Author

Topic: The Polish government and MF has just destroyed the cryptocurrencies in Poland. (Read 529 times)

copper member
Activity: 46
Merit: 26
Well, things are escalating quickly.
Early this morning RMF24 (news portal made by one of the biggest radio stations in Poland) published an interview with Deputy Minister of Finance Paweł Cybulski.
Article title: Przełom w sprawie kryptowalut. Nie trzeba płacić podatku od czynności cywilnoprawnych, ale…
English version: A breakthrough in the cryptocurrencies case. You do not have to pay tax on civil law transactions, but...

Are words written down in the mentioned article proves that we've a breakthrough?
NO.

Deputy Minister of Finance said early today that
Quote from: Deputy Finance Minister Paweł Cybulski
The Canon of Convenience
In terms of PCC tax, the principle of taxation convenience is applicable. If we can settle out of tax, if it's real and possible, we should settle out. (...) PCC is being questioned at this moment because this tax does not have the principle of taxation convenience. It is difficult to tax three hundred, four hundred or one thousand transactions with one taxpayer and force him to submit PCC every time

The problem?
Who will determine how many transactions will be convenient for settlement and how many are not convenient to be settled out?
It means that if someone can pay PCC tax from cryptocurrencies, he should do it. If not, then the tax office promises a gentle approach Cheesy
What makes this words even funnier? Principle of taxation convenience made by Adam Smith is not defined in any Polish in any official document, statute, constitution, local laws - literally nowhere.

Imagine tax offices that treat tax inconvenience as the main reason for not paying the tax. For sure Grin

Paweł Cybulski later added that
Quote
I'm not saying not to settle PCC. I say to settle PCC when it is possible to settle. When it will be convenient. So if we made one transaction on cryptocurrencies, with one taxpayer. But I stress, I am talking about convenience.
Quote
For sure we will approach it more liberally than strictly.
Quote
For sure, we will not try to draw taxpayers money in a forceful way. For sure we will want to do it wisely.
Oh thank you!

Quote
Reason lies in the fact that we must understand the situation of the other side. We have to look at it humanly, not cold, stiffly, according to the current letter of the law. This letter of law at this point is completely different from reality, from the possibility of exercising this right.

Quote
We will only catch cases that indicate that the taxpayer could settle in a bright way, and he did not.
full member
Activity: 490
Merit: 107
This is the other way of telling investors to just go away with cryptocurrency.. Their doing big mistakes that this will discourage the enthusiast on trading crypto,, it’s a shame that this government is taking advantage of this technology and holding our neck while doing so.. They won’t banned cryptocurrency,, but in exchange we will taxed you higher that you won’t wanted to invest again..

It’s like giving you freedom with a chain in your arms.. Fü($ that corrupt officials..
I don't know what  is really our direction of patronizing bitcoin, it seems that we will  uses bitcoin to elude taxes which is for  me is unfair, if we do it this way it seems that we will put the government into bankruptcy, to whom are we seek asylum if somebody will  harm us its the government,  so It is just fair to pay taxes according  to law.
hero member
Activity: 1834
Merit: 759
It’s like giving you freedom with a chain in your arms.. Fü($ that corrupt officials..

Yeah, that much is pretty clear:

Quote
While Prime Minister Mateusz Morawiecki has called digital currencies “Ponzi schemes” in an effort to turn Poles away from such investments

The problem here is that existing traders will have no option but to pay taxes according to what they come up with. This is worse than a ban in my opinion, because it's also going to tax traders dry and blind apart from discouraging people from getting involved. It's basically robbery. Looks like the noise is working though:

Quote
The Finance Ministry said on its website on Monday that it’s working on a “more convenient” method of taxation for cryptocurrencies, while repeating that last week’s statement showed the binding interpretations of the current regulations.

So let's hope they rethink their position.
full member
Activity: 462
Merit: 102
This is the other way of telling investors to just go away with cryptocurrency.. Their doing big mistakes that this will discourage the enthusiast on trading crypto,, it’s a shame that this government is taking advantage of this technology and holding our neck while doing so.. They won’t banned cryptocurrency,, but in exchange we will taxed you higher that you won’t wanted to invest again..

It’s like giving you freedom with a chain in your arms.. Fü($ that corrupt officials..
newbie
Activity: 40
Merit: 0
I heard about this stiry with huge taxes and authorities, which don't understand what kind of disaster they did. Polish community is shoked, the whole world thinks that it was weird
copper member
Activity: 46
Merit: 26
Everything indicates that the protest movements (happening) planned to be held on Friday 20/04/2018 will be overshadowed by the new announcement from MF.


Quote
Within a few days, we will announce a mechanism of taxation of cryptocurrencies - Deputy Finance Minister Paweł Gruza announced on Tuesday at the RDC. (Polish Radio Station)

http://biznes.interia.pl/podatki/news/za-kilka-dni-komunikat-w-sprawie-mechanizmu-opodatkowania,2564670,4211 - article in Polish.
hero member
Activity: 2996
Merit: 609
Another shitty decision by another government . Honestly , I really don't know what is the percentage of people that are involved with crypto currencies exchange , investment and trade in Poland , but they are definitely going to get high losses if this continues . Isn't it better to put taxes rather than just simply banning it .
The biggest reason why I support imposing taxes on it is that this way both government and the people would be in an equilibrium  . But "destroying" it is just going to develop rage among people .
As we know on most government if a certain thing wont passed up into their own standards then they will certainly make decisions and most of the time those would be on final state, there might be some considerations but not all the times such banning would really even more contribute on the rage of crypto people.I do feel that they would either accept it to be regulated rather than to be on total prohibition.
legendary
Activity: 1666
Merit: 1196
STOP SNITCHIN'
There is need for more explanation on what is being put out here because there is absolutely no sense in it whatsoever. I cant imagine telling someone to pay tax based on turnover and not on profit which should be in any ideal country.

Unless this is not really about tax revenues. Maybe it's about deterring cryptocurrency-related activities entirely. By making it virtually impossible to comply, they are effectively banning the activity.

The Polish central bank (in cooperation with the state FSA) has admitted to funding multiple anti-cryptocurrency campaigns on social media to deter Poles from getting involved. I don't think it's a coincidence that Poland has now instituted the most oppressive cryptocurrency tax regime in the world. Undecided
hero member
Activity: 798
Merit: 503
There is need for more explanation on what is being put out here because there is absolutely no sense in it whatsoever. I cant imagine telling someone to pay tax based on turnover and not on profit which should be in any ideal country. I see a whole lot of litigations coming up because taxation should not be a way to punish people which this policy is trying to promote. Levy them on profit and not on their losses even in ideal economy, it should be on the net income they get from the exchange sites after deducting the charges they have paid.
sr. member
Activity: 348
Merit: 250
Another shitty decision by another government . Honestly , I really don't know what is the percentage of people that are involved with crypto currencies exchange , investment and trade in Poland , but they are definitely going to get high losses if this continues . Isn't it better to put taxes rather than just simply banning it .
The biggest reason why I support imposing taxes on it is that this way both government and the people would be in an equilibrium  . But "destroying" it is just going to develop rage among people .
hero member
Activity: 2184
Merit: 531
I am a bit on the fence on this one as by law, we are required to pay taxes to the government for income generated. I know that there are loads of under-the-radar and or street businesses which evade tax, even some big companies find a way to evade tax payments. That being said, if taxing the crypto world is going to be expensive, then we might experience an exodus from this industry, only those who can afford to stay will. So, I think the taxes if implemented worldwide should be very affordable.

Do you think that what is required by law is the ultimate truth? The law isn't always ethical or just and when it isn't we should question it and oppose it. We shouldn't accept it if we don't like it because the laws are made by people like us and people can be wrong. In this case they were wrong. I read that they misinterpreted the laws and people aren't required to pay 1% of every transaction.
sr. member
Activity: 602
Merit: 265
I am a bit on the fence on this one as by law, we are required to pay taxes to the government for income generated. I know that there are loads of under-the-radar and or street businesses which evade tax, even some big companies find a way to evade tax payments. That being said, if taxing the crypto world is going to be expensive, then we might experience an exodus from this industry, only those who can afford to stay will. So, I think the taxes if implemented worldwide should be very affordable.
copper member
Activity: 46
Merit: 26
Thanks for this longread, it was interesting
I think that Polish authorities are making a huge mistake and they will regret it

or they will cancel those inadequate taxation rules and simply ban crypto.
Every Polish citizen know that now, after all of this nonsense, everything is possible.
newbie
Activity: 35
Merit: 0
Thanks for this longread, it was interesting
I think that Polish authorities are making a huge mistake and they will regret it
full member
Activity: 868
Merit: 116
Well, the governments cannot control the financial transactions of cryptocurrencies, and  in their opinion the only solution is taxing , but the users of crypto do not want this huge exploitation ( because the value of taxes is large and unacceptable) so it is   become like FIAT.  Furthermore, I think that because of these bad  laws, many users will get out of the  cryptocurrency field ( business ) . And I think if that happened , the Polish government will change the laws to benefit users.

In addition to that, unfortunately, many governments attack digital currencies in many ways (Bad laws, banning,...) but I do not think they will continue with those behaviours, especially if the digital currencies continue to evolve, and their popularity of users increases, then I think they will recognize all of them and will even lower the tax rate.
copper member
Activity: 46
Merit: 26
There's however one exception. Transactions below 50 PLN are not a subject of taxation. As PCC is being rounded to wholes. All above 50 PLN however are taxable.

Can you point out where this exception is specified? Is there any mention of structuring regarding the 50 PLN threshold? That amounts to ~$15. Does that mean you can trade in high volume lots of that size without triggering liability?

It was found later and is not mentioned in article - https://twitter.com/krzysztof_piech/status/983388470705033217
Wait what? You still have to pay taxes even if you didn't profit? Isn't that the point of taxation? I still find that hard to believe, but as I don't know Polish, I'll take your word for it. I'm glad I don't live in Poland.

I've always considered taxation to be fair if crypto played by the same rules as everything else (except some minor differences in filing), but specific rules for crypto is just bad news. If this were truly the case, then people were right in saying that they might as well have banned it.

Yup, that's the funniest and scariest thing of PCC tax.
Btw, there is no intention from my and others side to distribute false information.
This article was originally published on biggest Polish bitcoin website - bitcoin.pl, I've only translated it.

---

I'm going to post this image once again Grin https://i.imgur.com/PkbC6PE.png
the tax obligation ends on April 30. This message was published on 9th of April. Comedy.
newbie
Activity: 36
Merit: 0
It was such a stupid idea, I have absolutely no words to say. Just disappointment and anger
legendary
Activity: 2478
Merit: 1360
Don't let others control your BTC -> self custody
There's however one exception. Transactions below 50 PLN are not a subject of taxation. As PCC is being rounded to wholes. All above 50 PLN however are taxable.

Can you point out where this exception is specified? Is there any mention of structuring regarding the 50 PLN threshold? That amounts to ~$15. Does that mean you can trade in high volume lots of that size without triggering liability?

Yes. The requirement is that the subtracted amount has to be 1% of the transaction, but cannot go below 0.5 PLN. This means that 49 PLN generate tax of 0.49 PLN and as a result no tax can be imposed. It's not the only country that requires people to pay 1% of property sales, like cars and real estate, but nobody has ever tried to extend it to sock or currency trading. It's not only impossible to file, but also impossible to confirm since they want it all on paper. Traders could make a program that will fill the forms and print them automatically, but I'd like to see those poor office clerks struggle with thousands of copies every day.
And what about the environment? How many trees will have to be cut down every year so that the taxpayers can fill out some stupid tax forms?

in both cases it is necessary to submit a transaction letter in a special form to the local TAX office within 14 days from its occurance.

Depressing. This goes far beyond any personal income tax requirements I've ever seen. It seems like the government wants to deter traders outright, rather than collect taxes.

Short-sightedness will ultimately kill them. When the government imposes laws that are impossible to obey it always loses the fight.
hero member
Activity: 1834
Merit: 759
Unfortunately, the original article (written in Polish) was checked by some tax lawyers and according to MF statement... it's all impossible to believe but true.
There's however one exception. Transactions below 50 PLN are not a subject of taxation. As PCC is being rounded to wholes. All above 50 PLN however are taxable.
in both cases it is necessary to submit a transaction letter in a special form to the local TAX office within 14 days from its occurance.

darkangel11, people seems to be accustomed to milking.

Wait what? You still have to pay taxes even if you didn't profit? Isn't that the point of taxation? I still find that hard to believe, but as I don't know Polish, I'll take your word for it. I'm glad I don't live in Poland.

I've always considered taxation to be fair if crypto played by the same rules as everything else (except some minor differences in filing), but specific rules for crypto is just bad news. If this were truly the case, then people were right in saying that they might as well have banned it.
legendary
Activity: 1666
Merit: 1196
STOP SNITCHIN'
There's however one exception. Transactions below 50 PLN are not a subject of taxation. As PCC is being rounded to wholes. All above 50 PLN however are taxable.

Can you point out where this exception is specified? Is there any mention of structuring regarding the 50 PLN threshold? That amounts to ~$15. Does that mean you can trade in high volume lots of that size without triggering liability?

in both cases it is necessary to submit a transaction letter in a special form to the local TAX office within 14 days from its occurance.

Depressing. This goes far beyond any personal income tax requirements I've ever seen. It seems like the government wants to deter traders outright, rather than collect taxes.
copper member
Activity: 46
Merit: 26
Quote
While the first point is beyond any doubt, the second one is quite controversial. Exchanging for example Bitcoin to Litecoin generates income and therefore tax. Such statements began to appear in individual tax interpretations reported to local tax offices. People who have been trading cryptocurrencies for years have probably not been aware of this fact.

This is the case with the US and Australia as well, among other countries, if I'm not mistaken. Basically, if you make a trade where you profited (fiat or otherwise), you pay taxes.

Quote
It is extremely important to determine the moment of obtaining the income. According to Ministry of Finance, it arises when the taxpayer receives or has available to his own disposal the money or the other cryptocurrency. So, if during the whole year you’ve been trading cryptocurrencies but haven’t withdrawn money from crypto-exchange you should pay tax anyway. The moment of tax obligation takes place not when you’re transferring money from the exchange to a bank account but the time of the transaction. Unfortunately, many people were not aware of it either.

I could be wrong, but you only have to pay on profits you've actually made. Let's say you bought 1 BTC for $10, then you held it until it reached $100 in value. If you never actually traded your Bitcoin for anything, you don't pay anything. If, however, you used your Bitcoin ($100 in value) to buy Litecoins, you have to pay income taxes for $90 because that's how much you've profited from your 1 BTC.

Quote
For example. If entrepreneur in course of his business was trading with an amount of 10 000 PLN and made daily 10 buys and 10 sells for 10 000 PLN - 300 transactions monthly - and was not gaining any single penny from this trades, he is anyway obliged to pay approx. 500 000 PLN of tax because from 3 milllion PLN income (in terms of month) he is unable to deduct 3 million PLN costs. It’s worth to add that daytraders or transaction bots are already doing tens or hundreds of transactions each day. If they are doing it in course of their businesses then due taxes can be counted in millions of PLNs.

Are you sure about this? This is completely unreasonable if true. I highlighted the word income because that's all you have to pay for. If you break even with your trades, you can't earn income. I could be mistaken, but I'd say the 3 million is gross sales rather than income. Something is amiss here.

I'm only basing this on my (limited) knowledge of US crypto tax laws though, so I might be completely mistaken. They seem similar to me in first glance. The filing could very well be different though. This post is not meant as legal advice.

Unfortunately, the original article (written in Polish) was checked by some tax lawyers and according to MF statement... it's all impossible to believe but true.
There's however one exception. Transactions below 50 PLN are not a subject of taxation. As PCC is being rounded to wholes. All above 50 PLN however are taxable.
in both cases it is necessary to submit a transaction letter in a special form to the local TAX office within 14 days from its occurance.

darkangel11, people seems to be accustomed to milking.
legendary
Activity: 2478
Merit: 1360
Don't let others control your BTC -> self custody
They are greedy that's for sure, but they are also stupid to try it. I can't believe they expect people to come out and tell them how many altcoins they traded in the previous years. How are they going to track the sale of altcoins and how are they going to charge people? Those are thousands of transactions per day and most of them don't generate much income fiat wise. Some traders choose to trade altcoins to allocate funds while the coin they held previously is losing value, and the greedy government wants them to pay for this regardless of whether they made money or not?
What will happen?
Probably nobody will report their crypto sales and no sane person will fill out thousands of tax forms because some clerk thought it's going to be easy to treat cryptos like cars or houses Cheesy

Btw. taxes in Poland are extremely high.
32% tax for less than 20k € a year? That's a robbery even without this PCC and VAT. Why aren't you guys protesting?
hero member
Activity: 1834
Merit: 759
Quote
While the first point is beyond any doubt, the second one is quite controversial. Exchanging for example Bitcoin to Litecoin generates income and therefore tax. Such statements began to appear in individual tax interpretations reported to local tax offices. People who have been trading cryptocurrencies for years have probably not been aware of this fact.

This is the case with the US and Australia as well, among other countries, if I'm not mistaken. Basically, if you make a trade where you profited (fiat or otherwise), you pay taxes.

Quote
It is extremely important to determine the moment of obtaining the income. According to Ministry of Finance, it arises when the taxpayer receives or has available to his own disposal the money or the other cryptocurrency. So, if during the whole year you’ve been trading cryptocurrencies but haven’t withdrawn money from crypto-exchange you should pay tax anyway. The moment of tax obligation takes place not when you’re transferring money from the exchange to a bank account but the time of the transaction. Unfortunately, many people were not aware of it either.

I could be wrong, but you only have to pay on profits you've actually made. Let's say you bought 1 BTC for $10, then you held it until it reached $100 in value. If you never actually traded your Bitcoin for anything, you don't pay anything. If, however, you used your Bitcoin ($100 in value) to buy Litecoins, you have to pay income taxes for $90 because that's how much you've profited from your 1 BTC.

Quote
For example. If entrepreneur in course of his business was trading with an amount of 10 000 PLN and made daily 10 buys and 10 sells for 10 000 PLN - 300 transactions monthly - and was not gaining any single penny from this trades, he is anyway obliged to pay approx. 500 000 PLN of tax because from 3 milllion PLN income (in terms of month) he is unable to deduct 3 million PLN costs. It’s worth to add that daytraders or transaction bots are already doing tens or hundreds of transactions each day. If they are doing it in course of their businesses then due taxes can be counted in millions of PLNs.

Are you sure about this? This is completely unreasonable if true. I highlighted the word income because that's all you have to pay for. If you break even with your trades, you can't earn income. I could be mistaken, but I'd say the 3 million is gross sales rather than income. Something is amiss here.

I'm only basing this on my (limited) knowledge of US crypto tax laws though, so I might be completely mistaken. They seem similar to me in first glance. The filing could very well be different though. This post is not meant as legal advice.
member
Activity: 686
Merit: 15
This is really worrisome considering the repressive tax implementation by this government, the big banks might just be behind the scene ill advising the government. I think the people will have to move fast to stopping this, by getting attorneys who are expert in tax law. I pray they win.
member
Activity: 365
Merit: 10
Banning or destroyed crypto currency by polish government is one of those things crypto must face and overcome to prove to the whole world that it has come to stay for ever. Some other country like china and so on made the same statement but crypto currency continue to grow from country to countries. The issues surrounding the market price is temporary.
copper member
Activity: 46
Merit: 26
the tax obligation ends on April 30. We have April 10.
Here's another message from our beloved Ministry of Finance.



member
Activity: 122
Merit: 10
he will regret it.

It also depends on the development and adoption.

China has banned crypto trading and opened again.

I dont see why this is not going to happen in Poland
legendary
Activity: 2100
Merit: 1167
MY RED TRUST LEFT BY SCUMBAGS - READ MY SIG
newbie
Activity: 85
Merit: 0
Governs like that just want to leech their people... why tax incomes? Im not just talking of cyptos.
States do really do good thing enough with our money to allow this taxes?
They are becoming an obstacle to development of the  connected economy around the entire world.
member
Activity: 196
Merit: 17
EFFECT.AI▲Decentralized network for A.I
More than 100% tax is not tax, it's extortion! I suggest you Polish crypto people join together to fight the politicians. After all they're just people too. People who can be wrong about things, but also people who can be influenced by lobbying. In the worst case, they are people who can be stripped of their power.
newbie
Activity: 185
Merit: 0
It's definitely not the thing that millions would like to hear.
copper member
Activity: 46
Merit: 26
Slightly confused here. So it is 1% tax per transaction irrespective of the result of the trade? It is going to be disastrous for the day traders, but at the same time the impact will be more limited as far as the medium-term and long term investors are concerned.

yup.
No matter if it was profitable or not for you. It makes sense don't ya' think?  Roll Eyes Grin

Right now we can unfortunately say that Poland joined countries like Afghanistan, Algieria, Bangladesh, Bolivia, Ecuador, Morocco, Qatar, Macedonia and Vanuatu.
What links these countries? Crypto is illegal in those countries. A country in the in the middle of Europe.

OK, it's not illegal in Poland. It's plain dead and users using them and making profits on it hanged on their own genitals.

IT MAKES SENSE that every highly developed country is using it (at some point) and made it easily accessible and taxable for their own citizens and Poland's actually banning it. IT DOES MAKE SENSE... yeah..
legendary
Activity: 3346
Merit: 1352
Leading Crypto Sports Betting & Casino Platform
Slightly confused here. So it is 1% tax per transaction irrespective of the result of the trade? It is going to be disastrous for the day traders, but at the same time the impact will be more limited as far as the medium-term and long term investors are concerned.
legendary
Activity: 1666
Merit: 1196
STOP SNITCHIN'
Taxes like this definetely kill the opportunity to work in this sphere, it's gloomy
sad sign, to be honest

fortunately there's still hope in citizens and the hope is still burning that something can be changed.
It would be definitely better looking if they would simply ban cryptocurrencies like it's already done in Bolivia, Equador, Kambodia, Nepal or Kirgistan.
They instead have chosen intimidation and turning off the tax law so no one is able to properly settle his taxes.

Completely agreed. In the case of outright bans, I'd expect that enforcement would be lax, as there is likely no dedicated authorities or task forces devoted to it. Usually the ban itself is the only deterrent.

In this case, they're making it so your tax liability can be greater than your net income, and then sicking the tax authorities on citizens. That's really scary. People will be ruined over this if nothing changes. And there are very few agencies that can instill fear and terror like tax agencies...
copper member
Activity: 46
Merit: 26
Taxes like this definetely kill the opportunity to work in this sphere, it's gloomy
sad sign, to be honest

fortunately there's still hope in citizens and the hope is still burning that something can be changed.
It would be definitely better looking if they would simply ban cryptocurrencies like it's already done in Bolivia, Equador, Kambodia, Nepal or Kirgistan.
They instead have chosen intimidation and turning off the tax law so no one is able to properly settle his taxes.
newbie
Activity: 37
Merit: 0
Taxes like this definetely kill the opportunity to work in this sphere, it's gloomy
sad sign, to be honest
legendary
Activity: 1358
Merit: 1565
The first decentralized crypto betting platform
I think all governments are planning to do this. In order to fully study the mechanism of using cryptocurrencies and then tax all users as much as possible. That is why we cannot allow the legalization of cryptocurrency. An urgent need to develop a road map for the establishment of the terms of use of crypto-currencies without exchange for Fiat.

All governments are not so idiots as to kill the business. They prefer to get money from taxes. But with those laws people just leave the business.
You think very well about your politicians. Some politicians are even willing to organize mass killings of their citizens in order to use it for their own purposes. They are not interested in the income from taxes on users of cryptocurrencies. They are afraid to lose control over the citizens and it is much more terrible for them.

No, I don't. In my country there are quite a few potician idiots. I said all goverments are not idiots. For example governments from Germany or Japan have passed legislations more favorable to crypto users.
full member
Activity: 392
Merit: 137
I think all governments are planning to do this. In order to fully study the mechanism of using cryptocurrencies and then tax all users as much as possible. That is why we cannot allow the legalization of cryptocurrency. An urgent need to develop a road map for the establishment of the terms of use of crypto-currencies without exchange for Fiat.

All governments are not so idiots as to kill the business. They prefer to get money from taxes. But with those laws people just leave the business.
You think very well about your politicians. Some politicians are even willing to organize mass killings of their citizens in order to use it for their own purposes. They are not interested in the income from taxes on users of cryptocurrencies. They are afraid to lose control over the citizens and it is much more terrible for them.
legendary
Activity: 1358
Merit: 1565
The first decentralized crypto betting platform
I think all governments are planning to do this. In order to fully study the mechanism of using cryptocurrencies and then tax all users as much as possible. That is why we cannot allow the legalization of cryptocurrency. An urgent need to develop a road map for the establishment of the terms of use of crypto-currencies without exchange for Fiat.

All governments are not so idiots as to kill the business. They prefer to get money from taxes. But with those laws people just leave the business.
sr. member
Activity: 434
Merit: 252
I think all governments are planning to do this. In order to fully study the mechanism of using cryptocurrencies and then tax all users as much as possible. That is why we cannot allow the legalization of cryptocurrency. An urgent need to develop a road map for the establishment of the terms of use of crypto-currencies without exchange for Fiat.
legendary
Activity: 1358
Merit: 1565
The first decentralized crypto betting platform

Some idiots made a similar law on gambling profits when online gambling was regulated in my country until someone put some sense on it and amended the law, but according to the original law the State could charge you much more taxes than your net profts.

There was half a year when the original law was implemented until the amend, and Tax Revenue office is asking for insane amounts for that period, even for people who lost money:

https://www.highstakesdb.com/8614-spanish-chess-master-in-shock-after-receiving-500k-poker-tax-bill.aspx

This guy actually lost money while playing poker and he has received a 500.000 € bill.

I hope your Polish law is amended in the future but until then, I advise all Polish people to stay away from crypto, especially if they use exchanges.
copper member
Activity: 46
Merit: 26

Article was originally published in Polish at Bitcoin.pl | Ministerstwo Finansów zadaje cios użytkownikom kryptowalut. Podatek PCC od transakcji na giełdach, trudności z wykazaniem kosztów w DG. It was translated to English by becometa with a permission from original article author Bitmar. Translated version is also available here.
Article review and language tweaks were made by Grzegorz G. (Greg)

This post is also available on Steemit.

Message to all Polish business owners:
Jeżeli macie działalność gospodarczą związaną z kryptowalutami/blockchainem zajrzyjcie tutaj: Izba Gospodarcza Blockchain/Kryptowalut - lista 100 przedsiębiorstw - zgłoszenia:
Udział w przedsięwzięciu zadeklarowali m.in: Anna Streżyńska (była Minister Cyfryzacji) ze swoim MC2 Solutions, prof. Krzysztof Piech, Bitcoin.pl, Bithub.pl, FlyingAtom.com, ZET-Tech.eu, InPay.pl i inni!




Polish Ministry of Finance deals a powerful blow to cryptocurrency users. PCC (1%) - tax on civil law transactions made on crypto exchanges, difficulties with proving costs in business economic activity (called Działalność Gospodarcza – DG).
 
On 04/04/2018 the Ministry of Finance published guidelines on how to settle taxes for cryptocurrencies. Those rules, guidelines are definitely not good for people turning cryptocurrencies equities on crypto exchanges.

Since the beginning 2018, cryptocurrency companies in Poland found their bank accounts agreements being terminated. Some crypto exchanges have been added to the KNF black list – famous list of public warnings which consist of entities suspected of committing a crime. A media campaign against cryptocurrencies including paid YouTubers has also begun. One week ago, the National Tax Administration (called Krajowa Administracja Skarbowa) demanded crypto exchanges and cantors to send detailed data about their clients trading cryptocurrencies. Unfortunately, it turns out that this is not the end of repression of the cryptocurrency industry in Poland.

New statement from the Ministry of Finance begins with the sentences:

"In an annual PIT (called Tax Returns in UK, Form 1040 in USA), one should also mention revenues from sales or exchange of cryptocurrencies such as bitcoin, litecoin or ether.
We need to indicate effects of turning the cryptocurrencies in income tax from individuals, from goods and services and also from civil law transactions.
The Act on Personal Income Tax says that income obtained on this type of economic action is a subject to taxation on general terms.”


To this very point everything is clear and obvious. We’re gaining/getting revenue from turning the cryptocurrency so we pay the tax. This is not a surprise.

Revenue sources
"Revenues from cryptorcurrency turnover may be qualified to the source of revenue from:
  • property rights
  • non-agricultural business, if the cryptocurrency is traded as part of an activity that meets certain conditions: it has a commercial character, it is carried out on by its own behalf by the taxpayer, in an organized and continuous manner (and there are no premises indicated in Article 5b paragraph 1 of the PIT Act).”
This is the key issue of the problem in Poland. The Ministry of Finance recognise Bitcoin and cryptocurrencies as property rights if they’re being traded by natural individuals, not businesses. The Ministry of Finance adopted the same assumption in 2013.

If we do it on a continuous and organised basis and it is a commercial one, we’re obliged to set up a business (mentioned earlier as ‘Działalność Gospodarcza’), rather than trading as an individual.

Income
"Cryptocurrency turnover generates income in case:
- sales of cryptocurrency (exchanging it for a traditional fiat currency, for example: złotówki (PLN), euro (EUR), US Dollar (USD)
- exchange of one cryptocurrency into another cryptocurrency, exchange for a goods or services. Exchanging cryptocurrency should be treated as form of it’s paid sale, analogically as exchanging any other property rights, like for example claims."

 
While the first point is beyond any doubt, the second one is quite controversial. Exchanging for example Bitcoin to Litecoin generates income and therefore tax. Such statements began to appear in individual tax interpretations reported to local tax offices. People who have been trading cryptocurrencies for years have probably not been aware of this fact.
 
„Income made from paid sale of cryptocurrency through sale or exchange agreement – is being qualified to the incomes made from property rights, which is being referred in art. 18 of the PIT Act – arises at the moment of receiving or placing at the disposal of the taxpayer money (traditional currency), another cryptocurrency, goods or services."
 
It is extremely important to determine the moment of obtaining the income. According to Ministry of Finance, it arises when the taxpayer receives or has available to his own disposal the money or the other cryptocurrency. So, if during the whole year you’ve been trading cryptocurrencies but haven’t withdrawn money from crypto-exchange you should pay tax anyway. The moment of tax obligation takes place not when you’re transferring money from the exchange to a bank account but the time of the transaction. Unfortunately, many people were not aware of it either.
 
In case of running a business (DG):
“an income made from business operations are all due amounts, even if they have not actually been received. At the same time, date of income arise is being defined at the day of property rights disposal - so the day when cryptocurrency was sold or exchanged - no later than the date of invoice or payment.”
 


The cost of obtaining the revenues – entrepreneurs’ Armageddon
At the same time, it should be emphasized that in the case of cryptocurrency trading as a part of business operations, the tax accounting and recording for the incurred revenues and costs depend on the type of tax books kept and managed by the taxpayer (tax book of revenues and expenditures or accounting books).
It’s worth to note that the tax book of revenues and expenditures is a simplified and formalized form of recording economic events, which is why the taxpayer:
 
can make entries basing on a strictly defined documents such as for example. Invoices or bills. Because of this, documents in a form like for example. cryptocurrency exchange transaction list statement or bank statements with transaction history are not valid accounting documents. What is more is that within the meaning of the regulations, income and tax deductible costs documented only in this way can not be recorded in the tax book of revenues and expenses.”

 
According to the MF information(statement), if cryptocurrency trades was being done as a part of business with tax book of revenues and expenses (KPiR - Księga Przychodów i Rozchodów) [probably the majority of small businesses), the entrepreneur is not going to have the opportunity to deduct buying costs, because he is unable to document them in the form of bank transfers or an direct extract of transactions from the exchange.
 
The inability to record any revenue or expenditure in the tax revenue and expense ledger - because the taxpayer does not have the form required to document it - does not automatically mean that it can not be recognized as income and tax deductible under the PIT. Therefore, if the taxpayer otherwise documents reliably the occurrence of tax revenue or the tax expense, he should take this into account during the tax year in the current tax advance as well as in the annual income tax settlement."
 
Here comes the paradox, because if bank transactions statements and exchange transaction lists cannot become the main basis for deducting costs. There is no other reliable way to document costs, because stock exchanges do not give other options.
 
What does this mean practically if one might consider the position/statement of the Ministry of Finance?
For example. If entrepreneur in course of his business was trading with an amount of 10 000 PLN and made daily 10 buys and 10 sells for 10 000 PLN - 300 transactions monthly - and was not gaining any single penny from this trades, he is anyway obliged to pay approx. 500 000 PLN of tax because from 3 milllion PLN income (in terms of month) he is unable to deduct 3 million PLN costs. It’s worth to add that daytraders or transaction bots are already doing tens or hundreds of transactions each day. If they are doing it in course of their businesses then due taxes can be counted in millions of PLNs.
 
Thankfully natural persons are having easier situation and to properly record and document the costs of income, simply extract of transactions from crypto exchange is sufficient. Unfortunately, it is only easier and lighter in this respect, because by the purchase of cryptocurrencies in most cases they will have to pay PCC tax anyway.
    
The tax on civil law transactions (PCC tax) – Natural persons Armageddon=
"Contract for the sale and conversion of cryptocurrencies, which is a property right, is subject to tax on civil law transactions (PCC). In the case of a sales contract, the obligation to pay this tax - in the amount of 1% of the market value of the acquired property right sold to the cryptocurrency - concerns the one side of transaction: buyer. In the exchange agreement(contract), the obligation to pay tax - in the amount of 1% of the market value of property law, from which a higher tax applies - concerns jointly the both parties of the transaction.
 
Actions excluded from PCC taxation are contract for the sale or exchange of cryptocurrencies subject to VAT - so far as this actions are subject to VAT, or if at least one of the parties to the transaction is exempt from VAT for performing such activity."


What does it practically mean? In terms of natural person, by buying cryptocurrencies comes PCC tax payment obligation unless we buy from a company that is a VAT payer or VAT exempt. But how can we determine it?
By buying cryptocurrencies on the crypto exchange we’re unfortunately unable to determine whether we’re buying from or selling to natural person or a company because our contractors are totally anonymous and invisible for us during the trading process. It all does lead to a question whether such explanation of our behaviour would be enough to not pay the tax and penalty for not meeting the tax obligation. If a situation where polish crypto exchanges might give transaction history of its users to the National Tax Administration (KAS - Krajowa Administracja Skarbowa) happen, KAS is going to know exactly who bought from who and when they should (but didn’t) pay PCC Tax. But users, tax payers wouldn’t know it....
 
The question remains whether such a translation is enough to not pay tax and penalties for non-compliance with the tax obligation.
PCC tax example clearly shows that treating cryptocurrencies as a as property rights is very it is very unfair and that the law does not keep being up-to-date with the realities of new technologies.  
 
For example, if someone does make several dozen or even several hundred transactions per month while every transaction on the exchange can consist of a couple of more smaller ones (selling 1BTC on exchange actually we can sell it to 10 person for 0.1 BTC each), it all can lead to a situation where we’re going to be obliged to fill many kilograms of PCC-3 forms. It's scary to think what to do if someone has a transaction bot running in the background. Tax Offices may be flooded with tons of "waste paper". Similarly, PCC tax amounts may exceed our income from the transaction.
 

All this also leads to a question whether we are also obliged to pay PCC tax when buying cryptocurrencies on the foreign exchange. As one interpretation says:
 
the contract of sale of property rights carried out abroad when the activity is performed is subject to tax on civil law transactions, if all this conditions are met: the buyer is a resident or registered party in the territory of the Republic of Poland and the civil-law act was carried out on the territory of the Republic of Poland.
 
If the property law is being acquired through online portals (Cryptocurrency exchanges) the location of the activity is determined by the article 70 § 2 Act of 23 April 1964 r. – Journal of Laws (Code of Civil Rights) (logbook 2017, pos. 459, with changes), according to which if the offer is being submitted electronically, the contract is considered to be concluded in the place of residence or at the current seat of the offeror at the time of conclusion of the contract.
 
As we can see, it’s not important whether we’re trading on local or foreign crypto exchange. In both cases we’re theoretically obliged to pay PCC tax anyway.
 
Trading one cryptocurrency into another is a very similiar case. One thing to note is when such event occurs, both transaction parties (buyer and seller) are obliged to pay 1% PCC tax from cryptocurrency value.
 
It is worth to note that MF statement or rather informational leaflet does not declares any laws and nothing has changed prior and before it’s publication. Therefore, it can not be said that we will not pay tax, because the law is not retroactive. The law on property rights has existed for many years before cryptocurrencies, but its clash with cryptocurrencies makes it difficult to interpret it, leaving many ambiguities and absurdities.
 
The next part of absurd – pay tax on your forked coins
In one of the individual tax interpretation we can find a statement that:
Income on the Applicant part will arise not only when the cryptocurrencies are sold or exchanged into traditional currency, but also when there is a change of one cryptocurrency to another cryptocurrency, or when it comes to branching (so-called hard-fork).
 
The interpretation also exposes the fact that the income will also be created when fork action happens on the cryptocurrency we’re holding. The problem is that there are lots of forks being created right now and we do not have to be aware of any of them or even interested in them. While in the case of sale or exchange of cryptocurrencies it is our conscious decision, then when fork happens we do not have influence on it. It’s also impossible to measure forked coins value in a moment when fork is happening.
 
Cryptocurrencies should become regulated as it already is in lots of countries across the globe. Definitely, they should not be treated as a property right. Treating them as such is highly harmful and even dangerous for citizens who use them. Unfortunately, we haven’t seen tries from the government to simplify tax settlements. Even the people issuing the interpretations are completely unaware of the specifics of the trading rules on cryptocurrency exchange and the general realities of the cryptocurrencies world.
 
At this stage overall cryptocurrencies situation in Poland looks very bad, but the case is being analyzed by lawyers and tax experts. Perhaps within the time, there will be a ground for questioning certain statements, issues and interpretations of the Ministry and tax offices. It may also be that MF might understand the nonsense and absurd of treating the cryptocurrencies as property law and will issue more lenient guidelines.



This text is not, by means, a professional elaboration of legal situation. That kind of work might need more time to examine the legal aspects in detail.

More sources related to this story:
https://kryptowaluty.org.pl/aktualnosci-w-trakcie-tworzenia/efekty-prac-zespolu-ds-kryptowalut-problemy-komunikacyjne-i-blokady/
https://bithub.pl/prawo-i-polityka/niebezpieczny-precedens/
https://businessinsider.com.pl/finanse/kryptowaluty/podatek-od-kryptowalut-jak-sie-rozliczyc-stanowisko-mf-i-traderow/0hn6mq8
https://www.wykop.pl/link/4251213/zbigniew-ziobro-zajal-1-3-mld-zl-jednej-z-najwiekszych-gield-kryptowalut/
https://www.reddit.com/r/btc/comments/8advis/guys_polish_government_has_just_destroyed_all/?st=jfojy7ej&sh=dbfbfdeb
https://thebitcoin.pub/t/poland-wants-to-tax-you-on-trading-even-if-its-not-profitable/37179
https://www.wykop.pl/link/4250915/polski-rzad-wlasnie-zniszczyl-najszybciej-rozwijajaca-sie-branze-na-swiecie/
https://www.spidersweb.pl/2018/04/zbigniew-ziobro-bitfinex-prokuratura.html
Jump to: