The Polish Ministry of Finance recently released a 2019 tax form that comes with a section for cryptocurrencies. The tax form will allow users to declare their proceeds from crypto trading separately from the rest of their economic, income-generating activities.
A progressive approach from the government
The PIT-38 or personal income tax form was released by the Ministerstwo Finansow which helps in simplifying tax filing duties of Polish citizens. All private individuals who have traded in digital currencies could use this form to declare their crypto trading proceeds. According to the finance ministry, the form will help make crypto taxation and an easier and more transparent step for the authorities.
The form comes with a dedicated section allowing residents to provide details about their cost of acquiring digital currencies and tokens and the proceeds of the sale of such coins. Cost of investment is allowed to be deducted for consecutive years. This kind of deduction is not available for other income sources, like the sale of equities. Cryptocurrency exchanges should provide the necessary financial statement to the users, which could help them report their trading activities accurately.
Poland’s effort to tax cryptocurrencies
Since last year, the Polish government has been looking at ways to tax digital currencies in the country. According to a new framework, any profits made from selling digital currencies should be treated as income from cash capital. In the case of private trade, the profit will be treated as income from property rights. In this case, it will attract a tax of anywhere between 18% to 32%. In the case of business activity, the income will be taxed at 19% flat.
All revenues from trading by corporates will be categorized as capital gains and taxed at flat 19%. However, smaller firms receive a smaller tax rate of 15%. Only companies that have revenues lower than €1.2 million and startup companies started in 2019 will have the freedom to pay a 9% income tax. The authorities are also planning to increase the small taxpayer threshold to €2 starting next year.
The new tax reporting rules will have no effect on crypto trading exchanges or any other crypto service providers in the country. However, these entities may have to buckle up and provide better reporting services to their users to help them calculate taxes. With the new tax form, Poland has paved the way for the most supportive and progressive crypto regimes in Europe.