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Poland Lifts Temporary Crypto Tax Freebie

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Poland Lifts Temporary Crypto Tax Freebie

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The Polish government has announced that it is lifting its temporary suspension of tax collection for digital currencies, introduced back in May of this year.

At the time, the Polish government suggested that a temporary abandonment of tax collection allowed for an in-depth analysis of cryptocurrency in Poland including income tax. The ministry had issued a statement prior the end of the Polish tax year on 30 April, informing consumers that cryptocurrency falls into two income tax brackets of 18% and 32%.

These announcements provoked immediate public response through a Change.org petition which gained over 5,000 signatures asking for tax exemption for crypto technology dealings. Although the government responded positively to the petition, it stated that “the obligation may arise to pay tax in an amount often exceeding the funds invested”.

Now that the promised analysis has been completed, an updated framework for taxation is awaiting approval by the country’s president Andrzej Duda. The draft suggests that crypto-to-crypto transactions will be exempt from income tax, but a tax rate of 19 % will be incurred on cryptocurrency assets when exchanged as “a payment instrument, commodity, service or property right other than virtual currency”.

This means that income from the sale of cryptocurrencies for fiat will be treated in the same way as income from capital gains or investments for taxation purposes, with the same flat rate applicable to those making private or corporate tax returns.

Under the draft proposals, from the beginning of 2019, Poles will be required to report all transactions and purchases using cryptocurrencies on their tax returns. If the income from such transactions exceeds PLN 1 million (Polish zloty worth approximately USD 265,000), an additional rate of 4% will be added to the 19% new flat rate. This new “solidarity tax” at 23% will not be greeted as good news by large cryptocurrency investors.

 

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