax return | Summarize all income, deductions, and tax owed. |
Date | Event/Requirement |
---|---|
January 1, 2025 | Brokers begin tracking and reporting digital asset transactions. |
February 2026 | Brokers issue Form 1099-DA for the 2025 tax year to taxpayers. |
April 15, 2026 | Deadline for taxpayers to file their 2025 tax returns with IRS data. |
Timeline Event | Description |
---|---|
Before January 1, 2025 | Taxpayers must identify wallets and accounts containing digital assets and document unused basis. |
January 1, 2025 | Snapshot date for confirming remaining digital assets in wallets and accounts. |
March 2025 | Brokers begin issuing Form 1099-DA, reflecting a wallet-specific basis. |
Before Filing 2025 Tax Returns | Taxpayers must finalize their Safe Harbor Allocation to ensure compliance and avoid penalties. |
Feature | Use Case Scenario | Technical Details |
---|---|---|
Automated Monitoring of Transactions | Alice uses staking on Ethereum 2.0 and yield farming on Uniswap. Kryptos automates tracking of her staking rewards and LP tokens across platforms. | Integrates with Ethereum and Uniswap APIs for real-time tracking and monitoring of transactions. |
Comprehensive Data Collection | Bob switches between liquidity pools and staking protocols. Kryptos aggregates all transactions, including historical data. | Pulls and consolidates data from multiple sources and supports historical data imports. |
Advanced Tax Categorization | Carol earns from staking Polkadot and yield farming on Aave. Kryptos categorizes her rewards as ordinary income and investment income. | Uses jurisdiction-specific rules to categorize rewards and guarantee compliance with local tax regulations. |
Dynamic FMV Calculation | Dave redeems LP tokens for Ethereum and stablecoins. Kryptos calculates the fair market value (FMV) at redemption and during sales. | Updates FMV based on market data and accurately calculates capital gains for transactions. |
Handling Complex DeFi Transactions | Eve engages in multi-step DeFi transactions. Kryptos tracks value changes and tax implications throughout these processes. | Manages multi-step transactions, including swaps and staking, for comprehensive tax reporting. |
Real-Time Alerts and Updates | Frank receives alerts on contemporary tax regulations affecting DeFi. Kryptos keeps him updated on relevant changes in tax laws. | Observe regulatory updates and provide real-time alerts about changes in tax regulations. |
Seamless Tax Reporting Integration | Grace files taxes using TurboTax. Kryptos integrates with TurboTax to import staking and yield farming data easily. | Direct integration with tax software like TurboTax for smooth data import and multi-jurisdictional reporting. |