Cryptocurrencies: the taxpayer must settle with the tax authorities, even if he/she did not earn income

Taxpayers who buy and sell cryptocurrencies must remember to file their annual tax return on PIT-38 form by 2 May. This obligation does not only apply to people who have earned income from trading virtual money in the past year. It also weighs on taxpayers who only purchased cryptocurrencies.

Cryptocurrencies and revenue

Note that the exchange of one cryptocurrency for another does not create a tax liability, regardless of whether it is done on an exchange or as a unit. That is, if a taxpayer buys Bitcoins and then exchanges them for another cryptocurrency, no income arises. We only deal with it when the taxpayer exchanges cryptocurrencies for legal tender (i.e. traditional money) on an exchange, in an exchange office or on the open market. Revenue also arises when virtual currencies are paid for goods or services.

The tax on income related to cryptocurrencies is 19%. PIT-38 tax return may be filed electronically or on paper, in the tax office with jurisdiction over the place of residence.

What about deductible costs?

The deductible costs of the sale of cryptocurrencies are the documented expenses that the taxpayer incurred to acquire the virtual currency and the costs associated with their disposal, such as. payment to sales agents. Some people acquire cryptocurrencies as a result of their so called “gold”. digg. Importantly, in this case, the purchase of electronic equipment intended for this purpose or the cost of energy consumption cannot be regarded as tax deductible expenses. Expenses associated with exchanging one virtual currency for another are also not an expense.

Obligations despite no income

PIT-38 from cryptocurrencies should be filed even if the taxpayer did not receive any income and only incurred expenses to purchase cryptocurrency. In subsequent years such a person will be able to deduct these costs from tax, if he sells virtual money. If a taxpayer sold and bought cryptocurrencies in a given year, and the amount bought exceeded the proceeds from the sale, the difference will carry over to subsequent years – but must be accounted for.

What should taxpayers do who in previous years, such as. 2019-2020, they acquired cryptocurrencies but did not file a proper return? I would recommend going back through these accounts and filing the correct returns for them. Why it is important? If the taxpayer acquired cryptocurrencies in 2019 and monetized them in 2021, i.e. exchanged them for legal tender, he should also include in his return the earlier acquisition costs. This will allow him to lower his tax base.

Thus, in the returns for earlier years, it would be necessary to show the costs of purchasing cryptocurrencies and to file an active regret – that is, to admit the failure to meet the tax obligation while realizing it. This will be the best way to avoid the penalty for not filing your return on time.