Polish jurisdiction may be attractive to crypto businesses looking for a friendly governmental stance towards the industry as well as relatively low corporate taxes and an extensive number of international agreements on the elimination of double taxation.
Polish taxes are administered by the Tax Administration Chamber, who’s also responsible for maintaining a register of licensed crypto activities, titled the Register of Virtual Currencies. Although the authority hasn’t set any crypto-specific taxes, companies carrying out crypto related economic activities in Poland are liable for paying a number of existing taxes which are levied depending on the specifics of a particular product or service.
The tax year coincides with the calendar year, and annual tax returns must be filed by the 30th of April. There’s no requirement for the filing of tax declarations throughout the year.
Standard tax rates:
- Corporate Income Tax (CIT) – 19%
- Value Added Tax (VAT) – 23%
- Withholding Tax (WHT) – 19%-20%
- Social Security Contributions (SSC) – 20.08%
Currently, the Tax on Civil Law Transactions isn’t levied on cryptocurrency transactions.
Poland has over 90 international agreements on the elimination of double taxation, which will allow you to avail of the preferential tax rate or tax exemption. To do so, you must supply a certificate of residence proving the location of the taxpayer’s seat for tax purposes.
Corporate Income Tax
Polish tax resident crypto companies are subject to paying the Corporate Income Tax on their worldwide income, while non-resident companies are taxed only on the income sourced in Poland. If your company’s registered office or place of management is located in Poland, it’s considered a resident.
At the end of the tax year, crypto companies, like any other company, must submit annual income tax declarations to the e-Tax Office. They should include the income earned in that tax year from the transfer of virtual currencies and calculate the income tax due. Furthermore, the tax statement must reflect the revenue earning costs, including when the taxpayer didn’t earn any revenues from the transfer of virtual currencies.
According to the Corporate Income Tax Act, revenues from the exchange of virtual currencies for fiat money, products, services or property rights other than virtual currencies, or from the payment of other liabilities with virtual currencies, shall be considered revenues from capital gains. To reiterate, the value of virtual currencies obtained in exchange for other virtual currencies shouldn’t be considered revenue.
Income from the transfer of virtual currencies is taxable at a rate of 19%. Income from the transfer of virtual currencies is the difference gained in a given tax year between the total revenues earned from the transfer of virtual currencies and the revenue earning costs. Expenses incurred in relation to the exchange of virtual currency for another virtual currency won’t be considered as revenue earning costs.
Value Added Tax
It’s legally required for your crypto company to apply for VAT registration prior to starting your economic activities in Poland, and it normally takes a month to obtain a VAT number. Then, VAT reporting is submitted monthly, but companies can select quarterly reporting when registering for VAT.
Since Polish legislation is aligned with EU law, it follows the rule by the Court of Justice of the European Union (CJEU) stating the provision of services involving the exchange of cryptocurrencies for fiat money and vice versa is VAT exempt. Other crypto products and services supplied in Poland might be subject to VAT.
Social Security Contributions
If your crypto company is envisaging employment of people, you must take Social Security Contributions into account regardless of the specifics of your crypto activities. It’s part of the payroll tax and is administered by the Social Security Institution. The contributions are collected to cover such categories as pension, disability and sickness benefits, maternity leave and insurance for injuries at work. The payments are made monthly by employers and employees.
Employers are required to pay the following contributions:
- Pension – 9,76%
- Disability – 6,50%
- Accidents and injuries at work – 0,67%-3,33% (the rate depends on the type of the conducted professional activity, classified by the Polish authorities)
Dividends paid out by Polish tax residents are subject to the Withholding Tax, which is withheld and forwarded to the tax authority by the payer of dividends. In most of the cases the standard rate of 19% is applicable, although it can vary due to the international agreements on the elimination of double taxation.
Interest is normally levied at the rate of 20% in Poland, unless otherwise stated in the international agreements on the elimination of double taxation.
Interest is exempt from the Withholding Tax if it’s paid out by a company with its registered office in Poland to a company with its registered office in an EU or EEA country other than Poland or in Switzerland and if one of the following conditions is met:
- The company paying out the interest holds at least 25% of the shares in the capital of the company collecting the interest
- The company collecting the interest holds at least 25% of the shares in the capital of the company paying out the interest
- The company subject to taxation on its total income in an EU or EEA country holds at least 25% of the shares in the capital of the company paying out the interest and in the capital of the company collecting the interest and at least 25% of the shares have been held directly and continuously for at least 2 years
Tax Credits and Incentives
If foreign income sourced by resident companies isn’t protected from double taxation by the international agreements on the elimination of double taxation, the Polish tax authorities implement tax credit procedures where resident companies remain subject to paying Polish taxes, but they are proportionally reduced based on the taxes paid abroad.
Crypto companies of any size operating in Poland might be eligible for applying for the tax relief for research, development and innovation (R&D). The relief allows for a remarkable deduction of 200% of the costs as the costs are first 100% deducted as operating costs, and then they are 100% deducted from revenue.
The following costs are deductible:
- Employee’s salaries, including Social Security Contributions
- Purchase of materials required to conduct the research and development activity
- Payments for expert opinions and advisory services, including scientific research results
- Payments for scientific and research equipment, including service fees
- Patent fees, protection rights for a utility model, rights from registration of an industrial design
- Amortisation made in the tax year on fixed assets and intangible assets used in the conducted R&D activity
- Costs of purchasing specialist equipment in the conducted R&D activity
Lastly, before making a decision on the most suitable legislation for your crypto company, you might want to learn about the Polish Investment Zone which is an incentive instrument for entrepreneurs in the form of a tax exemption for new investments, designed to grant tax reliefs (namely, Corporate Income Tax exemption) to companies of various sizes if they commit to complete their investments within 10-15 years.
The amount of the incentive is dependent on the following criteria:
- Value of incurred eligible costs of the investment (investment capital or two-year labour costs of new employees)
- State aid intensity in a chosen region
- Size of the company
If you’re determined to succeed in Poland but aren’t sure where to start, highly qualified and experienced consultants of Regulated United Europe (RUE) will be pleased to assist you in structuring your taxes, familiarise you with all cryptocurrency regulations in Poland. We very well understand and closely monitor crypto-specific Polish taxation rules and strive to ensure that our clients not only comply with local regulations but also operate in a tax efficient way. Moreover, we’re more than happy to help you with the company formation, obtaining a crypto license in Poland and accounting. Book a personalised consultation now.
Crypto Taxes in Poland in 2023
For 2023, Polish authorities have set more favourable tax rates for private and legal persons which is another reason to view Poland as a country, where crypto-related economic activities can bring more rewards and returns.
Furthermore, since Poland is a member of the Organization for Economic Cooperation and Development (OECD), more changes related specifically to cryptocurrency businesses await in due course. The OECD has recently introduced a new international tax transparency framework, entitled Crypto-Asset Reporting Framework (CARF), the policies of which should eventually be transposed into Polish legislation. In a nutshell, the aim of the framework is to automate tax reporting and facilitate international sharing of the relevant data which will raise crypto taxation standards by keeping tax authorities across the member countries well-informed.
Corporate Income Tax
The Corporate Income Tax remains at 19% but in 2023 some important changes will be implemented as amendments to the Polish Corporate Income Tax Act will come into effect. To start with, the implementation of the minimum income tax has been suspended until the end of the year and the profitability ratio that will make a company liable for the minimum income tax has now been increased from 1% to 2%.
When it comes to the capital gains exemption, it will be applicable even if the sold company owns at least 5% of the shares in another company and when the subsidiary benefits from an exemption on income from activity conducted in a Special Economic Zone or within a Polish Investment Zone.
Another relaxation of rules pertains to the transactions with entities in tax havens. The documentation thresholds for transactions carried out directly with tax haven companies have been increased to 2,5 mill. PLN (approx. 532,000 EUR) for financial transactions and 500,000 PLN (approx. 106,500 EUR) for non-financial transactions. There are more amendments to the Polish Corporate Income Tax Act which we would be pleased to consult you on during a face-to-face meeting which you’re welcome to schedule now.
Value-Added Tax (VAT)
The standard VAT rate remains at 23% and cryptocurrency transactions will remain VAT-exempt. However, there are other relevant changes that will impact local businesses. As of January 2023, Polish companies will be allowed to create VAT groups where each group will be treated as a single taxable person for Polish VAT purposes. It’s an optional step but can have such advantages as intra-group transactions being disregarded (although they still must be recorded). To be eligible for a VAT group in Poland, companies should prove existing financial, economic, and organisational bonds.
Key allowances and conditions for VAT groups:
- The minimum period of a VAT group’s existence is three years
- Permanent establishments and branches can join such groups
- An application must be filled out in order to initiate a group formation (once it’s approved, a group VAT number is granted to the group members)
- Each VAT group member is jointly and individually liable for VAT debts and penalties imposed on the entire group
- All members of a VAT group are obligated to submit one consolidated VAT return, and it’s not permitted to file separate individual VAT returns for each entity
The rates of the Withholding Tax remain between 19% and 20% but 2023 will bring inherent changes as the regulations of the pay and refund system have become more straightforward. First of all, the amendment of the Polish Corporate Income Tax Act considerably extends the deadlines for filing applications for reduced tax rates. The new rules will allow for exemptions or reduced rates for certain payments under 2 mill. PLN (approx. 425,800 EUR) which a remitter can apply for by filing a statement once in the tax year.
Social Security Contributions
As of January 2023, general partners of Joint-Stock Limited Partnerships will be subject to health insurance contributions from the commencement of their business activities, as they won’t be able to avail of the allowance for startups. Other than that, the rules for Social Security Contributions remain the same. Every month employers are obligated to pay 19,21–22.41% of the gross salary of an employee which covers pension insurance, sickness insurance, disability insurance, accident insurance, and labour fund.
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