New Bill Clarifies Crypto Taxation in Poland

A new draft introducing amendments regarding the taxation of crypto incomes has been published in Poland. The bill differentiates between decentralized cryptocurrencies and centralized virtual money, and clarifies the tax regime applicable to crypto trading and mining.  

Also read: Eastern Europe: Regulation Postponed, Tax Abandoned, Banks Enlightened

Draft Distinguishes Between Cryptos and Centralized Coins

The stated purpose of the bill is to simplify and clarify the procedures for reporting and paying taxes on revenues from crypto-related activities. The new proposals come after an earlier decision to tax all digital money transactions, regardless of profit or loss, sparked protests from the Polish crypto community. The Finance Ministry admitted “the irrational effect” of the Civil Law Transactions Tax (PCC) in the case with cryptocurrencies and abandoned the idea to impose it until a comprehensive solution is found.

In accordance with the Act on Counteracting Money Laundering and Terrorism Financing, the draft law defines virtual currency as a “digital representation of value.” The authors also divide virtual currencies into two groups – cryptocurrency and centralized virtual currency, the Polish outlet Kryptowaluty reports. Even more importantly, the legal text details that virtual currencies can serve as a medium of exchange and be accepted as means of payment, they can be stored and transferred electronically and used in e-commerce.

Crypto-to-Crypto Transactions Will Not Be Taxed

Cryptocurrency miners are also expected to pay taxes on their profits but the tax base will be determined depending on the nature of their economic activity. When miners work for themselves, they will pay tax on the gains from the sale of the mined cryptocurrency. If they mine on behalf of other entities or individuals, the value of their remuneration will be taxed. However, if they chose to convert the cryptocurrency to fiat before they pay their clients, the whole amount will be considered as revenue and tax will be due on the total.

All these obligations should be reported on the annual tax returns and settled once a year, according to the published draft. Taxpayers dealing in cryptocurrency will not be required to pay taxes in advance. Poland currently applies a progressive income tax scale with two brackets – 18 percent for annual incomes of up to 85,528 zloty (~€20,000), and 32% for those above this limit. Previous reports have suggested that changes to the tax regime will be made next year.

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