Bitcoin and cryptocurrency trading in Poland
Poland scores a healthy 7.5/10 on crypto friendliness with a very positive government outlook and low taxes and a high and growing number of ATMs. Places to spend crypto are expanding, especially within the tourist industry.
Law and crypto trading in PolandLegal - existing crypto legislation
Poland officially recognizes the trading and mining of digital/virtual currencies as an official economic activity, and it is largely monitored by the Central Statistical Office which reports directly to the Polish Prime Minister’s office.Legal - forthcoming crypto legislation
All crypto issues are under review but nothing specific is forthcoming. The Polish Financial Supervision Authority (UKNF) continues to reinforce its position that potential investors should be aware of risks and volatility of trading all types of cryptocurrencies.
Taxing cryptocurrencies in Poland
Holding crypto and not selling it, even if it goes up, is not taxable. You are only liable for income tax when you transact, lend or gain interest on your coins and they yield an income or gain. So if you sell them or exchange them for a product or service you are liable for tax in a given year. You’ll need to keep all records for tax purposes (but you must have guessed that already). The tax rate is 19% on income over expenses, but if you’re in the big league of trading and your income goes over a million PLN, then your tax is bumped up an extra 4%. For personal income taxes, profits from crypto transactions are taxed as income from cash capital. For private transactions, the revenue is regulated as income from property rights, and the gain is taxed progressively at rates between 18% and 32%. Profits from business activities are taxed at a flat rate of 19%.
Your crypto trading is both recognised and tax allowable. Your crypto purchases and sales will make up the revenue figure in a given year from which you will deduct the costs of cryptocurrency purchases. Also, investment costs from previous consecutive years can be added to the following years’ returns until they are fully deducted.
Tax when moving residency
If you are a long-term resident of Poland you are deemed a permanent resident for tax purposes. Should you move, your tax affairs will come under the jurisdiction of your country of residence.
Tax on mining
Mining is beyond the scope of most individuals and calls for significant investment in time, money, and equipment. However, Poland’s income tax laws treat mining in the same way as trading. Gains in value of your mined bitcoin or crypto is taxable and the cost of mining is allowable.
Crypto financial services in Poland
Most retirement and pension funds worldwide deem cryptocurrency to be too volatile to become part of long-term retirement schemes. There is little certainty on this at present.
The Polish Financial Supervision Authority (KNF) granted licenses to two crypto startups, Coinquista and Bitclude, as payment providers. Both are now authorized.
Like many countries, Poland is interested in this technology and is actively looking at ways to bring its advantages into the mainstream.
Using crypto in Poland
Poland has a rapidly expanding digital currency culture and there are at least 112 ATMs dotted around the country. Crypto is beginning to grow in acceptance and a number of bars, restaurants, and retailers take it, as well as the Polish national airline, Lot.
You won’t be able to reduce your tax by gifting your cryptocurrency. Whatever gain you have made on it will be taxable up to the point at which you gift it.
Crypto regulation in Poland
Improved security for your crypto assets inevitably means increased legislation and regulation. Poland is embracing crypto trading, and Polish Crypto Exchanges are regulated and comply with KNF’s AML/CTF reporting obligations.
However, security is largely a question of doing your homework, so if you lose your keys or get hacked, your most likely form of compensation is through any insurance that your exchange offers on your holdings. Basically, just remember that all exchanges have their own levels of security, advantages, and disadvantages, so you need to check out the service that satisfies your needs best.
As with many government bodies, the tax authorities can request information from crypto exchanges and expect compliance with their laws. You’ll need to provide personal details and proof of ID – so anonymous dealing is not possible.