On January 1, 2024, as part of the amendments to the VAT Act (known as Slim VAT 3) and certain other laws, changes were introduced regarding the taxation of capital gains for individuals investing through investment funds. The new taxation rules apply to income (revenue) earned in 2024.
Until the end of 2023, tax on the sale or redemption of investment fund units or investment certificates was settled on a lump sum basis (under Article 30a of the PIT Act). This meant that it was not possible to offset transactions resulting in profits with transactions resulting in a loss. The taxpayer also could not offset a loss from investment funds transactions if they simultaneously earned income from the sale of other financial instruments taxed under Article 30b of the Act.
Changes to regulations from January 1, 2024
From 2024, the catalog of revenues taxed under Article 30b of the PIT Act will include income from capital funds.
Consequently, it will be possible to settle in the annual PIT-38 return for 2024:
- losses from the redemption of fund units with income from the sale of shares,
- losses from the sale of shares with income from the redemption of fund units,
- losses from the redemption of fund units with income from the redemption of other capital fund units.
The latest legal changes allow for the reduction of the tax burden by including losses when settling investment profits. These losses can come from investments in funds themselves, as well as from transactions in securities (such as shares or investment certificates). This allows for the reduction of tax liability by taking into account incurred losses.
These losses can reduce the taxation basis in the next five tax years, with a deduction limit in each particular year of 50% of the loss value. It is also possible to reduce income from a given source by up to 5 million PLN in one of the next five tax years. Any unused loss amount can be settled in the remaining years of the five-year period, with the same limitation that the annual deduction cannot exceed 50% of the loss value.
The obligation of the Polish fund will be to provide a PIT-8C report, which will include information on the income earned or the loss generated from investments in funds. This information will allow for settlement with the tax office, showing income (profit) or loss from investments in the PIT-38 return. The first such settlement will take place in 2025 for 2024.
Benefits of the change
The main benefit is the possibility of offsetting losses from investment funds with profits (income) from other capital investments or offsetting losses from other capital investments with profit (income) from investment funds.
Additionally, the 19% tax on investment funds gains will be payable in the annual tax return, submitted personally by the taxpayer - by the end of April of the following the tax year.
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