Miners of digital currencies such as bitcoin will have to pay value-added tax (VAT) in Poland if they want to sell the currencies.
CoinDesk, citing a statement from the Polish tax authorities, reported that the sale of mined bitcoins is subject to a 23% VAT.
Mining is the process of generating new bitcoins, as a reward for solving complex math problems.
The authorities’ interpretation of bitcoin mining comes after a Polish bitcoin miner submitted a request for clarification regarding taxes imposed on the sale of mined bitcoins.
The applicant was planning to sell his bitcoins to entities within and outside the European Union, and believed that none of these transactions would be subject to a Polish VAT.
“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.”
However, the authorities refuted the claim saying it has no legal basis. They considered bitcoin mining a service, and the sale of mined bitcoins as asking a fee for the service.
“The applicant is demanding a precise fee for the service [of bitcoin mining],” they 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.”
Taxation of bitcoin transactions is done in different ways in different countries.
For example in Japan, capital gains from bitcoin are not taxable as the country treats bitcoin just as a form of “value-added electronic record” similar to credit card transactions.
Meanwhile, the digital currency is taxable in the US which considers bitcoin a property.
According to the US Internal Revenue Service, miners must include the fair market value of the virtual currency as gross income on the date of receipt.