Recently, interest in selling or replacing cryptocurrency, such as bitcoin, litecoin or ether, has increased significantly, and as the annual settlement time is approaching, questions arise which economic events should be included in the tax return.
The Ministry of Finance published a communication indicating how to tax the turnover on the cryptocurrency market.
The revenue from the trading of cryptocurrency is generated, among other things, in the case of the sale of cryptocurrency (changes into traditional currency) or the conversion of cryptocurrency to another cryptocurrency, to a commodity or to a service (the replacement of cryptocurrency should be treated analogously to any other property rights).
General taxation
According to this Communication, the annual statement of the PIT should also include revenue generated from the sale or exchange of cryptocurrency. These revenues are taxed on a general basis and the manner in which they are taxed and shown in the tax return depends on the form of taxation chosen by the taxable person conducting non-agricultural business activities and on the source of income (material rights or non-agricultural business).
The revenue from the trading of cryptocurrency is generated, among other things, in the case of the sale of cryptocurrency (changes into traditional currency) or the conversion of cryptocurrency to another cryptocurrency, to a commodity or to a service (the replacement of cryptocurrency should be treated analogously to any other property rights).
Obligation to tax PCC
It is also worth noting that according to the Ministry of Finance, the trading of cryptocurrency is subject to the tax of PCC, which could mean tax arrears for many people who have chosen this way of investing capital.
In practice, this means that PCC should be removed from each sales transaction at the level of 1% the market value of the purchased cryptocurrency (the tax liability is imposed on the buyer).
On the other hand, the swap agreement creates a tax obligation of 1% the market value of the property law on which the higher tax relates jointly and severally to the parties to the operation.
PCC shall not be taxed on that sale or exchange of cryptocurrency which is subject to VAT in so far as it is subject to VAT or if, one of the parties to the activity shall be exempt from VAT for the performance of that activity.
For VAT purposes, the concept of currencies used as legal tender also includes cryptocurrency, which means that these transactions will benefit from VAT exemption.
Rafał Dąbrowski
Senior Manager in Tax Advisory. Lawyer, tax advisor, restructuring advisor. At Russell Bedford in charge of the Department of Tax Advisory. From 2011 It provides advice to leading companies from various sectors of the economy. In particular, he specializes in consulting the steel, fuel, construction, transport, real estate and IT industries. Speaker of conferences and training on tax law. Author of numerous tax-related articles published in the industry press.