Tax season - general information

As every year, when the month of January appears in our calendar, investors start to take a massive interest in the tax issue. Every year the same questions are asked, the same doubts arise and we are accompanied by the same unjustified stress with the settlement of our profits or losses. How to settle tax forex? The tax season is in full swing, so below I will present you the most important information in a nutshell.

Will I receive a PIT from my broker?

It depends. Each regulated Polish Brokerage House (DM) is obliged to send to its client and its Tax Office - PIT-8c. It is an obligation imposed by the legislator and each DM must comply with it. PIT-8c is a document thanks to which the Tax Office knows about the revenues we have achieved and based on which we calculate our profit or loss. Based on it, we calculate our tax liability and fill everything in PIT-38. Of course, do not forget to pay the tax itself :). It sounds simple and it is so. It is worth remembering that we are liable for incorrect settlement of the tax, not the broker. Therefore, it is a silly idea to check the calculations personally.

What if we have an account with a foreign broker?

Due to the fact that the above statutory obligation applies only to Polish brokerage houses, foreign companies do not have to do it. And they do not. They do not do this because it would require them to know Polish tax regulations (and to monitor them, because they can change), and would also generate additional costs.

Therefore, we must settle ourselves on the basis of transactions from the platform for a given year. If we run an account in Polish zloty, it is not that difficult. Complications arise when keeping accounts in a foreign currency.

How to settle the Forex Tax?

We have three options:

1. we calculate everything ourselves,
2. we commission such a settlement to an accounting office (the cost usually depends on the number of transactions - not every office wants to undertake it),
3. use programs that calculate the necessary values.

We share with all our clients free The program "Forex Club - Tax", thanks to which you only need to load story from the platformto get the appropriate calculations (supports MT4, cTrader, JForex platform).

For more details on the settlement methods, see the series of articles "Taxation of Forex Income":

How to confirm our income from a foreign broker?

The Tax Office may call us for clarifications regarding the testimony given. This happens very rarely but it's better to be prepared for it. If we have done everything correctly then we have nothing to be afraid of. There are no uncomfortable questions here, and usually only a brief verbal explanation takes care of the matter. But due to the fact that it may be worth to print a list of all transactions in your life and keep it somewhere deep in the drawer. The printout is so good that if you decide to close your account with our broker or he will turn it off for us, eg after a year of our inactivity, it will not be a problem to quickly present the account history.

Does my broker's office matter?

No. Account should be taken in the country in which our tax residence is located. So if we live in Poland for most of the year, we also have to pay tax on capital gains here. It does not matter that our broker with whom we have an account is based in Cyprus, where the tax rate is 0%. It does not concern us.

READ NECESSARY: Choosing a broker - Polish or foreign?

Some say that you do not have to settle for profits if the broker does not issue PIT-8c. Nothing more wrong. This obligation does not disappear. Payments to our bank account, especially in large amounts, may be of interest to the tax office, and certainly will draw his attention when purchasing an exclusive car or flat.

What is the current rate in Poland?

At this moment, that is 3.05.2020 invariably from 2002, it is 19% (so-called Belka tax).

The plus is that we have the option to deduct 50% of the loss, if we have recorded one.

When do we have time to settle?

PIT-8c is sent by brokerage houses by the end of February. We must submit a PIT-38 by the end of April.

Consequences of unpaid tax

Failure to submit a tax return or failure to pay the tax due may result in a request to the Tax Office for explanations. An error in calculations or the lack of signature may only result in the need to submit a correction of the summons. However, if we do not submit the document or we do not pay the tax itself, we will start to be charged penalty interest, in addition, we may face a fine or imprisonment (or both), or we may be charged a flat-rate income tax on income from undisclosed sources of income or not found coverage in disclosed sources - in the amount of 75% of this income.

READ ALSO: A foreign broker can inform the US about your transactions

Tax optimization

Some are looking for legal ways to minimize tax costs. Most often, they decide to set up a company in countries with lower tax rates (eg Cyprus 0%) and pay out profits in the form of dividends. It is a way. It's just that this solution pays off only from a certain threshold of income, which must be large enough that the tax on them is higher than the annual maintenance of the activity (+ possibly tax in the country where we have a company). It is also important that our country should have a double taxation agreement.

For those interested, I recommend that you seek details directly from companies specializing in tax optimization and setting up such companies.

Good advice at the end

This article is not intended to scare you and make you aware of how to settle forex tax. The consequences of not paying the tax can clearly outweigh the benefits. Thus, it is not anything complicated and if you try to even settle it yourself, it will take you less than an hour. The hour that you have to spend in the next year of trading on the market. It's not much.