Tax-Loss Harvesting — tax loss realization

What is tax-loss harvesting?

Tax-loss harvesting is a strategy involving intentionally selling investments at a loss to use the realized loss to reduce capital gains tax. It's a legal way to reduce your tax bill without changing market exposure.

How does it work in Poland?

In Poland, you settle investment gains and losses in PIT-38. You can offset losses from one instrument with gains from another in the same tax year. Unused losses can be deducted over the next 5 years (maximum 50% of the loss in one year).

Example

• You sell ETF A with a 10,000 PLN gain → tax 1,900 PLN (19%)
• You sell ETF B with a 6,000 PLN loss
• Tax base: 10,000 − 6,000 = 4,000 PLN → tax 760 PLN

Savings: 1,140 PLN.

Step by step

1. Identify loss positions — review your portfolio for instruments that are "in the red"
2. Sell at a loss — realize the loss on a regular account (not IKE/IKZE — there's no Belka tax there)
3. Buy a similar instrument — e.g., switch from one issuer's S&P 500 ETF to another issuer's S&P 500 ETF. You maintain exposure but realize a tax loss
4. Settle in PIT-38 — offset the loss with gains

Important rules

Wash sale

Poland doesn't have a formal wash sale rule (like in the US) that prohibits repurchasing the same instrument within 30 days. You could theoretically sell and immediately buy back the same ETF. However, it's worth being cautious — the tax office might question a transaction if they consider it artificial.

Regular account only

On IKE and IKZE you don't pay current tax on gains, so tax-loss harvesting doesn't make sense. The strategy applies only to brokerage accounts taxed currently.

Transaction costs

Selling and buying back generate commissions. Make sure the tax savings exceed transaction costs.

When to use?

• At year-end — when you already know realized gains and want to offset them
• After major market drops — more loss positions to realize
• During portfolio rebalancing — you're changing composition anyway, so realize losses in the process

How Freenance can help

Freenance identifies loss positions in your portfolio and estimates potential tax savings from tax-loss harvesting. This way you won't miss opportunities for tax optimization.

👉 Optimize taxes with Freenance — freenance.io