Bitcoin Mining Profits Subject to 23% VAT, says Polish Tax Authority

The latest news related to the legal status of digital currencies in Poland stated that local tax authorities announced the sale of mined bitcoins is subjected to a VAT (value-added-tax) of 23%.

Image: I Paid a Bribe/Flickr

Image: I Paid a Bribe/Flickr

The latest news related to the legal status of digital currencies in Poland stated that local tax authorities announced the sale of mined bitcoins is subjected to a VAT (value-added-tax) of 23%.

The claim was made by the director of tax authorities in Łódź, central Poland, as an answer to the request submitted by a Polish bitcoin miner.

During the announcement, the authorities said that the party asked for clearer interpretations on the Polish regulation regarding taxes imposed on the sale of mined bitcoins.

‘Not a commodity’

The statement reads:

“The applicant is planning to launch sales of the cryptocurrency as part of his commercial activity,” the statement mentioned.

The document states that the Polish Bitcoin miner was planning to sell his digital coins to three separate spots, eith one of the places being outside of the European Union. One of the companies has headquarters in Belize, another company owns a UK registered website, and the last company has a registered website in Łódź.

The applicant said to the Polish tax authorities that he believed none of these transactions would be subjected under VAT, but decided to request the authorities to confirm this interpretation just in case he was wrong.

 “According to the applicant […] the sale of bitcoin is not subject to a value-added tax for commodities and services because bitcoin is not a commodity […] and the sale of the cryptocurrency which is mined by the taxpayer does not constitute a service,” the authorities said. “The applicant said that a mined bitcoin is not a commodity […] because it does not have a material form.”

No legal basis

Nevertheless, in the response to the applicant’s request the tax authorities claims that this interpretation does not have any legal basis, due to the fact that applicant’s request demands a precise fee for the service that cannot be accomplished. This requires the VAT regulation to take an action leading to the 23% implementation.

 “Under the current law, the applicant’s legal assessment of the said situation is incorrect,” the statement said. “The sale of the mined cryptocurrency […] by the applicant to customers with the use of Internet and websites will constitute an activity which is subject to VAT in the territory of Poland.”

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