The Finance Ministry of Poland has recently published its official position on the taxation of cryptocurrency incomes and profits. The tax returns of Polish citizens should contain information about revenues from trade and exchange for cryptocurrencies like bitcoin, litecoin or ether, the department said.
The turnover from crypto transactions must be reported as personal income and taxed according to the country’s current tax code. Poland has implemented a progressive income tax scale with two brackets – 18% for incomes of up to up to PLN 85,528 zloty (€20,400), and 32% for those that exceed that annual amount.
The ministry insists that the general terms of the Personal Income Tax Act cover income derived from cryptocurrency transactions. Furthermore, it says purchases and sales of cryptocurrencies are considered transfers of property rights. As such, they are subject to 1% tax rate under the rules governing civil law agreements.
According to the ministry’s interpretation of the tax law, all cryptocurrency transactions, regardless of their net results, are subject to taxation. This means Poles are expected to pay taxes even when they haven’t profited from their dealings with cryptocurrency.
Cryptocurrency traders in Poland launched a petition to protest the government’s decision to tax all cryptocurrency transactions.
The authors of the petition are demanding the abolition of all taxes on cryptocurrency trading. They also call for clear rules for the taxation of profits in the industry. The local crypto community says investors will be losing capital which, as their funds can be taxed hundreds of times.
“The current interpretation of the tax regulations in regards to cryptocurrencies requires market participants to pay 1% tax on each transaction. After a hundred transactions, regardless of the market situation, investors could have given all their capital to the state. As a cryptocurrency community, with over 250,000 active members, we oppose these obligations.”
As a result of “imprudent government actions”, many Polish blockchain companies and programmers now work on foreign projects, claim the people behind stopregulacjom.pl (Stop Regulation) initiative. “They want to take 1% of each transaction but will not get a penny”, the campaign says. The petition has been signed by almost 3,000 people (at the time of writing).
The Finance Ministry has announced that it’s working on a “more convenient” method of taxation for cryptocurrencies, while stressing that current regulations are binding. The deadline for filing the annual tax returns in Poland is April 30.
With the recently published notice, the country joins a growing number of EU member-states that want to tap into crypto-related incomes and profits. Most of them, however, have not yet adopted comprehensive regulations concerning cryptocurrencies like bitcoin.
Taxation policies vary significantly across the continent. Income tax and capital gains tax are often imposed on crypto-related revenues. Most governments have opted for applying their regular tax laws. Tax rates range from 0 to 50% in different EU countries.
There’s a growing movement in other large cryptocurrency markets to tax bitcoin transactions. In the United States, the IRS issued a note reminding Americans that their capital gains on crypto transactions will be subject to taxation. And in South Korea, the government plans to unveil a cryptocurrency taxation framework by June 2018.