Poland Crypto Tax Guide 2024

Poland has long been one of the most prominent destinations for crypto-based startups owing to its lenient crypto regulations and a comparatively softer stance on crypto as an industry. Crypto investors have enjoyed a similar environment as well, according to a report by Triple A, more than 900,000 people owned crypto in Poland. Moreover, Poland was the first country ever to integrate blockchain for the provisioning of emergency services. In November 2020, Olsztyn completed a successful trial run of Smart Key, a bridging technology that connects blockchain with physical assets, to aid in police, fire and ambulance services. 

Global crypto adoption has soared in the past 3 years, and Poland has followed suit. That is part of the reason why Polish authorities have been actively publishing new guidelines regarding crypto taxation. They have also released a new tax form called PIT-38 to help Polish taxpayers report crypto transactions conveniently. Although there are guidelines around crypto taxation in Poland, navigating those guidelines and interpreting them in the context of specific crypto investments is tedious. That’s why we created this comprehensive tax guide covering every aspect of crypto taxation.

Note that this guide will be updated regularly to accommodate any new guidelines. Therefore, we suggest you keep revisiting this guide regularly to keep up with the tax trends.

Latest Updates Guidelines

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Polish Accounting Act

National Accounting Standards

How is Crypto Taxed in Poland?  

In Poland, the taxation of cryptocurrencies follows specific guidelines based on the country's tax laws. According to the Personal Income Tax Act, virtual currency is defined as a digital representation of value that can be exchanged into legal tender and accepted as a means of exchange. However, it's important to note that virtual currency excludes certain categories such as legal tender issued by national banks, international units of accounts, electronic money, financial instruments, bills of exchange, and cheques.

When it comes to taxation, revenue generated from trading cryptocurrencies is considered revenue from monetary capital. Disposing of virtual currency in exchange for payment involves different scenarios:

• Exchange of virtual currency for legal tender (e.g., selling cryptocurrency for fiat)

• Exchange of virtual currency for goods, services, or property rights

• Settlement of liabilities with virtual currency

It's worth noting that not only the conversion of virtual currency into fiat currency triggers a tax liability but also exchanging it for goods, services, or property. However, exchanging one cryptocurrency for another or converting it into stablecoins does not result in a tax liability.

The taxation rate for cryptocurrencies in Poland is 19%. There is no specific tax threshold in this case, and all income derived from cryptocurrencies, regardless of the amount, is subject to the 19% tax rate. It's essential for investors to accurately report their income from virtual currencies and fulfil their tax obligations accordingly.

Can the Tax Administration Chamber Track Crypto

The answer is yes. Poland is a member of the EU and hence comes under provisions like DAC-8 that are meant for better compliance and investor protection in the space. DAC-8 mandates all crypto companies provisioning financial services in the region to collect and share investor data with all EU member states. Couple that with the AMLD-6 directive, which calls for stricter KYC norms for crypto service providers and it's safe to assume that the TAC has access to your transaction details and can co-relate this information with data on public ledgers to identify any discrepancies in tax reports.

Therefore we suggest reporting all your crypto transactions and paying your taxes judiciously to avoid legal complications.

Capital Gains Tax

In Poland, certain cryptocurrencies do qualify the definition of securities and their disposal results in gain from monetary capital. However, this does not make much of a difference when it comes to their taxation. Because Poland does not have a dedicated capital gains tax, all crypto transactions are taxed at a flat rate of 19%. 

Capital Gains Tax Rate

As mentioned earlier there is no dedicated capital gains tax rate in Poland and all crypto transactions are taxed at a flat rate of 19%.

How to Calculate Capital Gains

Calculating your income from sale of crypto is fairly simple in Poland. You can use the formulae below to calculate -

Income from sale of crypto = Aggregate revenue from sale in the year - Tax deductible costs in the year

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 in the next year.

Here’s an example:

Let’s say Antony bought 1 BTC and 1 ETH for 80,000 PLN in January 2022 and decided to sell both these tokens later that year for 1,10,000 PLN.

Disposal Amount = 1,10,000 PLN

Cost Basis = 80,000 PLN

Let’s use the formula:

Capital Gains = (1,10,000 - 80,000) PLN = 30,000 PLN

A flat tax rate of 19% will be levied on the 30,000 PLN gain.

Crypto Losses

Crypto losses are tax deductible in Poland. If you’ve made losses that far exceed your gains, you can report them in the PIT-8 tax form and any assets that you’ve bought and not sold in a financial year are to be reported as expenses to be accounted for in your tax return. Now, as long as you have losses in the current financial year and expenses to be accounted for in the subsequent financial year, you can carry your losses forward until the gains made from the disposal of crypto assets exceed these losses.

There is no provision that states that capital losses aren’t tax deductible, therefore one should definitely report all losses to tax authorities and avail tax benefits.

Lost Or Stolen Crypto

There are no established provisions or guidelines that determine the tax treatment of lost or stolen crypto. And therefore it is likely that the Resolution hinges on individual cases and subsequent tax relief offered.

Hence, we recommend reaching out to tax authorities directly to clarify how lost or stolen crypto is viewed from a tax perspective.

Crypto Tax Breaks Poland

There is no way to avoid crypto taxes entirely. However, tax authorities in Poland do offer some ways to reduce your tax bill:

1. Offsetting Capital Losses

Individual taxpayers can carry their capital losses forward as long as they have expenses to be accounted for in the subsequent tax year. 

2. HODL Your Assets

• HODLing your assets is not a taxable event in Poland and gains are only taxed when they’re realised.

Furthermore, authorities in Poland provide certain exemptions and tax benefits for residents. However, it's unclear if these apply to crypto investments. We advise consulting experienced tax professionals to confirm their applicability.

• Charitable Contributions- Donations to registered charities can be deducted from gross income, up to a limit of 6% of taxable income.
  
  
• Internet Connection Expenses- Individuals who qualify can claim a relief of 760 PLN for internet connection expenses. This relief can be claimed for up to two consecutive years.
  
  
• Free of Charge Blood Donation- Based on the amount of blood donated, individuals can deduct the money equivalent, up to 6% of their total income subject to progressive taxation.
  
  
• Payments to Individual Insurance Security Account (IKZE)- Deductions can be made for payments to the non-obligatory IKZE, up to 4% of the pension insurance assessment basis for the individual in the previous year.
  
  
• Rehabilitation Expenses- Expenses related to rehabilitation and aiding life activities for disabled taxpayers or those supporting disabled individuals can be deducted. Proper documentation is required.
  
  
• Thermo-modernization Relief- Owners/co-owners of residential buildings can deduct expenses related to thermo-modernisation projects, up to a total of 53,000 PLN for all projects.

• Deduction of Social Security Contributions- Employee's social security contributions can be deducted within specified limits. Deductions for contributions paid in another EU or EEA member state or Switzerland are also possible under certain conditions.
  
  
• Relief for Renovation of Monuments- Owners of properties listed in the Register of Cultural Property can deduct expenses for renovation and purchase of historic properties. The formula for this relief will change starting in 2023.
  
  
• Standard Deduction for Employees- A standard deduction of 250 PLN per month is available for employees, with an annual limit of tax costs not exceeding 3,000 PLN. For multiple employment relationships, the upper limit is 4,500 PLN.

Crypto Cost Basis Method Poland

The examples we have used above to explain capital gains calculations are fairly simplistic and don’t reflect real-world transactions. Investors buy multiple assets of the same kind at different prices in the same tax year and that makes capital gains calculations much more complicated. If you have multiple acquisition prices for the same asset, which one would you use to calculate the cost basis for such transactions? That’s exactly why investors should use specialised accounting methods as specified by their respective tax authorities for cost-basis calculations.

In general, there are following cost basis methods which are used for calculating capital gains.

1. LIFO

LIFO or Last-In-First-Out accounting method states that the acquisition price of the most recent asset you buy is to be used as the cost basis for capital gains calculations upon disposal.

2. FIFO

FIFO or First-In-First-Out accounting method states that the acquisition price of the earliest asset you buy is to be used as the cost basis for capital gains calculations upon disposal.

3. HIFO

HIFO or Highest-In-First-Out accounting method simply states that the highest acquisition price for an asset across all acquisition instances is to be used as the cost basis for capital gains calculations upon disposal.

4. Average Cost Basis Method

The average cost basis method simply states that the cost basis for an asset is simply equal to the average acquisition price of all tokens that you currently have in your portfolio.

However, as mentioned above, Poland follows a simple method for calculator of income from sale of crypto assets, where buying crypto generated deductible costs and selling them leads to tax revenues both aggregated annually.

Crypto Income Tax

Income from crypto assets is simply taxed as regular income under the existing income tax rules. In Poland, income obtained from cryptocurrencies is categorised as income from monetary capital and is subject to taxation at a rate of 19%. This taxation applies to various crypto-related activities, including trading, mining, and participating in Initial Coin Offerings (ICOs).

When selling virtual currencies, the taxable amount is determined by the difference between the sale price and the purchase price. This difference is considered income and is subject to the 19% tax rate. This means that any profits made from cryptocurrency trading, as well as other transactions involving virtual currencies, is considered income.

Moreover, it's interesting to note that for goods and services tax (VAT) purposes, cryptocurrencies are considered means of payment rather than property. This classification by the Ministry of Finance influences their treatment under VAT regulations.

It's important to note that not all aspects of crypto transactions are covered by specific tax laws, which may cause ambiguity in some instances. As a result, seeking advice from an experienced tax advisor is recommended to ensure compliance and proper reporting.

Crypto Income Tax Rates

As mentioned previously, a blanket tax rate of 19% applies to income from crypto transactions in Poland. 

Tax-Free Crypto Transactions

Listed below are some tax-free transactions in Poland:

Taxed Crypto Transactions

Listed below are some taxed crypto transactions:

Tax on Mining Crypto

Mining rewards are non-taxable at the point of receipt. The tokens received as a result of mining inherit the cost basis of 0 PLN, which essentially means that once you dispose of these assets and convert them to fiat, the entire amount will be taxed at a flat rate of 19%.

Tax on Staking Crypto

Although mining and staking are two separate ways of adding and validating new blocks of transactions on public ledgers, Polish authorities view them through the same lens when it comes to their taxation.

Staking rewards are taxed in the same way as mining rewards.

How are Airdrops and Forks Taxed in Poland?

Tokens received through airdrops and forks aren't taxed upon receipt. They can even be converted to other crypto without immediate tax implications. However, upon conversion to fiat, they inherit a cost basis of 0 PLN, triggering taxation.

Due to the zero cost basis, the tax rate applies to the entire amount upon disposal.

Crypto Gifts and Donations Taxes

There are no guidelines that dictate the taxation of crypto gifts and donations in Poland. However, if we assume crypto gifts and donations to be the same as fiat donations, we can infer the tax implications on such transactions.

Just like with regular assets and property rights, the value of crypto assets and rights received through gifts, donations, or inheritance would be subject to Polish gift and inheritance tax. This tax would apply if the recipient of the assets is a Polish national, a Polish permanent resident, or if the donation contract is concluded in Poland.

Non-residents might not have to pay gift and inheritance tax on movable crypto assets and rights inherited or donated within Poland, as long as the donor is neither a Polish resident nor a Polish citizen.

The exemptions that apply to traditional assets and property rights, such as acquisition by close family members and certain types of property, could potentially also apply to crypto assets. However, it's important to note that the tax-free amounts and specific rules might vary depending on the personal relationship between the recipient and the donor or deceased person.

The tax calculation for crypto gifts, donations, and inheritance would be based on the fair market value of the crypto assets on the day when the tax event occurs (such as the acceptance of inheritance or donation). The tax rate would be determined based on the relationship between the recipient and the donor or deceased, just like in the case of traditional assets.

Note that these guidelines are speculative. We suggest seeking guidance from an experienced tax professional to better understand how such transactions are taxed.

Crypto Margin Trades, Futures, and CFDs

Although there is no specific guidance on how income from margin trades, futures, and CFDs are taxed, income from margin or leverage trades would likely attract tax liabilities similar to that of regular trades.

This essentially means that any gains incurred from such trades would attract a flat tax rate of 19%. However, it would be prudent to seek guidance from tax professionals to understand how such transactions are taxed.

Crypto ICO Taxes

ICOs are special events that allow investors to own native tokens from unreleased projects in exchange for mainstream tokens like Bitcoin and Ethereum. They are similar to IPOs in the regular securities market.

Any tokens received from ICOs are not taxable at receipt. These tokens inherit the cost base equal to 0 NLP and are taxed when they’re disposed of, attracting a flat tax rate of 19%.

NFT Taxes

The Polish tax authorities are yet to release specific guidelines on NFT taxation. Any income from trading NFTs will likely be taxed as regular income. However, we do suggest seeking guidance from an experienced tax professional to better understand how NFTs are taxed.

DAO Taxes

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. They are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and allow members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

It is likely that any income from DAOs won’t be taxed at receipt and would simply be taxed at a flat tax rate of 19%. The cost basis for such transactions would be 0 NLP, as is the case with tokens received through airdrops and ICOs.

Since there is no clear guidance on the taxation of income from DAOs, this is a mere speculation on our part. We suggest seeking the advice of tax experts to better understand how such transactions are taxed.

DeFi Crypto Taxes

The subject of DeFi taxation is barely touched upon by tax authorities in Poland and is therefore one possible grey area in the Polish tax regime. Any income from staking or lending on DeFi protocols would likely be treated the same way as income from ICOs, airdrops, or hard forks.

We suggest seeking guidance from an expert tax professional to better understand how such transactions are taxed.

When to Report Crypto Taxes in Poland

Crypto taxes in Poland should be reported between 15 February and 30 April of the year following the fiscal year in which the income was earned or losses were sustained. This reporting timeframe applies to various tax returns, including forms such as PIT-37, PIT-36, PIT-36S, PIT-36L, PIT-36LS, PIT-38, and PIT-39.

For the lump-sum tax on revenues, the tax return should be submitted between 15 February and the end of February of the year following the fiscal year. This timeline is specifically applicable to the PIT-28 and PIT-28S tax returns.

It's important to note that if 30 April falls on a Saturday or a holiday, the deadline for submitting tax returns would be the first working day following the holiday(s).

How to File Crypto Taxes in Poland

You can submit your crypto taxes in two ways primarily:

• Using paper forms
• Through the online portal or desktop application 

If you choose the latter, you have three different avenues for submitting your tax return:

• an interactive PDF file,
• e-Deklaracje Desktop application,
• Twój e-PIT service.

The tax return prepared with taxpayer information gathered by the revenue authority can be accessed by the taxpayer through the e-Tax portal. The annually generated tax return is automatically considered submitted once the deadline has passed.

What Records Will the Tax Administration Chamber Want

There is no official list of documents that one needs to maintain as per the tax authorities. However, it would be best to maintain the following records for a smooth tax filing experience.

1. List of all transactions with dates and times from the exchange
2. A detailed record of the acquisition and disposal amount
3. Details about the type of asset and the parties involved in the transaction
4. A list of cost basis and disposal amount for each asset
5. A detailed record of all assets held in digital wallets you have private keys for

How to File Crypto Taxes Using Kryptos?

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

• Visit Kryptos.io and sign up using your email or Google/Apple Account
• Choose your country, currency, time zone, and accounting method 
• Import all your transactions from wallets and crypto exchanges
• Choose your preferred report click on the generate report option on the left side of your screen and let Kryptoskatt do all the accounting.
• Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

How to Avoid Crypto Taxes in Poland

Avoiding crypto taxes can cause legal trouble in Poland. However, there are ways you can lower your tax bill legally:

1. Carry your losses forward and offset them against your gains
2. HODL your assets for the long term and convert them to stablecoins when you want to liquidate your positions since crypto gains are only taxable when they’re converted to fiat

Frequently Asked Questions (FAQs)

1. Is crypto legal in Poland?

The question can be better framed as “Is investing in crypto legal in Poland?” and the answer to that would be yes. Although the Polish authorities do not consider crypto to be legal tender, investing in crypto is completely legal in Poland. In fact, Poland is the first country in the world that has integrated blockchain into its public welfare system. Poland is widely regarded as a crypto-friendly nation across the world.

2. How is Crypto Taxed in Poland?

In Poland, the taxation of cryptocurrencies follows a clear framework. Income generated from the sale of virtual currencies is considered income from monetary capital and is subject to a flat tax rate of 19%. This taxation encompasses various crypto activities such as trading, exchanging, mining, and participating in Initial Coin Offerings (ICOs). Tax liability arises when cryptocurrencies are sold, based on the difference between the sale and purchase prices, resulting in either income or capital loss.

However, specific regulations for all crypto-related transactions aren't fully established, introducing some uncertainty. Seeking guidance from a specialist or experienced tax advisor is recommended to ensure accurate adherence to tax laws. Taxpayers are individually responsible for reporting their cryptocurrency-related income and transactions, and regulations concerning virtual currencies can change from one tax year to the next.

3. Does Poland have a capital gains tax?

No, Poland does not have a dedicated capital gains tax. The tax system in Poland treats income from the sale of assets, including investments like stocks and cryptocurrencies, as capital gains. When individuals sell cryptocurrencies at a profit, the resulting gain is considered a capital gain and is subject to taxation. The tax rate for capital gains in Poland is currently set at a flat rate of 19%.

4. How can Kryptos simplify crypto taxes for you?

We’ve already discussed how to file your crypto taxes in the above sections of the guide offering a stepwise breakdown of the entire process. However, we agree that it is unreasonably complicated even for someone with a fair amount of prior knowledge. However, there’s an easy way to file your crypto taxes using a crypto tax software called Kryptos.

All you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform auto-fetches all your transactions from the tax year and generates a legally compliant tax report within minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.

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All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!