Navigating Cryptocurrency Taxes in Poland: What You Need to Know

Author: Micha Krawczyński

How Poland Taxes Cryptocurrency Gains

If you trade or invest in cryptocurrencies in Poland, you need to be aware of how taxes work. In Poland, cryptocurrency is considered property rather than money. As a result, when you sell it for a profit, you have to pay 19% capital gains tax.

But that's not all. If you receive cryptocurrency in exchange for work or services, it is taxable as personal income, which could lead to a higher tax rate. Profits from cryptocurrency mining are also regarded as business income, which is governed by various tax regulations.

New Developments in Crypto Tax Laws

Poland has been updating its crypto tax laws in recent years. One notable change is the tax-free nature of cryptocurrency-to-crypto transactions. Only when you convert cryptocurrency into fiat money, like PLN, or use it to make purchases are taxes due.

The tax office has been closely monitoring cryptocurrency activity since 2023. In order to track transactions and make it more difficult for people to evade taxes, they now collaborate with banks and exchanges.

How to Report Crypto Profits

If you’ve made money from crypto, you have to report it in your annual tax return. It means that you probably have to fill out the PIT-38 form (for capital gains). If you earned crypto as income, you use the PIT-36 form.

The deadline for filing taxes in Poland is April 30 each year. Not reporting your crypto profits could lead to fines or legal trouble. To stay safe, keep detailed records of your transactions, including dates, amounts, and exchange rates.

How to Reduce Your Crypto Tax Liability

Thankfully, there are a few legal ways to lower your taxes on cryptocurrencies. One way is to balance your gains against your losses. If you sold cryptocurrency at a loss, you can reduce your tax obligation by deducting the loss from your total gains.

Another option is to hold onto your cryptocurrency for a longer period of time. Since you are only taxed when you sell or use cryptocurrency, waiting to cash out could cause your taxes to be delayed. Some people may also choose to move their cryptocurrency to a nation with lower taxes, but this requires careful planning.

What Happens If You Don’t Pay Taxes on Crypto?

Some people think they can get away with not reporting crypto earnings, but that’s risky. In order to track your transactions, the Polish tax office now has partnerships with major banks and exchanges.

You may be subject to significant fines, additional fees, or even legal action if they discover that you failed to pay taxes. Criminal charges may result from tax fraud in extreme circumstances. It’s always better to play it safe and report your earnings.

How Authorities Track Crypto Transactions

A lot of people assume that crypto is completely anonymous, but that’s not true. The Polish government uses blockchain tracking tools to monitor transactions. Even if you’re using decentralized exchanges (DEXs), authorities can still trace your activity.

If something seems suspicious, you could be flagged for an audit. That’s why it’s smart to keep records and follow the rules.

Is It Possible to Use Cryptocurrency Without Paying Taxes?

When you purchase something with cryptocurrency, the transaction is taxable. The difference between the cryptocurrency's original purchase price and its current value when it is spent is subject to taxes.

Some individuals use debit cards that automatically convert cryptocurrency to cash when payments are made. But be careful—this still creates a taxable event. If you regularly use cryptocurrency for purchases, it is best to first review the tax regulations.

Do You Need to Hire a Tax Professional?

Crypto taxes can be difficult to understand. Hiring a tax professional can be wise if you trade frequently or have significant cryptocurrency investments. They can assist you in minimising errors and reducing your taxes.

You can also learn about any new rules from a tax professional. You can save a lot of money and stress by getting professional advice because tax laws are always changing.

Conclusion

Crypto taxes in Poland may seem complicated, but you can avoid problems if you go by the rules. Always report your income, keep track of your records, and look for legal ways to reduce your tax liability.

Consult a tax expert if you have any questions at all. You can enjoy your cryptocurrency profits without unnecessary challenges if you maintain compliance.