30th November 2018
Contractors need to be aware of the latest development of the cryptocurrency tax.
As we’ve mentioned before, Poland has become a very attractive destination for contractors. The country’s cumulative GDP growth from 2008 to 2016 stands at an impressive 32.4%, and a recent McKinsey report referred to the destination as ‘Europe’s new growth engine’. However, it is also a place where authorities are having increased success in cracking down on tax evasion. The country has been moving towards a more comprehensive tax system for a while now, and a new cryptocurrency tax is the most recent step towards this. Therefore, contractors intending to work here need to be aware of the latest developments.
Cryptocurrency Tax – What you need to know
Cryptocurrencies have been a controversial subject in Poland. In February, the Central Bank of Poland funded £24,000 worth of content aimed against them. Similar campaigns were organised by the Financial Supervision Authority. Social media channels were flooded with government material warning of the risks associated with using cryptocurrencies.
Initially, the government took a hard stance, pushing for mandatory cryptocurrency tax on all such transactions, regardless of profits made or lost. This was met with widespread disdain from the crypto community. Online petitions accused the government of restricting access to the market, and protestors gathered outside parliament. Furthermore, the tax was imposed with no consultations of affected parties. Eventually, after substantial pressure, Deputy Finance Minister Pawe? Gruza announced he had ‘accepted the irrational effect’ of the proposed tax and that the government would carry out ‘in-depth analysis’ before making any more decisions.
Redrafted legislation now stipulates that crypto-to-crypto transactions will not be taxed. For all other cryptocurrency assets, there will be a cryptocurrency tax rate of 19%. This applies to the exchange of digital assets for a ‘payment instrument, commodity, and service or property right.’ When someone makes income with a cryptocurrency sale, it will be treated like regular income. In addition to this, Polish residents will have to keep accurate reports of every purchase they make with cryptocurrencies on their tax return in a separate log.
What does it mean for contractors?
Clearly, the compliance landscape in Poland is becoming increasingly complex. Whether or not you deal with cryptocurrency, the attitude of the government towards tax is getting stricter and contractors need to ensure they don’t end up on the wrong side of the law. However, it is not only Poland that’s moving in this direction. With the advent of the Common Reporting Standard, countries worldwide are adopting a harder line on tax compliance, and by working together, authorities in these destinations will only become more efficient at picking up on inconsistencies and discrepancies. With a compliance situation as complicated as Poland’s, finding yourself in breach of the rules by accident could be easier than you expect. Therefore, if you’re planning to work abroad, it is wise to employ experts to take the weight off your shoulders, so you can focus on your own expertise.
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