Profits from investment funds – practical application of the new taxation rules (PIT-38)

From an investor's perspective, this change is generally favourable. However, practical experience to date shows that its application also involves new obligations and operational challenges.

Until the end of 2023, income derived from the redemption or repurchase of investment fund units was subject to a 19% flat-rate capital gains tax, withheld directly by the fund acting as the tax remitter. In practice, this meant that the investor was not required to take any action with respect to tax settlement, as the proceeds received had already been reduced by the applicable tax. As of 2024, this model has been abandoned. Income from investment funds now falls under Article 30b of the Polish Personal Income Tax Act and must be reported in the annual PIT-38 tax return. At the same time, the possibility of offsetting gains and losses within the capital income source has been introduced.

From the taxpayer's perspective, the most significant effect of the change is the ability to offset losses incurred on investments in investment funds against income earned from other capital instruments. The new rules also allow losses to be carried forward and deducted in subsequent tax years. This solution significantly increases the tax neutrality of investing and allows for more efficient management of tax liabilities, particularly for investors with diversified portfolios or those realizing both gains and losses on different financial instruments.

Practical experience so far shows, however, that the introduction of the new rules has resulted in a significant transfer of responsibilities from financial institutions to taxpayers. In particular, investors are now required to prepare their tax settlements independently, which in practice means gathering and analysing data from various sources. Where investments are held in multiple funds or through different financial institutions, this involves consolidating information from numerous PIT-8C forms and properly reflecting it in the annual tax return. Although the PIT-8C serves as the primary source of data, its use requires verification and reconciliation with other investment-related information. As a result, the tax filing process is no longer automatic and demands greater involvement and diligence on the part of the taxpayer.

The possibility of offsetting gains and losses is beneficial, but its practical application requires proper analysis. The data used for tax reporting often comes from different systems, and the timing of income and cost recognition may vary. As a result, taxpayers must independently determine the correct tax result, taking into account all investment-related events. In practice, this means that the effective use of the new regulations requires not only access to data but also its proper interpretation.

The greatest difficulties arise in the case of foreign investments, which are also subject to the new taxation rules. In such situations, investors often do not receive a PIT-8C form, which means that they must prepare the tax calculations themselves. In addition, currency conversion is an important element of the settlement process. Each transaction should be converted into Polish zloty (PLN) using the average exchange rate published by the National Bank of Poland (NBP) on the day preceding the transaction date. Consequently, the investment result determined in a foreign currency may differ from the tax result calculated in PLN. Exchange rate differences may affect the amount of income or loss, which further complicates the tax reporting process and increases the risk of errors.

The new regulations are particularly beneficial for investors who actively manage their portfolios and use various investment vehicles, as the possibility of offsetting gains and losses allows for a reduction of the effective tax burden. At the same time, practical challenges arise primarily in more complex situations, such as investments made through multiple entities and, in particular, foreign investments. The need to aggregate data, the lack of full automation, and the requirement to perform currency conversions make the tax reporting process more demanding and time-consuming.

The change in the taxation rules applicable to investment funds from 2024 represents an important step towards improving the consistency and neutrality of the tax system.

The possibility of offsetting investment gains and losses is undoubtedly a beneficial solution that responds to taxpayers' needs. At the same time, practical experience demonstrates that the new regulations significantly change the nature of the tax reporting process, transforming it from an automatic procedure into one that requires conscious action and careful analysis. In particular, for more complex investment portfolios and foreign investments, the proper preparation of tax filings may constitute a significant operational challenge and may require appropriate tax expertise and professional advisory support.