Controversial official guidelines on cryptocurrencies transactions

SZCZEGÓŁY ZAŁĄCZONEGO PLIKU guidelines-on-cryptocurrencies-transaction

On April 4th the Ministry of Finance published guidelines on taxation of cryptocurrencies transactions in terms of Personal Income Tax (PIT), VAT and Tax on Civil Law Transactions (TCLT).

The Ministry confirmed that the revenue from cryptocurrencies transaction may be qualified as business activity revenue.

The Ministry’s standpoint is that extracts from the history of transactions from internet exchange or bank statements may not be used to record transactions in tax book of revenues and expenditure (“podatkowa książka przychodów I rozchodów”). The Ministry does not indicate what documents should the PIT taxpayers use to record relevant transactions, which leaves field for speculation.

However, the Ministry admitted that such extracts may constitute basis for revenue and cost recognition if the PIT taxpayer keeps books according to the Accounting Act.

According to the Ministry, cryptocurrencies transactions are subject to Tax on Civil Law Transactions (TCLT). It means that transactions should be taxed with 1% rate calculated on the basis of market value of the cryptocurrency transaction. Taxation with TCLT also requires submitting relevant returns. Under such circumstances, cryptocurrencies arbitrage (where most profits are generated by tiny margins on huge turnover) becomes pointless as profit margins will be consumed by TCLT and additional administrative cost.

Transaction on cryptocurrencies is excluded from TCLT only if it is subject to VAT, or at least one of the parties is VAT exempt.

The National Tax Administration also demanded from Polish crypto exchanges information on their clients transaction. The assumption is that the data will be used to verify PIT and TCLT returns of traders.

Anna Drzyzga
MDDP Outsourcing