Taxation of Forex Income - Part 2

If we do not have PIT-8C information, we have to determine the amount of income and costs ourselves. It is not particularly difficult, but you should remember about a few important rules, especially since the interpretations of the regulations in this regard are not clear-cut.

Income - Costs = Income

According to art. 30b paragraph 2 item 3 updof the income from forex transactions is the difference between the sum of revenues from the sale of derivative financial instruments and the exercise of rights arising therefrom and the tax deductible costs determined on the basis of art. 23 sec. 1 point 38.

The issue of the moment of tax revenue in the case of derivative financial instruments is regulated in art. 17 sec. 1b established the act. Pursuant to this provision, the revenue from the payable disposal of derivative financial instruments and the exercise of rights arising therefrom arises at the time of exercising the rights arising from derivative financial instruments.

However, it is difficult to find in the interpretations of the tax authorities an explanation of when in the case of forex transactions "the realization of rights resulting from derivative financial instruments" takes place. Taking into account the specific nature of these transactions, it seems logical that revenue is generated when the position is closed.

Example

Investor on 10 in March at 01: 15 has opened a short position on 1 lot EUR / USD (sold currency pair) at the 1,1713 exchange rate. He closed the position on the same day at 13.15 after the 1,1559 course. This means a revenue of 154 dollars.

A bigger problem is determining what is the cost.

According to art. 22 sec. 1 Personal Income Tax Act, the costs of obtaining revenues are costs incurred in order to achieve revenues or to maintain or secure a source of income, with the exception of costs listed in art. 23.

The provision of art. 23 sec. 1 point 38a above the Act stipulates that expenses related to the acquisition of derivative financial instruments are not deemed to be tax deductible costs - until the rights arising from these instruments are exercised or until the rights arising from these instruments are resigned or their sale for consideration - provided that such expenses, pursuant to Art. 22 g of paragraph 3. 4 and XNUMX, do not increase the initial value of the asset and intangible assets.

The regulations only specify when the cost arises, but do not indicate how to determine it. The logical conclusion stemming from the quoted provisions is that the closed position that brought the loss should be considered as an expense.

Other costs

The applicant will also be able to include fees related to transactions performed on the Forex account (deposits and withdrawals) to the costs of obtaining income. This cost may be, for example, the cost of a foreign currency account run solely to service a FOREX account or a fee for bank transfers related to forex payments.

Theoretically, the internet fee, thanks to which we carry out operations on the FOREX market, could be a cost - in practice, however, it is not possible to determine in what part the Internet connection is used to connect to the trading platform, and in which for other applications.

Of course, revenues and costs should be converted into PLN. According to Art. 17 sec. 4 of the Personal Income Tax Act, revenues, incl. from the sale of derivative financial instruments for consideration and from the exercise of rights resulting therefrom, obtained in foreign currencies are converted into PLN according to the average exchange rate of foreign currencies announced by National Bank of Poland on the last business day preceding the day of obtaining income.

The tax deductible costs should be converted in the same way. According to art. 22 sec. 1, second sentence, cited above act costs incurred in foreign currencies are converted into zlotys according to the average exchange rate announced by the National Bank of Poland on the last business day preceding the day the cost was incurred.

This means that for the purpose of calculating the tax, each closed position (income or cost) should be converted into zlotys using the NBP exchange rate from the previous business day. For active FOREX investors, who often occupy several or a dozen positions each day, this means a lot of work.

It should also be remembered that for control purposes, you must have a document on the basis of which the revenue and costs were determined. The evidence documenting the income and costs obtained on the FOREX market may be, for example, an electronic record of the history of the currency account, as long as it contains data identifying the taxpayer and data allowing to determine the amount of income and the costs of obtaining it.

1. part of the article 3. part of the article