Cryptocurrencies are a tool with a high degree of dynamization, which is also recognized by an increasing number of countries. This attitude manifests itself both in the context of recognizing the legality of digital currencies and supporting their development. It is worth bearing in mind that the technology used to create crypto allows at the same time to design smart contracts (automatically fulfilling legal relationships). At the same time, concerns regarding tax regulations in this particular case are among the most frequently mentioned by Polish entrepreneurs.
Given the current legal status and tax context, cryptocurrencies (with some exceptions) can be viewed as traditional currencies. So how should the settlement of cryptocurrencies look like while fully respecting the tax law?
Until the end of 2015, there was no formal ban on the use of cryptocurrencies, regardless of the state. At the same time, even Chinese entrepreneurs using Bitcoin struggled with restrictions in the form of recommendations that came directly from entities related to monetary policy. In turn, in Russia, until recently, it was planned to introduce sanctions resulting from the use of cryptocurrencies.
The situation becomes more complicated in the case of the United States. There, due to the specific legal system, there is a wide variety of views on both cryptocurrencies and blockchain technology. At the moment, the most important crypto regulation in force in the state of New York is “BitLicense“. It ranks entities that need a dedicated consent to operate. The license assumes the fulfillment of certain obligations, including adapting the regulations on counteracting money laundering.
The issue of complicated or too demanding banking and financial regulations has led to the concept of sandbox regulators. It consists in legal protection of young companies implementing modernization on the financial market. These are burdened with a high risk of failure, but at the same time are characterized by a high economic potential. For the first time, cryptocurrency regulators have been implemented in the UK.
Japan was one of the countries that had direct contact with bitcoin’s legal problems. In 2014, one of the largest cryptocurrency exchanges in the world, i.e. MtGox, was closed. This decision led to the initiation of many legal changes in Japan regarding cryptocurrency platforms. Contributed to the current situation on the Japanese market: bitcoin is considered a fully legal tender, which allows for easier settlement of cryptocurrencies.
There are also places that allow you to settle your tax obligations with the use of cryptocurrencies. We are talking here about the town of Zug in Switzerland, also known as the “Krypto Valley”. For this reason, many Swiss and foreign companies have relocated their activities there. So how do you buy bitcoin?
When referring to Polish law, it should be noted that the use of cryptocurrencies from Poland is perfectly acceptable. This status applies to both doctrine and jurisprudence.
However, no Polish act defines the term “cryptocurrency”. There is, in turn, the term “virtual currency“, which can be found in the Act of March 1, 2018 on counteracting money laundering and financing of terrorism (Journal of Laws of 2022.0.593, i.e.). Additionally, the PIT / CIT Act includes references to the AML Act. When referring to the provision, we call a virtual currency a digital representation of value that is exchangeable in the case of economic transactions. Thus, e.g. ethereum or bitcoin meet the criteria set out in the AML Act.
Currently, the cryptocurrency tax is calculated at 19% of the base. Art. 22d of the Personal Income Tax Act treats the difference between the sum of revenues and tax-deductible costs in a tax year as income from the sale of virtual currencies. At the same time, trading cryptocurrency pairs is treated as a tax neutral exchange.
If a given person at the very end of the tax year (December 31) decides to withdraw their tokens into a fiat currency, then when a surplus over costs occurs, income tax will arise at the same time.
In connection with the feast of Corpus Christi, as an author of this article, I would like to wish you, our readers and members of the Kanga Exchange community all the best. Additionally, the first 10 people who will make a transaction in the exchange office using the OLEK code will reduce its value by 0.5!