Living in Germany/ Mining in Poland

[diegoblanco_00]

Hello everyone!!

I actually live in Germany, Berlin.

I am about to start GPU crypto mining (not trading) activities. They will generate yearly income in BTC or other lite coins like ETH, Ergo, etc. for less than 22.000 euro / year during 2021 as per actual conversion and less than 50.000 Eu in 2022. I mention this data in regards to the business registration that I believe could fall into the small business: Kleinunternehmer.(small business)

However the mining machines will be based out in Poland, but I live and pay my taxes in Berlin. I have a full time permanent job as employee in Berlin, so beside the approval of my employer, might I need a private business registration in Poland too?

My main question would be about how to declare such assets in the tax report, as the activity of generating such coins from crypto mining economic activity.

Also about the proper company/sole trader registration document required.

I would like to have my taxes in order.

If you have clear answers to my questions and could help me with this kind of issues or point out to the correct person I will be very happy.

Thank you!!

[CryptoTraderM]

I guess Koinly cannot help you much with the taxation of Crypto mining. For example, they have no means for you to enter your monthly electricity bill and to submit a sales tax report to claim back the sales tax, that you paid for electricity deliveries.

Furthermore, if you found a company in Germany and run your business in Poland, you still have to register your business premises in Poland and file all the tax reports (monthly or quarterly sales tax, yearly income tax and so on) for it. In particular, you will have to separate your earnings into a part, that originated in Poland and for which you pay tax in Poland, and another part, that originated from your administrative work in Germany, and for which you pay tax in Germany. Both Poland and Germany may disagree with your split of the income between the two countries, and they may do that in a tax audit, that happens years after you started your business, requiring you to change all the tax statements, and fight with the authorities on the other side to get back, what you paid too much to them.

This even applies, if you found the company in Poland, because then, your management activities in Germany will also be considered business premises in Germany. There is no way, that you can avoid the shallow waters of “Double Taxation” (and the treaties, that ought to avoid them), if you run a business cross-border.

The cleanest solution therefore might be to find a partner in Poland, who runs the mining rig as HIS business and leases his service to you. But even in that case, you will likely still have to register a business in Germany and file quarterly sales tax statements (even though they are net zero).

You should definitely ask a tax lawyer both in Germany and in Poland before setting up anything.