23% VAT on Digital Currencies in Poland

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23% VAT on Digital Currencies in Poland
23% VAT on Digital Currencies in Poland

23% VAT on Digital Currencies in Poland

The Eastern European nation of Poland has imposed 23% VAT on the miners of peer-to-peer decentralized digital currencies, like Bitcoin and litecoin. Thus, if anyone is continuing to sell these virtual currencies, he will have to shell 23% VAT. Earlier in December the last year, an official from the country’s Ministry of Finance declared that Bitcoin was not illegal.
The government came up with this after some professionals involved in Bitcoin mining submitted a request to seek further clarification of the country’s implementation of taxes on the sale of mined Bitcoins. However, the new announcement from the government says that VAT is applicable on all digital currencies.

According to the reports the person who wanted to know the status about taxes on Bitcoin export organizations in and outside of the European Union got a reply that Polish authorities consider Bitcoin mining a service and the sale of these mined Bitcoins is similar to asking a fee for the service.

Arguments That Bitcoin Mining is Not Service Set Aside

The announcement from the tax authority reads: “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.”

It further says that the applicant argues that a mined Bitcoin is not a commodity because it does not have a material form; however, it clears that the process of Bitcoin mining is a rather complex and powerful task.

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For instance, a computer that requires a lot of power and high-tech hardware that solves various algorithms and once they are answered then the Bitcoins are mined which is like modern day gold digging.

No Government Wants to Leave Bitcoin without Taxes Due to Heavy Potential
Though there is no consensus whether Bitcoin is a commodity or currency around the world as governments and central banks have classified Bitcoins differently and have imposed different taxes on the digital currency, imposition of some sort of tax has been a fact that no government wants to get away with.

Earlier last year an official from the Polish government had cleared that under Polish law, profits generated by digital currency transactions are subject to taxation, and those who do not declare them to the country’s revenue service could face sanctions. This was also an interesting point since Bitcoin mining was getting popularity.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com