Bitcoin – the world’s most popular cryptocurrency – is reaching all-time highs again. In the first half of November 2024, after several weeks of fairly stable growth, BTC is worth almost $90 thousand. This is a situation that attracts the attention of investors, but it is worth remembering that cryptocurrency trading is associated with certain specific requirements.
Cryptocurrencies in law
The specific nature of cryptocurrencies, and in particular the lack of a central issuer, comes with some complications in terms of their legal status and tax regulations. For a relatively long time after the appearance of Bitcoin and other similar solutions, cryptocurrencies basically did not exist in Polish law, but this changed in 2018. Initially, they were classified as property rights – therefore, trading in crypto was associated with the need to pay tax on civil law transactions. In mid-2018, however, the so-called AML Act came into force, which finally recognized profits from cryptocurrency trading as capital gains. Currently, they are treated on similar terms to other financial instruments, such as company shares or foreign currencies. It should be remembered that the tax obligation applies to everyone in this case, regardless of the scale of the transaction – the tax-free amount does not apply to capital gains.
Tax on crypto profits
Profits from cryptocurrencies in Poland are subject to taxation on the same terms as for other capital gains. Therefore, investors must pay the so-called Belka tax, i.e. 19% of the entire profit achieved in a given tax year. If the combined value of the purchase and sale transactions shows a loss for the investor, the tax is in effect zero. However, it should be borne in mind that even in this situation, it is necessary to accurately calculate the turnover on the tax office returns. Importantly, cryptocurrencies and other investments are treated separately from other sources of income. This means that profits from trading cryptocurrencies do not affect the tax threshold for other sources. There is also no Belka’s tax-free amount – the value of 19% applies even in the case of transactions worth several zlotys.
How to account for profits from cryptocurrencies?
Accounting for profits from trading in cryptocurrencies is done through an annual tax return, which we also file in the case of other capital gains. This document is intended to show revenues from the sale of m.in shares, shares, and for several years also cryptocurrencies. It should be remembered that it is not required to pay tax advances during the year – it is enough to pay it once, after submitting the annual tax return. It is also a good idea to keep any evidence of the purchase and sale of cryptocurrencies, including confirmations of transactions on exchanges and transaction history, as this type of information may be needed to correctly settle accounts with the tax office. Polish tax law also allows investors to deduct losses from cryptocurrencies to reduce the tax base in the event of further gains, but this only applies to profits from the same source. Deduction of losses can be spread over five consecutive tax years.