PCC for cryptocurrency trading - a new position of the Ministry of Finance

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Cryptocurrency trading has become extremely popular among taxpayers in Poland.However, since the parties to the transaction are anonymous and the document confirming the sale or purchase is not a standard regulatory document, there has been a doubt as to how the cryptocurrency trading should be accounted for in accordance with the regulations. The Ministry of Finance has adopted a regulation that PCC tax should be paid on each cryptocurrency purchase. Is PCC still in force for cryptocurrency trading? We answer.

PCC for cryptocurrency trading - previous position

Due to the increasing inaccuracy of regulations regarding cryptocurrency trading, the Ministry of Finance decided to issue an official study "Tax effects of cryptocurrency trading in PIT, VAT and PCC" published on April 4, 2018, indicating how to properly settle cryptocurrency trading.

The study of the Ministry of Finance raised the subject of the PCC tax on cryptocurrency trading, which was negatively received. The outrage results, among other things, from the fact that trading in cryptocurrencies consists in buying cryptocurrencies and reselling them at a more favorable rate, therefore, there may be several dozen transactions during the day. This would involve doing a multi-page P-CC3 print each day.

In the study, we can read that: The contract for the sale and exchange of a cryptocurrency, which is a property right, is subject to tax on civil law transactions (PCC) [16]. In the case of a sales contract, the obligation to pay this tax - in the amount of 1% of the market value of the property right acquired in the cryptocurrency sold - applies to the buyer. In the case of an exchange agreement, the obligation to pay 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 taxation of PCC [17] is a contract for the sale or exchange of cryptocurrencies 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 for this activity.

After the negative reception, the Ministry of Finance issued a communiqué on April 9, 2018, in which it indicated that:
The website of the Ministry of Finance presents the current state of cryptocurrency taxation resulting from the currently applicable tax laws. However, this is not the final method of taxing this sphere. We are working on proposing another more convenient form of taxation of cryptocurrencies.

You should not settle PCC on cryptocurrency trading - position until June 30, 2019

Work on the development of a more convenient form of taxation of cryptocurrencies did not take long, because on July 13, 2018, the Regulation of the Minister of Finance of July 11, 2018 on waiving the collection of tax on civil law transactions on the contract of sale or exchange of virtual currency entered into force.

The regulation indicated that taxpayers purchasing, by way of a contract of sale or exchange, the virtual currency referred to in Art. 2 clause 2 point 26 of the Act of March 1, 2018 on counteracting money laundering and financing terrorism, are exempt from paying the tax on civil law transactions on this transaction, and thus from submitting the PCC-3 form on this account. Art. 2 sec. 2 point 26 of the Act on Counteracting Money Laundering and Terrorism Financing:
26) virtual currency - it is understood as a digital representation of a value that is not:
legal tender issued by the NBP, foreign central banks or other administrative bodies
public,
an international unit of account established by and accepted by an international organization
individual countries belonging to or cooperating with this organization,
electronic money within the meaning of the Act of August 19, 2011 on payment services,
a financial instrument within the meaning of the Act of July 29, 2005 on Trading in Financial Instruments,
by bill or check
- and is tradable for legal tender and accepted as a medium of exchange Please note that the PCC tax exemption for cryptocurrency trading will not be retroactive. Therefore, the exemption applies to transactions made between July 13, 2018 and June 30, 2019. Transactions related to cryptocurrency trading concluded until July 13, 2018, the previously indicated settlement method applies, and thus the need to pay the PCC tax on cryptocurrency trading.

Why by the end of June 2019? The Ministry of Finance indicates in response to the letter of June 26, 2018, ref. DP-I.0220.10.2018.MM that:
Solutions regarding the legal and tax situation of entities that have failed to settle their liabilities due to tax on civil law transactions in connection with cryptocurrency trading in the past require a legislative initiative. The direction of solutions is not yet decided and will be the result of in-depth analyzes currently being carried out.

Summing up, although the PCC tax on cryptocurrency trading until June 30, 2019 will not apply to transactions concluded after July 13, 2018, it can be expected that by then the Ministry of Finance will already develop ready-made legal solutions for cryptocurrency trading in Poland.