The Polish government recently amended its income tax law, which was approved by President Andrzej Duda. The updated law, which now includes provisions for cryptocurrencies, will come into force on January 1, 2019.
The amendments, which should have been adopted earlier, were suspended after the Polish cryptocurrency community challenged the decision to tax any cryptocurrency transactions, regardless of profit or loss.
There are several key provisions in the bill that was sent to the president for approval. According to information from the Polish publication Kryptowaluty, one of the most important provisions concerns the conversion of cryptocurrencies. The amendments state that crypto-to-crypto transactions will not be subject to tax.
However, when using digital assets to exchange for “a service, property, payment instrument or product,” a Polish citizen will now have to pay a 19% tax. Profits from the sale of cryptocurrencies for “fiat or other non-digital assets” will be treated as capital gains or investments. The tax rate will be the same for both individuals and legal entities.
Starting next year, residents of Poland will also be required to report all purchases made using cryptocurrency on their annual tax returns. Businesses will not be able to compensate for losses associated with cryptocurrency with income from other activities. They will also be required to separate funds that relate to cryptocurrency transactions from others.
Finally, income from activities such as the sale of digital assets will be subject to the so-called “solidarity tax” if the enterprise’s profits exceed 1 million zlotys. In this case, an additional 4% rate will apply.
Although the proposed amendments represent a comprehensive approach to regulating the taxation of cryptocurrency profits, the future of the Polish crypto community remains unclear. Even by committing to paying just 1% of all cryptocurrency transactions, a trader could potentially spend all of his digital funds on taxes.
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