Cryptocurrencies are taxed differently under Polish law, based on the specific circumstances. This article covers how to successfully fill the PIT-38 in different events.
When trading one cryptocurrency for another, is one required to pay tax? It is important to note that these types of transactions are not subject to taxation, but even if there is no requirement to pay tax, there is still a need to record earnings and expenses associated with trading one cryptocurrency for another. More information on recording earnings within PIT are mentioned here: How to account cryptocurrency transactions in your PIT.
Listed below are some examples of how each type of exchange works and how it should be recorded:
CRYPTO → CRYPTO
Let us assume a trader purchases 1000 ETH, exchanges 100 ETH for 10 BTC, and then holds both. They do not pay tax on trading one cryptocurrency for another, regardless of the amount.
CRYPTO → CRYPTO → FIAT
For example one buys 100 ETH for 700 PLN, trades the ETH for 10 BTC, and then converts BTC for 10 000 PLN. In such a case, the trader pays tax on the 10 000 PLN (gains) minus 700 PLN (costs) so 19% tax on 9 300 PLN.
Can they count the 100 ETH to 10 BTC exchange as expenses? Under Polish regulations as of 2019, that is not required. The only taxable amount is the profit that is converted to FIAT currency.
More information on how to account for gains and losses will be covered in the up coming article.