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Taxation of cryptocurrency trading in 2019

Polish Government plans significant changes in cryptocurrency trading taxation for 2019

Krzysztof Burzyński

The draft amendment to the Personal Income Tax (PIT) Act and to the Corporate Income Tax (CIT) Act provides that:

  1. Income from cryptocurrency trade will be subject to 19 % PIT/CIT rate.
  2. Income will be the price paid to the seller of the sold cryptocurrency less the price paid by the seller to purchase this cryptocurrency.
  3. Income will be settled once a year – after year-end.
  4. Cryptocurrency exchanges (i.e. BTC to ETH) will be tax neutral.

Currently, there is an ongoing dispute between Polish individual and corporate investor on one side and Polish tax authorities on the other concerning taxation of cryptocurrency trading.

The Polish tax authorities’ position is  that, in general:

  1. For individual investors:
    1. income from cryptocurrency trade is subject to 18 / 32 % PIT rate (32 % rate is applicable to when annual income exceeds approx. 20 ths euro),
    2. income is the price paid to the seller of the sold cryptocurrency less the price paid by the seller to purchase this cryptocurrency,
    3. income should be settled on an annual basis.
  2. For individual investors who are entrepreneurs (sole traders):
    1. income from cryptocurrency trade is subject 19 % PIT rate regardless of the level of income,
    2. income is the price paid to the seller of the sold cryptocurrency less the price paid by the seller to purchase this cryptocurrency plus other cost generated by entrepreneurs (e.g. office, laptop, phone),
    3. income is settled on a monthly / quarterly basis.
  3. For corporate investors:
    1. income from cryptocurrency trade is subject to 19 % CIT rate regardless of the level of income,
    2. income is the price paid to the seller of the sold cryptocurrency less the price paid by the seller to purchase this cryptocurrency plus other cost generated by the corporate investors (e.g. office, laptops, phones),
    3. income is settled on a monthly basis.