On 1 July 2020, new regulations came into force, which exempt cryptocurrency transactions from TCLT (transfer tax) indefinitely!
But before we move on to the new regulations, it’s time for some prehistory!
TCLT on cryptocurrencies transactions – announcement of the Ministry of Finance of 2018.
We all remember the confusion that followed the announcement of the Ministry of Finance on 4 April 2018, entitled Tax consequences of cryptocurrencies trading in PIT, VAT and TCLT [Skutki podatkowe obrotu kryptowalutami w PIT, VAT i PCC]. The main issue was the position of the Ministry of Finance that cryptocurrencies transactions were subject to TCLT (the tax on civil law transactions).
In this announcement, the Ministry of Finance stated that:
“A cryptocurrency sale and exchange contract, which is a property right, is subject to a tax on civil law transactions (TCLT). 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 cryptocurrency – concerns the buyer. In the case of an exchange contract, the obligation to pay the tax – in the amount of 1% of the market value of the property right on which the higher tax is due – applies jointly and severally to the parties to the transaction.
Excluded from TCLT taxation is a cryptocurrency sales or exchange contract subject to VAT, to the extent that it is subject to VAT or if at least one of the parties to the transaction is exempt from VAT on account of the transaction.”
In my opinion, the issue with TCLT on the cryptocurrency transactions was not as clear as the Ministry claimed. Especially if we take into account the unclear status of a cryptocurrencies on the grounds of Polish law and the principle of resolving doubts in favour of taxpayers. Finally, the fact that the Ministry’s interpretation could in practice lead to expropriation (the tax was calculated as 1% of the transaction value, not earnings).
I wrote more about it in the article “TCLT taxation of cryptocurrency transactions i.e. the (not)application of the clause to resolve doubts in favour of taxpayers (In dubio pro tributario rule).”
The publication of the Ministry of Finance announcement was followed by protests, which resulted in the adoption of a regulation on TCLT taxation on cryptocurrencies.
Deferral of TCLT collection for transactions from 13 July 2018 to 30 June 2020.
On 13 July 2018, the Special Regulation on TCLT entered into force. According to it, the collection of tax on transactions involving virtual currency (i.e. cryptocurrencies) within the meaning of the AML (Anti-Money Laundering and Terrorist Financing Act) was temporarily deferred.
According to this regulation, extended several times, even if we considered that in connection with a given cryptocurrency transaction we were covertly obliged to pay TCLT, due to “abandonment of collection” we do not have to pay this tax to the Tax Office.
The Regulation currently applies to all transactions carried out from 13 July 2018 to the end of June 2020.
Exemption from TCLT taxation for cryptocurrencies transactions from 1 July 2020.
On the occasion of changes in the law in connection with the so-called anti-crisis shield associated with the coronavirus epidemic, an indefinite exemption from TCLT tax for cryptocurrencies transactions was introduced.
This means that finally(!) we have no doubt that in connection with transactions on cryptocurrencies we don’t have to pay TCLT, which would reduce our profits.
You have questions about taxes on cryptocurrencies? Write to me (email@example.com)!
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