Forex trading offers high-profit potential, but traders need to understand the tax implications. This is true for Forex traders in Poland, where specific rules and regulations govern taxation. Accordingly, Traders Union has developed a one-stop guide focused on Polish tax law, providing insights to ensure compliance and optimize trading strategies.
What are the Forex tax rules in Poland?
Poland’s National Fiscal Administration (KAS) has declared that Forex trading is subject to taxation as personal income. In line with this, traders are required to report their trading profits annually and pay taxes. This involves filing a tax return, detailing trading activities and income.
Subsequently, residents are subject to a progressive tax rate ranging from 17% to 32%, depending on their total income. Meanwhile, non-residents face a flat 20% tax rate on income derived from Polish sources, unless a double tax treaty applies. At the same time, corporate entities in Poland are subject to corporate income tax, which is imposed at 19% on their global income.
In the case of small taxpayers, these individuals enjoy a reduced tax rate of 9%. The tax is calculated based on the company’s annual income and is payable to the National Fiscal Administration. Moreover, capital gains from Forex trading, including profits from selling currencies, are generally treated as ordinary income and subject to the same Forex trading taxes in Poland. Traders Union analysts suggest that considering case studies, losses incurred can be offset against future gains in the same tax year.
Exploring tax benefits in Poland
Forex trading in Poland is subject to taxation, but traders can benefit from certain deductions and allowances. For instance, expenses related to trading activities, like software fees and internet costs, can be deducted. Additionally, users may qualify for a tax-free allowance on their trading profits.
Consequently, Poland’s double taxation treaties can also impact how traders’ income is taxed, especially for those living in other countries. Nevertheless, beyond these provisions, there are no other specific tax benefits or exemptions for Forex traders in Poland.
In addition, a tax-free trading income amount of PLN 30,000 in the country, citing that Forex traders earning less than PLN 30,000 annually are not required to pay taxes on their trading income. Correspondingly, investors can explore structuring Forex trading within legal entities and double taxation treaties to maximize profits and minimize tax liabilities.
A deeper dive into the Polish Forex tax system
With a decade of experience, Traders Union has marked its significance in decoding the tax system in Poland, offering an understanding of how different trading scenarios can impact individuals’ tax obligations.
For example, Piotr, a software developer, earned PLN 40,000 from part-time Forex trading alongside his regular job. After deducting PLN 2,000 in expenses, he paid an income tax of up to 17% on the remaining PLN 38,000. His tax liability was influenced by his ability to deduct PLN 2,000 in expenses, resulting in an income tax of up to 17% on the remaining PLN 38,000.
In contrast, Katarzyna, a full-time Forex trader, made gains of PLN 150,000, deducting PLN 20,000 in expenses. She registered as self-employed with the National Fiscal Administration (KAS) and paid a 32% Self-Assessment tax on her PLN 130,000 taxable profit.
On the other hand, Andrzej, a construction company owner, earned a total of PLN 90,000 in personal income, which included income from Forex trading. As a registered business owner with KAS, Andrzej was subject to a 19% corporate income tax on all of his income, including that from his construction business.
Remarkably, these examples showcase how professions, business registration status, deductions, and income amounts impact the taxes owed on Forex trading proceeds under the Polish system.
Traders Trust: a tax-beneficial broker
Choosing a trustworthy broker is also crucial for users navigating a tax system, as it can offer significant benefits. Traders Trust is a broker considered by professional traders despite its lack of a license, as it complies with the Foreign Account Tax Compliance Act (FATCA) and offers unique advantages.
With a decade of experience, Traders Trust boasts tight spreads, direct market access, and social copy trading services through MQL5 Signals. However, it lacks regulatory licenses from top agencies like the UK’s Financial Conduct Authority or Australia’s ASIC and prohibits clients from several major countries.
Traders Union experts suggest that individuals needing strong regulation or based in a prohibited jurisdiction should consider other brokers, while Traders Trust remains best suited for experienced traders seeking high leverage, direct market access, and copy trading services.
Notably, online trading is dynamic, so picking a trustworthy broker is crucial. Therefore, the Etv Hindu published an article, based on TU insights, to help traders in achieving success in Forex trading and picking a trustworthy broker in Poland, by understanding the tax rules and regulations.
Additional tax tips for Forex traders
Taxation can be a complex topic for Forex traders, especially in a country like Poland where tax rules and regulations can vary. Here are TU’s key tips to help beginners navigate their tax obligations more effectively:
- Understanding tax residency. It is important to understand the criteria that determine tax residency in Poland. Generally, traders are subject to personal income tax on worldwide income, while non-residents are taxed only on Polish-sourced income.
- Maintaining detailed records. Keeping accurate records of all Forex transactions, expenses, and relevant documents is essential. This practice helps in calculating taxable income, claiming deductions, and demonstrating compliance during tax audits.
- Exploring double taxation treaties. Residents of another country with which Poland has a double taxation treaty should explore the treaty’s provisions. These agreements may reduce or eliminate double taxation.
- Considering legal entity structure. If possible, conducting Forex trading within the structure of a legal entity, such as a company, may offer tax advantages. This includes the possibility of a reduced corporate tax rate of 9% for small businesses in Poland.
- Staying informed on tax rates. Regularly checking for updates on personal income tax rates in Poland is also important. Being aware of any changes will help in planning tax strategies.
Wrap-up
Staying informed and complying with tax laws is essential to meet obligations and avoid potential penalties. If unsure about how these rules apply, traders must consider consulting a tax advisor or accountant specializing in Forex trading taxation. Nevertheless, while this article provides a general overview, Polish tax regulations can be complex and subject to change. For personalized advice, consider consulting a qualified Polish tax advisor. The article was written by Chinmay Soni, a certified investment analyst.
The article was prepared in cooperation with the website’s partner.
