Miners of peer-to-peer decentralized digital currencies, like bitcoin and litecoin, will be subjected to a 23 percent value-added tax (VAT) in the Eastern European nation of Poland if they wish to continue to sell these virtual currencies.
The announcement came after a bitcoin miner had submitted a request to seek further clarification of the country’s implementation of taxes on the sale of mined bitcoins. The individual had planned to sell his bitcoins to organizations in and outside of the European Union and had concluded that the sales would not have been slapped with a VAT.
Polish authorities consider bitcoin mining a service and the sale of these mined bitcoins is similar to asking a fee for the service.
“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 Polish tax authorities said in a statement. “The applicant said that a mined bitcoin is not a commodity […] because it does not have a material form.”
The process of bitcoin mining is a rather complex and powerful task: 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 – think of it as modern day gold digging.
Governments and central banks all over the world have classified bitcoins differently and have imposed different taxes on the digital currency.
In the United States, for instance, the Internal Revenue Service made headlines worldwide when it slapped the buying, selling and trading of bitcoin with a tax, even for the casual user who would buy a sweater, a coffee or a computer with the cryptocurrency.
North of the border in Canada, the Canada Revenue Agency (CRA) instituted a tax on all bitcoin transactions as well as capital gains taxes on bitcoins bought or sold akin to a commodity. In the United Kingdom, meanwhile, Her Majesty’s Revenue and Customs (HMRC) confirmed that it would make virtual currencies exempt from a 20 percent VAT.
