What bitcoin is you don't have to explain to anyone – in these days information about cryptocurrency attacks us from every side. Many investors, on the other hand, are concerned about the question, ‘How do I make money in this market?’ As it turns out, it also affects the tax.
The current decrease in bitcoin is associated with an increased turnover of cryptocurrency. This, in turn, undoubtedly gives rise to certain tax consequences. For the brave one is the one who thinks that the taxus will “reveal” something.
The case is obvious – the Income Tax Act cannot be overly causistic, it must also be presented functionally. Therefore, the fact that at the time of its creation the world had not heard of bitcoins does not make it impossible to assign cryptocurrency trading to a specific source of taxation.
On 6 March 2018 was released first, According to the media, the Supreme Administrative Court judgment in the case reference no. II FSK 488/16, on the taxation of cryptocurrency trading. It confirmed the earlier position of the tax office, as set out in the contested tax ruling, according to which the trading of cryptocurrency constitutes revenue from so-called property rights, subject to tax on income from individuals, according to the tax scale (18% and 32%).
In the present case, the investor requested a tax ruling, wondering whether there was a tax revenue in his case. In the past, he purchased and then sold virtual means of payment, or bitcoin. He did not register his business activity, even though he carried out several one thousand transactions.
According to the investor, there was no taxable income and, if so, only interest on cash capital. The Supreme Administrative Court, supporting the position of the Provincial Administrative Court in Warsaw and the fiscal court, disagreed with the investor.
He stated that under Polish law cryptocurrency cannot be treated as a legal tender (golden Polish). They do not function as money market instruments within the meaning of separate provisions.
Such views have already been expressed in other cases, including in the letter of the Director of National Tax Information dated 10 November 2017 (case sign 0112-KDIL3-1.4011.299.2017.2.KF).
Therefore, a flat rate cannot be used for cryptocurrency 19% income tax on interest on cash capital referred to in Article 30a(1)(3) Personal Income Tax Act.
According to the court, revenue from the sale of cryptocurrency, according to Article 18 Personal income tax laws should constitute income from so-called property rights.
According to this provision, ‘the income from property rights shall in particular be regarded as revenue from copyright and related rights within the meaning of separate provisions, rights to inventive projects, rights to topography of integrated circuits, trademarks and designs, including the free disposal of those rights’.
The catalogue of taxed income from property rights – as you can see – is not closed and it is in it that the trading of cryptocurrency should be placed.
By the property rights referred to above, we should understand such rights which are closely linked to the economic interest of the rightholder and which are simultaneously transferable (may be traded) and have a certain asset value. Cryptovaluta, in fact a virtual means of payment, undoubtedly has both a certain value and is traded.
Consequently, the revenue generated by the trading of cryptocurrency should be cumulated by the investor with his other income and shown in the annual statement PIT-36. The tax should be calculated on a general basis, i.e. on a tax scale.
If you think about it, it's no wonder. The case is obvious – the Income Tax Act cannot be overly causistic, it must also be presented functionally. Therefore, the fact that at the time of its creation the world had not heard of bitcoins does not make it impossible to assign cryptocurrency trading to a specific source of taxation.
However, the attempt made by the inquisitive taxpayer in which the judgment in question was brought is, of course, worthy of appreciation. For there can be a pretty good income. Maybe someone can win this fight.
The case is commented by the expert of the Małopolska cryptocurrency market – Mr Dariusz Barski:
There are quite a lot of cryptocurrency transactions in the Polish market. The previous fiscal position was known in the industry, so no one should be surprised. I must say that the NSA judgment cited above did not surprise experienced investors.
However, this does not change the fact that investors focused on cryptocurrency will seek clear regulation of the area related to the revenue from investments in the cryptocurrency market, as is the case in the capital market. I mean, e.g.
a linear tax, the possibility of reducing income by the cost of obtaining it (fees, training, conferences, excavators for currency extraction, electricity, etc.).
Let us also remind that the cryptocurrency market is not only profits but also losses – and sometimes not small. Persons who bought BTC in December 2017 for example 19,000 USD are currently 40% negative – and here the question arises – how do they show it? Can they account for the resulting loss? It's not possible at the moment.
The market for cryptocurrency trading is developing today and appropriate regulation will have to be established over time. Individual small investors will account for themselves as NSA will point them out, and a large proportion of investors will have no profits, because – like the WSE or the foreign exchange market – they will generate losses.
Ewa Miszczyk-Wróbel
Lawyer. Expert of non-standard business solutions, author of legal concepts implementing complicated business assumptions of entrepreneurs.
She graduated in law from the Faculty of Law and Administration at the Jagiellonian University in Krakow, followed by Postgraduate Studies in Copyright, Publishing and Press Law at the Institute of Intellectual Property at the Jagiellonian University in Krakow, as well as numerous specialist courses and trainings.
He is a legal advisor in the District Chamber of Legal Advisors in Krakow.
He has many years of professional experience gained in a renowned law firm specialising in the service of foreign entities, a stock exchange joint stock company operating in the modern technology and IT industry, pharmaceutical wholesaler and medical device manufacturers.
From 2010 is engaged in the continuous operation of large-scale projects and in support of labour agencies operating on the domestic and foreign markets. Specializes in company law (transformation processes, M&A, decommissioning), construction law and labour law.
She is involved in pro bono activities, has repeatedly supported the Kraków OIRP in organised legal aid actions for those in need, and has also supervised the labour law department in the WIOSNA Association in Krakow.