The rapid growth of virtual currencies means they are increasingly used to settle business receivables. Business owners receive cryptocurrency payments for invoices they have issued, which raises questions about the correct tax treatment of such transactions. It is particularly important to understand whether exchange differences arise when cryptocurrency is converted into złoty and how to settle correctly the tax effects of receiving payment in a virtual currency.
Polish tax law contains detailed rules on taxing cryptocurrency operations, which differ significantly from the standard rules on foreign currencies. Business owners need to understand that receiving payment in cryptocurrency creates two separate tax events - business revenue and potential revenue from the disposal of the virtual currency.
Legal basis for taxing cryptocurrency in a business
The taxation of cryptocurrency in a business context is governed by the PIT Act (personal income tax), which distinguishes between revenue from business activity and revenue from capital (kapitały pieniężne). This classification is key to settling a cryptocurrency payment correctly.
Under Article 14 section 1c of the PIT Act, the basic rule for when business revenue arises is that the date revenue arises is the day goods are delivered, a property right is disposed of or a service is performed, or partly performed, but no later than the day the invoice is issued or the receivable is paid.
As a rule, business revenue arises on the day the service is performed, but no later than the day the invoice is issued or the receivable is paid, regardless of whether the fee has actually been received and in what form payment was made. This also applies where the counterparty pays with cryptocurrency
Business revenue must be distinguished from capital and property rights, which are a separate source of revenue. This source includes, among other things, revenue from the disposal of virtual currency, governed by Article 17 section 1 point 11 of the PIT Act.
The definition of disposal of virtual currency is set out in Article 17 section 1f of the PIT Act. Disposal of virtual currency means exchanging virtual currency for legal tender, goods, a service or a property right other than virtual currency, as well as settling other liabilities with virtual currency.
Disposal of virtual currency covers not only selling cryptocurrency for złoty, but also exchanging it for goods, services or other property rights. Each such operation may generate income taxed under separate rules
Article 17 section 1g of the PIT Act is particularly important: it provides that the rule on revenue from the disposal of virtual currency also applies to revenue earned within a business (except for the business of providers of virtual currency services referred to in Article 2 section 1 point 12 of the Anti-Money Laundering Act). This means that a business owner who receives payment in cryptocurrency has to settle the transaction under two separate tax regimes.
Rules for taxing income from the disposal of virtual currencies
Income from the disposal of virtual currencies is subject to a special tax regime set out in Article 30b of the PIT Act. This system has separate rules for calculating tax, which differ significantly from the standard rules for business activity.
The basic tax rate on income from the disposal of virtual currencies is 19 per cent. This flat rate applies to all income from the disposal of virtual currencies, regardless of the amount of income earned.
Income from the disposal of virtual currencies is taxed at 19% income tax under Article 30b section 1a of the PIT Act. The rate is fixed and does not depend on the amount of income earned
An important feature of this system is that income from the disposal of virtual currencies cannot be combined with other income. Under Article 30b section 5d of the PIT Act, income from the disposal of virtual currencies is not combined with income taxed under Article 30b section 1, Article 27 or Article 30c.
The method of calculating income from the disposal of virtual currencies is set out in Article 30b section 1b of the PIT Act. Income from the disposal of virtual currencies is the difference, earned in the tax year, between total revenue from the disposal of virtual currencies and the tax-deductible costs.
Income from the disposal of virtual currencies is calculated as the difference between the revenue from selling the cryptocurrency and the cost of acquiring it. Costs include documented expenses incurred to acquire the virtual currency and the costs of disposing of it
The tax is settled by filing a PIT-38 return (the annual return for capital income) between 15 February and 30 April of the year following the tax year (Article 45 section 1a point 1 of the PIT Act). The deadline is the same as for other annual returns, but you must use a separate form intended for capital income under Article 30b, including income from virtual currencies.
Tax-deductible costs of disposing of virtual currencies
The detailed rules on tax-deductible costs for the disposal of virtual currency are set out in Article 22 sections 14-16 of the PIT Act. These provisions introduce special rules that differ from the standard rules on business costs.
Under Article 22 section 14 of the PIT Act, tax-deductible costs of disposing of virtual currency are made up of two main categories of expenses:
- Documented expenses directly incurred to acquire the virtual currency
- Costs related to disposing of the virtual currency
The second category specifically mentions documented expenses incurred for the benefit of entities referred to in Article 2 section 1 point 12 of the Act on Counteracting Money Laundering and Terrorist Financing. This mainly concerns commissions paid to cryptocurrency exchanges and other licensed entities providing virtual currency exchange services.
Tax-deductible costs of disposing of virtual currencies include all documented expenses incurred to acquire the cryptocurrency and the costs related to its sale, including commissions paid to cryptocurrency exchanges and exchange offices
The cost settlement system for virtual currencies has special rules on carrying forward any excess. Costs are generally deducted in the tax year in which they were incurred. However, if in a given tax year costs exceed the revenue from the disposal of virtual currency, the excess is not a tax loss.
Instead, the excess of costs over revenue is carried forward and settled as tax-deductible costs of disposing of virtual currency in the following tax year. This mechanism ensures that the costs incurred are not lost but can be used to reduce future income from cryptocurrency operations.
If the costs of acquiring and disposing of virtual currencies in a given year exceed the revenue from their sale, the excess is not a tax loss but is carried forward as a cost to the following tax year
Settling a cryptocurrency payment in practice
When a business owner receives cryptocurrency as payment for an invoice issued, the transaction has to be settled in two stages. The first stage concerns recognising business revenue, the second - potential income from the disposal of the virtual currency.
Stages of the tax settlement:
-
Recognising business revenue
- Revenue arises on the day the service is performed, but no later than the day the invoice is issued or the receivable is paid
- The amount of revenue equals the fee due shown on the invoice (for an active VAT payer - net)
- The form of payment (cryptocurrency) does not affect when revenue arises
-
Determining the acquisition cost of the cryptocurrency received
- The acquisition cost is the value of the receivable treated as paid, i.e. the fee due under the invoice
- This value will be the cost when the virtual currency is later disposed of
- It is worth documenting the cryptocurrency rate on the day of receipt as supporting evidence, from a reliable source
-
Settling the sale of the cryptocurrency
- Income from disposal = revenue from the sale - acquisition cost
- Taxed at 19% in the PIT-38 return
- Costs related to the sale can be deducted
Performing a service for a counterparty gives rise to business revenue. That revenue is the fee due for performing the service as shown on the invoice issued. For recognising this revenue, it does not matter whether the fee has actually been received or in what form the business owner will receive it.
Under Article 14 section 1 of the PIT Act, business revenue means amounts due, even if they have not actually been received. This means that the moment revenue arises does not depend on the form of payment, including receipt of payment in cryptocurrency.
Business revenue arises on the day the service is performed, but no later than the day the invoice is issued or the receivable is paid, regardless of whether the counterparty pays in cash, by transfer or with cryptocurrency. The form of payment does not affect when revenue is recognised
Obtaining virtual currency as a form of payment of the fee due for services is a paid acquisition of cryptocurrency. The expense directly incurred to acquire the virtual currency is the value of the receivable that the taxpayer treated as paid as a result of receiving the cryptocurrency - as the Director of National Tax Information (KIS) stated, among others, in an individual tax ruling of 30 October 2023 (No. 0115-KDIT1.4011.633.2023.1.JG).
This value of the receivable, equal to the fee due for the services provided, is at the same time the tax-deductible cost of disposing of the virtual currency. When the business owner sells the cryptocurrency received, the revenue from the sale can be reduced by the value of the original receivable.
Worked example of settling a transaction
Let us look at a practical example of settling a transaction involving cryptocurrency. Mr Maciej runs a JDG (sole proprietorship) providing IT services and issued an invoice for a service performed for PLN 10,000 net. The counterparty paid the receivable in cryptocurrency, and in the same year Mr Maciej sold the cryptocurrency received for PLN 12,000.
Settlement example:
Input data:
- Invoice for the service: PLN 10,000
- Cryptocurrency payment received on the day the invoice was issued
- Sale of the cryptocurrency in the same year for PLN 12,000
- Costs of the sale transaction: PLN 100 (exchange commission)
Tax settlement:
- Business revenue: PLN 10,000
- Acquisition cost of the cryptocurrency: PLN 10,000
- Revenue from selling the cryptocurrency: PLN 12,000
- Costs of sale: PLN 100
- Income from disposal: 12,000 - 10,000 - 100 = PLN 1,900
- Tax at 19%: 1,900 × 19% = PLN 361
Settling this transaction requires taking two separate sources of revenue into account:
- Revenue from non-agricultural business activity of PLN 10,000 - arising from performing the service and issuing the invoice
- Income from the disposal of virtual currency of PLN 1,900 - the difference between the revenue from selling the cryptocurrency (PLN 12,000) and its acquisition cost (PLN 10,000) and the costs of sale (PLN 100)
When you receive cryptocurrency as payment for an invoice, you must recognise business revenue equal to the amount on the invoice and potential income from the disposal of the virtual currency when you sell it
The amount of PLN 1,900, being income from the disposal of virtual currency, will be shown in the PIT-38 return and taxed at 19 per cent under Article 30b of the PIT Act. This means additional tax of PLN 361 (1,900 × 19%).
The value of the invoice receivable paid in cryptocurrency is the acquisition cost of the virtual currency, which then reduces the revenue from selling it. This mechanism ensures that only the difference between the revenue from selling the cryptocurrency received and the value of the original receivable (less the costs of disposal) is taxed.
Exchange differences and cryptocurrencies
Under Article 14 section 2 point 3 of the PIT Act, business revenue also includes exchange differences. Article 14b section 1 provides that taxpayers determine exchange differences under Article 24c of the PIT Act.
| Aspect | Foreign currencies | Cryptocurrencies |
|---|---|---|
| Legal status | Legal tender | Virtual unit |
| Exchange differences | Yes, under Article 24c PIT | Do not arise |
| Tax base | Exchange differences | Disposal of virtual currency |
| Tax rate | Tax scale / flat rate | 19% (fixed rate) |
| Tax return | PIT-36/PIT-36L | PIT-38 |
The rules on determining exchange differences apply only to taxpayers running a business or special branches of agricultural production. Tax exchange differences arise only in the situations listed in Article 24c of the PIT Act, where a business event was both expressed in a foreign currency and carried out in a foreign currency.
Exchange differences for tax purposes arise only for operations expressed and carried out in foreign currencies that are legal tender of other countries
Of key importance is the individual tax ruling of the Director of National Tax Information of 19 February 2024 (No. 0115-KDIT1.4011.25.2024.1.MR), in which the authority stated that under Polish law virtual currency cannot be treated in the same way as legal tender.
Cryptocurrency does not function as a money market instrument within the meaning of separate legislation. As a result, solutions provided for traditional foreign currencies cannot automatically be applied to issues concerning cryptocurrency trading.
Cryptocurrency operations consist of making the relevant entries only in IT systems and are not currency operations within the meaning of foreign exchange law
Because cryptocurrency is a virtual unit that cannot be treated in the same way as foreign currencies under Polish law, exchange differences within the meaning of Article 24c of the PIT Act do not arise. This interpretation is of fundamental importance for the tax settlement of cryptocurrency operations. How to present such assets in the financial statements is explained in our article on cryptocurrencies in the balance sheet.
Practical aspects of the tax settlement
Receiving payment in virtual currencies for an invoice issued generates revenue from non-agricultural business activity, taxed under the form of taxation chosen by the business owner. This may be the tax scale (12% and 32%), the flat 19% tax (podatek liniowy) or the flat-rate tax on recorded revenue (ryczałt). We record such payments in clients’ books whatever their form of taxation – see our accounting services.
The sale of cryptocurrency obtained in this way is settled within a separate source of revenue - capital. This split has important practical consequences, because it requires separate records for each source of revenue.
Documents required for the settlement:
- Invoices issued to counterparties
- Confirmations of receipt of the cryptocurrency (e.g. from an electronic wallet)
- Documents confirming cryptocurrency rates on the day of receipt
- Confirmations of the sale of the cryptocurrency on an exchange or at an exchange office
- Documents confirming transaction costs incurred
A business owner receiving payment in cryptocurrency must keep detailed documentation covering the moment the virtual currency was received, its value and all costs related to its later sale
Pay particular attention to documenting the value of the receivable that was paid. The amount of the fee due under the invoice is both business revenue and the acquisition cost of the virtual currency. It is worth keeping the cryptocurrency rate on the day of payment as supporting evidence, using reliable sources of cryptocurrency rates.
Costs related to selling cryptocurrency:
- Commissions paid to cryptocurrency exchanges
- Fees for exchanging virtual currency into złoty
- Costs of transferring funds to a bank account
- Other documented expenses related to the transaction
Documentation and record-keeping obligations
Running a business that uses cryptocurrencies requires particular care with documentation and records. The business owner must be able to show all the circumstances related to receiving and disposing of the virtual currency.
Basic documents to collect:
- Invoices issued to counterparties
- Confirmations of receipt of the cryptocurrency (e.g. from an electronic wallet)
- Documents confirming cryptocurrency rates on the day of receipt
- Confirmations of the sale of the cryptocurrency on an exchange or at an exchange office
- Documents confirming transaction costs incurred
All cryptocurrency operations must be properly documented, because the tax authorities may require a detailed demonstration of the basis for calculating tax on income from the disposal of virtual currencies
The records should make it possible to identify each operation of acquiring and disposing of cryptocurrency, together with dates, amounts and exchange rates. It is particularly important to keep records of the costs that can be deducted from the revenue from the disposal of virtual currency.
If the business operates on a larger scale, it is worth considering specialist software for recording cryptocurrency operations. Such tools can automate the calculation of income and costs and generate the reports needed for the tax settlement.
Tax planning and cash flow
Business owners who accept cryptocurrency payments should consider different tax planning strategies that may affect their final tax burden. It is key to understand that the moment of selling cryptocurrency directly determines when the tax obligation arises.
One possible strategy is to spread cryptocurrency sales over time to avoid concentrating income in a single tax year. Because income from the disposal of virtual currencies is taxed at a fixed rate of 19 per cent, there is no risk of moving into a higher bracket of the tax scale. Remember, however, that this income counts towards the base of the solidarity levy (4% of the excess of total income over PLN 1,000,000, Article 30h of the PIT Act).
The moment of selling the cryptocurrency determines when the tax obligation arises, so business owners can plan these operations over time and set aside funds for the tax in advance
It is also important to take into account the possibility of carrying forward excess costs to subsequent tax years. If the costs of acquiring and disposing of cryptocurrencies in a given year exceed the revenue from their sale, the excess can be used to reduce future income from virtual currency operations.
Business owners should also consider how accepting cryptocurrency payments affects cash flow. The need to pay tax on income from the disposal of virtual currency may require additional cash-flow planning.
