How to settle tax on cryptocurrencies? Brokers ignore it, but the Polish start-up sensed an opportunity
The remaining 19 percent who had profits from the game and earned on cryptocurrencies, however, do not get a tool to settle taxes on these profits. We asked XTB if it had or planned any helpful mechanisms for clients, unfortunately we did not receive an answer for three days. When there is no service on the market and there is demand, it creates a natural opportunity for someone else to earn money and create a new business.
– The idea of starting a company appeared in 2020 at the moment when I wanted to settle the cryptocurrency tax myself. First, I created a solution for myself, and then, when I realized that there were no services of this type based on automation on the Polish market, we created a startup – describes Bartosz Milczarek, Executive Director at Cryption R&D.
Why are the appropriate tools not offered by the brokers themselves, since clients bring them high profits?
– Stock exchanges ignore the subject of tax settlements. The lack of a data exchange standard or the lack of tax reports issued by them leave the user alone in settling with the tax office. Interestingly, the current generation prefers to use the application on their own rather than contact a tax specialist or accountant, informs Bartosz Milczarek.
Exit to Europe
Cryption R&D has just received PLN 2.5 million for development. The money was provided by the American funds FF VC and Pointer Capital, but also by the Polish businessman “business angel” Marcin Wenus. Already in the first year of operation, the company showed a profit of PLN 27.8 thousand. PLN, but with revenues of only PLN 58 thousand. zloty. Started with a capital of 6 thousand. zloty.
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– In two years we have come a long way, including a huge developmental leap. In 2022, we recorded a tenfold increase in the number of users. Today, our solution is used not only by thousands of individual users, but also by tax offices and accounting offices that settle their clients in this way – describes Bartosz Milczarek.
It currently has 59 percent of shares in the company, Krzysztof Dworakowski has 20 percent, and FF VC – 21 percent.
As Cryption describes in a press release, “Over ten years of experience of Bartosz Milczarek and Krzysztof Dworakowski in creating IT systems for banking, forex brokers and the blockchain industry, and Hanna Milczarek, who has many years of corporate experience related to accounting and finance in the IT sector.
On the domestic market, Cryptions had virtually no real competition, so the leading position in its field was natural. The question is, is there a market for that, and is there money in that market? Investors believed it.
The collected PLN 2.5 million will be allocated for further development, i.e. for the implementation of new functions, but also for the expansion of the tool for tax offices and accounting offices. Above all, however, “after the services were well received on the domestic market, the startup sets out to conquer Great Britain and plans to continue its expansion to other countries” – we read in the presentation of Cryption R&D.
– We see great potential for our further development on the British market, where we want to raise additional funds. We are currently working on developing and improving our solution for the Polish B2B sector. In the future, we plan to expand into Central and Eastern Europe, where we want to be a leader – describes Bartosz Milczarek.
“Settlement with the tax office is a challenge”
– In our opinion, there are three main limitations that make it so settling accounts with the Tax Office on cryptocurrency trading can be a challenge. First, exchanges do not provide users with any tax reports. Secondly, cryptocurrency tax calculations are complicated, time consuming and costly for an accounting service. And third, there are not enough accountants who are up to date with the legal requirements for cryptocurrencies. We are convinced that our expertise and solution allow us to effectively eliminate all these aspects – argues Bartosz Milczarek.
The Cryption app allows you to quickly synchronize with cryptocurrency and blockchain exchanges and perform calculations. Additional benefits include expert support and a low subscription price. You can even use the free version, but it will only support up to 20 transactions. The higher package, with the settlement of up to 300 transactions, costs PLN 299 per year. In the UK, Cryptions offer up to 500 transactions for free, because there is already competition there.
– Our tool shows tax liabilities in real time. When a user makes a cryptocurrency transaction, we update the tax liabilities in the app after synchronization. This means that our application is used not only to calculate tax before submitting the tax form, but also to track tax liabilities in order to optimize them – explains Hanna Milczarek, managing director at Cryption, co-founder of the company.
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