Tax-Loss Harvesting in Poland — Is It Worth It?

Tax-Loss Harvesting in Poland — Is It Worth It?

Tax-loss harvesting is the practice of intentionally selling investments at a loss to reduce your capital gains tax liability. It's a well-known strategy in the US, but does it make sense under Polish tax law? In this guide, we'll examine how it works in Poland, what the limitations are, and when it's worth using.

What Is Tax-Loss Harvesting?

In simple terms: you sell assets you've lost money on to generate a tax loss. You can then offset this loss against gains from other investments, reducing your tax bill.

Example:

• You earned 10,000 PLN selling shares of Company A
• You lost 4,000 PLN selling shares of Company B
• Your net gain: 6,000 PLN
• Tax at 19%: 1,140 PLN (instead of 1,900 PLN without offsetting)
• Savings: 760 PLN

How Does It Work Under Polish Tax Law?

Legal Basis

Article 9(3) of the PIT Act allows offsetting losses against income from the same source over 5 tax years following the year the loss was incurred.

Key Rules:

1. Losses can only offset income from the same source

   • Capital losses (e.g., from stocks) can only offset capital gains
   • You CANNOT offset investment losses against employment income

2. Annual limit: 50% of the loss

   • In any single year, you can deduct up to 50% of the incurred loss
   • The remaining 50% carries forward to subsequent years (5 years total)

3. Alternative: lump sum up to 5 million PLN

   • Since 2022, you can also deduct a loss in one go if it doesn't exceed 5 million PLN
   • This simplification works well for most individual investors

4. Requires actual transactions

   • You must actually sell the asset — paper losses don't count

When Does Tax-Loss Harvesting Make Sense?

Scenario 1: You Have a Large Gain to Offset

You made significant profits on one investment and have other positions in the red. Selling losing positions reduces your tax bill.

Scenario 2: Portfolio Rebalancing

Planning to change your portfolio structure? Instead of selling winning positions (and paying tax), start by selling losing ones.

Scenario 3: Year-End Tax Planning

December is a good time to review your portfolio for potential loss offsetting against gains earned during the year.

Scenario 4: Strategy Change

If you want to exit assets you no longer believe in, it's better to do it when they're down — at least you'll generate a tax benefit.

When Tax-Loss Harvesting Does NOT Make Sense

1. You Have No Gains to Offset

Without capital gains, there's nothing to offset against. The loss carries forward for up to 5 years, but you don't know if you'll generate gains in that time.

2. Transaction Costs Exceed the Benefit

Brokerage commissions, spreads, and potential repurchase costs can eat into your tax savings.

3. Wash Sale Considerations

In the US, the "wash sale rule" prevents you from deducting a loss if you repurchase the same asset within 30 days. Poland doesn't formally have this rule, but tax authorities can challenge transactions that appear artificial under the general anti-avoidance clause (Article 119a of the Tax Ordinance).

Recommendation: If you want to maintain similar exposure, consider buying a different ETF tracking the same index or a different company in the same sector.

4. Short-Term Thinking

Selling an asset at a loss just to "save on taxes" can be shortsighted. If you believe in the long-term growth of that asset, hold it.

Practical Example: Step by Step

Situation:

• Gain from selling an S&P 500 ETF: 15,000 PLN
• Loss on GetBack shares (bought years ago, nearly worthless): -8,000 PLN
• Loss on cryptocurrency (sold): -3,000 PLN

Calculation:

• Total gains: 15,000 PLN
• Total losses: 11,000 PLN
• Taxable income: 4,000 PLN
• Tax at 19%: 760 PLN (instead of 2,850 PLN)
• Savings: 2,090 PLN

Note: Cryptocurrency and stock/ETF gains are both classified as "capital income" (kapitały pieniężne) under the PIT Act, so offsetting is possible.

Tax-Loss Harvesting and IKE/IKZE

If you invest through IKE or IKZE accounts, tax-loss harvesting is irrelevant — these accounts are exempt from the Belka tax (IKE when conditions are met, IKZE with deferral). The strategy only applies to taxable brokerage accounts.

How to Track Your Gains and Losses

Effective tax-loss harvesting requires accurate tracking of:

• Purchase price of each asset
• Transaction dates
• Realized gains and losses

Freenance helps you track all assets — stocks, ETFs, crypto, bonds — in one place, making year-end tax planning significantly easier.

Comparison with Other Tax Optimization Strategies

FAQ — Frequently Asked Questions

Is tax-loss harvesting legal in Poland?

Yes, offsetting capital losses against capital gains is fully legal and provided for in the PIT Act.

How long can I carry losses forward?

For 5 tax years from the year the loss was incurred. You can deduct up to 50% per year (or a lump sum up to 5 million PLN).

Can I offset stock market losses against crypto gains?

Yes, both are classified as "capital income" under the PIT Act.

Can I offset Forex losses?

Yes, if you report them as capital income. Make sure you have the PIT-8C form from your broker.

Is there a wash sale rule in Poland?

Not formally, but tax authorities can challenge artificial transactions under the general anti-avoidance clause (Article 119a of the Tax Ordinance).

When is the best time for tax-loss harvesting?

December is a natural moment — you can review your portfolio and offset losses against gains before the tax year ends. But the strategy works year-round.

Does my brokerage automatically offset losses?

No. Your brokerage issues a PIT-8C form, but you must handle the offsetting yourself in your annual PIT-38 tax return.

Summary

Tax-loss harvesting in Poland is fully legal and can deliver real tax savings — especially in years with significant capital gains. The key is a deliberate approach: track your transactions, plan year-end sales, and avoid artificial transactions. It's not a strategy for every situation, but it's a valuable tool to have in your investment toolkit.