How to report eToro in PIT 38 in Poland

How to report eToro in PIT 38 step by step

1. Download the full Account Statement from eToro.
2. Identify all closed transactions, meaning shares, CFDs and ETFs, as well as dividends, interest, and cryptocurrency acquisitions and disposals.
3. Separate the data into shares and ETFs, CFD contracts, cryptocurrencies, dividends and interest.
4. Apply the FIFO rule wherever it is relevant for tax purposes.
5. Convert each tax relevant transaction into PLN using the average NBP exchange rate from the day preceding the given transaction.
6. Calculate the result separately for shares and ETFs, separately for CFDs, separately for cryptocurrencies, and separately for dividends and interest.
7. Enter the correct values into the PIT 38 return.
8. If you report foreign income, also attach PIT ZG and do not forget to credit foreign withholding tax on dividends where applicable.

Introduction

eToro is one of the most popular foreign investment platforms used by Polish investors. The interface is simple, market access is broad, and CopyTrader creates the impression of easy investing without active trading by the user.

From a tax perspective, however, this is not a simple account. eToro does not issue a Polish PIT 8C form. That means the investor must determine income, costs, the tax result and then prepare the PIT 38 return correctly.

In practice, the biggest difficulty is not filing the tax return itself, but properly processing the transaction history. With a few trades, it can be done manually. With hundreds or thousands of transactions, it becomes technical work rather than a simple form filling exercise.

Why eToro is a popular investment platform

eToro became popular because it combines a simple interface with access to many asset classes. The user sees the account more like an investment app than a traditional brokerage account.

The CopyTrader feature plays a major role. It allows users to copy the trades of other investors. From the user's perspective, this looks convenient. From a tax perspective, it often means hundreds or thousands of transactions that must be reported.

This is exactly where the first practical problem appears. The investor feels they did very little. The account did a lot in the background.

Does eToro issue PIT 8C and what does it mean

No. eToro does not issue the Polish PIT 8C form.

This is the basic difference between eToro and a Polish broker. With a Polish brokerage house, the taxpayer usually receives a ready summary for PIT 38. With eToro, this does not exist. You do not receive a Polish tax report. You do not receive a ready tax result. You do not receive figures calculated under Polish rules and NBP exchange rates.

The conclusion is simple. A Polish investor must download the transaction history, calculate proceeds and costs, apply FIFO, convert everything into PLN and only then complete PIT 38.

Which tax return applies to eToro, meaning PIT 38 and PIT ZG

Income from capital investments carried out through eToro is generally reported in the PIT 38 return. This is the main return for income from the disposal of securities, derivative financial instruments and virtual currencies.

If the income is foreign in nature, in practice PIT ZG must also be taken into account. This is the attachment concerning income earned abroad.

This does not mean the whole account is reported as one combined result. Shares and ETFs, CFDs, cryptocurrencies, dividends and interest must be analysed separately. These categories do not work the same way for tax purposes.

Why the result shown in the eToro app is not the tax result

The result visible in eToro is a platform result. It is not a tax result under Polish law.

The reason is simple. Polish tax reporting requires each tax relevant transaction to be converted into PLN, using NBP exchange rates from the correct dates, and applying rules such as FIFO. The eToro app shows a result in the logic of an investment account, not in the logic of Polish PIT 38.

That is why a situation is possible where the investor looks at the app and believes there is no income or only a small result, while a proper Polish tax calculation produces something different.

Why a full transaction history is necessary

Without a full transaction history, eToro cannot be reported reliably. You need not only closed positions from the given year, but also earlier purchases if they affect costs determined under FIFO.

Based on the full history, you determine the purchase date, sale date, acquisition cost, proceeds, dividends, fees and corporate actions such as a split or reverse split.

The lack of complete data causes a large number of errors. The investor downloads too narrow a period or only looks at closed positions from one year. That is not enough.

How to download the eToro transaction report for tax filing

The transaction report can be downloaded from the Account Statement section in eToro. In practice, it is best to download the file in Excel format and set a date range covering not only the tax year, but also the earlier period needed to determine costs correctly.

For a given tax year, you will very often also need December of the previous year or even earlier years if positions were opened earlier and closed later.

FIFO rule in eToro tax reporting

FIFO means First In First Out. In practice, when assets are sold, the earliest purchased units of a given instrument are assigned as the tax cost.

This matters because the way positions are shown in eToro may suggest something else. The user feels they are closing a specific visible position and that its cost should be assigned to the tax result. Under Polish tax rules, that is often wrong.

Simple FIFO example

• You buy 100 shares at 100 USD.
• Later you buy another 100 shares at 120 USD.
• You then sell 70 shares.

For tax purposes, the cost will be 70 shares from the first purchase at 100 USD. Not from the second one. Not from the position you would intuitively regard as being closed. From the earliest lot.

This is exactly why the tax result can differ significantly from the result shown by the platform.

How to apply NBP exchange rates when reporting eToro

Each tax relevant operation must be converted into PLN. The average NBP exchange rate from the day preceding the transaction is used.

This applies, among other things, to the purchase cost, sale proceeds and foreign tax withheld on dividends.

One of the most common mistakes is using one average USD exchange rate for the entire year. That is wrong. Each operation should be calculated using the exchange rate applicable to the specific date.

Can eToro fees and charges be treated as tax deductible costs

Not every fee automatically becomes a tax deductible cost. Tax significance may attach mainly to those costs that are directly connected with the acquisition or disposal of the given instrument.

In practice, each fee must be checked individually to see what its character is and whether it can be documented correctly based on the platform report.

This is not an area for guesswork. With a simple account, the issue may be easy. With a more complex account, especially with many transaction types, misclassification is common.

Stock splits and tax reporting

A stock split in itself generally does not create taxable income. It does, however, change the number of shares and their unit price, which then affects future sale reporting and the operation of FIFO.

If a split is not reflected correctly, the tax result may be completely distorted. This is one of the most common practical errors in self prepared filings.

Nvidia stock split example

Assume the investor bought 100 Nvidia shares at 100 USD each. The total cost is 10,000 USD.

The company then carries out a 10 to 1 stock split. After the split, the investor holds 1,000 shares at 10 USD each. The overall economic value does not change, but the number of shares and the unit price do.

If the investor later sells 200 shares, the tax cost of that sale is not 200 times 100 USD, but 200 times 10 USD. That means 2,000 USD, taking into account the correct adjustment of share quantities after the split.

Why a stock split can be hard to spot in eToro

In eToro, a split does not always look like a classic purchase or sale transaction. Often the user simply sees a different number of shares and a different unit price after some time.

As a result, many investors do not notice the moment when they should have adjusted the quantity and cost history. Without that, later calculations are wrong.

When preparing the filing, you therefore need to check whether the share count, unit price and data chronology were reflected correctly after such an event.

Reverse split

A reverse split works in the opposite way to a regular split. The number of shares decreases while the unit price rises proportionally.

For tax purposes, the basic logic is similar. The operation itself generally does not create income, but it matters for later sales, costs and the application of FIFO.

If you fail to reflect a reverse split, the acquisition cost on a later sale may be calculated incorrectly.

How to report shares and ETFs from eToro

For shares and ETFs, you need to determine the sale proceeds and the acquisition cost. The acquisition cost is assigned under FIFO, and both values are converted into PLN using the correct NBP exchange rates.

Only after those steps can you determine the actual taxable income or loss. This is exactly the stage where many investors make the mistake of using the result from the app instead of doing a full tax calculation.

How to report CFD contracts from eToro

CFD contracts are derivative financial instruments. For tax purposes, they should not be treated as identical to a simple sale of shares, although in practice they also fall within the capital income area reported in PIT 38.

For CFDs, you need to determine the result on individual transactions, convert the relevant values into PLN, and keep this category separate from cryptocurrencies, dividends and interest.

The problem with CFDs is mainly scale. Active trading can generate a huge number of operations, which means a lot of technical work.

How to report cryptocurrencies from eToro

Cryptocurrencies must not be mixed with shares, ETFs and CFDs. They are a separate tax category.

The most common mistake is to put the entire eToro account into one combined result. That approach is wrong. The result from cryptocurrencies is not combined with the result from securities and derivatives in the same way.

That is why an account containing shares, CFDs and cryptocurrencies at the same time requires the data to be separated into distinct groups before the tax calculation even starts.

Do you need to report eToro if you did not withdraw any money

Yes. Not withdrawing money from eToro does not mean there is no tax obligation.

In capital investments, what matters as a rule is the sale of the asset or the closing of the position. If you sold shares, closed CFDs or carried out other operations that generated a result, you may have created a tax obligation even if all funds remained on the platform the whole time.

How CopyTrader affects tax reporting

CopyTrader is convenient from an investment perspective, but often problematic from a tax perspective. The user copies one or several investors and feels that they are not actively doing anything. The account, however, performs many operations automatically.

In practice, CopyTrader can generate hundreds or thousands of transactions, many partial position closures and a large number of events that must be classified and calculated.

That is exactly why accounts using CopyTrader are very often technically difficult to report without assistance.

How to report US dividends from eToro

Dividends from US companies are common in eToro accounts. This is a separate income category. They must not be treated as the same as the result from selling shares or ETFs.

In Poland, dividends are generally taxed at 19 percent. If withholding tax was collected abroad, it may be taken into account under the applicable double tax treaty and Polish tax rules.

Here too, the income must be converted into PLN using the average NBP exchange rate from the day preceding the receipt of the income.

W 8BEN form

W 8BEN is the form that allows the reduced US withholding tax rate under the treaty between Poland and the United States to be applied.

If W 8BEN is submitted correctly, US dividend withholding tax is usually collected at 15 percent instead of 30 percent.

This does not eliminate Polish tax. In practice, under the standard model, there may still be an obligation to pay the difference up to 19 percent in Poland.

What happens if you do not submit W 8BEN

If W 8BEN has not been submitted, 30 percent withholding tax may be collected in the United States. Many investors then assume that nothing more needs to be done in Poland. That is a wrong assumption.

In practice, the problem is that the Polish settlement does not always allow the full 30 percent to neutralise Polish tax. As a result, even after 30 percent has been withheld in the US, there may still be an obligation to pay an additional 4 percent in Poland.

The conclusion is simple. It is better to submit W 8BEN earlier rather than later.

Most common mistakes when reporting eToro in PIT 38

Does eToro send data to the Polish tax office, meaning CRS

eToro does not operate like a Polish broker that issues PIT 8C and sends a copy to the tax office. That does not mean the matter is completely invisible to the authorities.

Foreign financial institutions may be subject to the automatic exchange of tax information under CRS. In practice, this means the administration may receive information about the existence of the account itself and certain amounts of income or turnover.

This is still not a ready Polish tax settlement. But it is also not complete invisibility.

Can the tax office see your eToro account in practice

As a rule, the tax office does not see the full account in the same way the user sees it in the app. Nor does it automatically receive a ready tax result calculated under Polish rules.

In practice, however, the tax office may see information about the existence of the account and about high levels of income or turnover. That matters because, in investing, the reported amounts may correspond to total sales rather than actual profit.

This leads to a common misunderstanding. In reality, the taxpayer may have a small profit or even a loss, while the reported data may look like very high inflows. In that case, the tax office may ask for explanations.

Which types of income from eToro must be reported

An eToro account can generate several different categories of income. They need to be analysed separately.

So it is not enough to calculate one combined result for the whole account. First you must determine which income categories exist in the account, and only then move on to the calculations.

Belka tax on eToro investments

Income from eToro investments is generally subject to capital income tax, commonly called Belka tax in Poland. The basic rate is 19 percent.

• There is no tax free allowance here.
• This income is not reported in PIT 37.
• This income is not combined with employment or business income.
• It is not reported jointly with a spouse.

This is a separate tax area and that is why PIT 38 is the correct tax return.

Can a loss from eToro be carried forward to future years

For shares, ETFs and CFDs, a loss may be carried forward to subsequent tax years under the rules applicable to capital income. As a rule, the carry forward period is five consecutive tax years.

You must remember, however, that cryptocurrencies follow a different logic. It is not worth automatically applying the same simplifications used for shares and derivatives.

Is eToro legal in Poland

As a rule, a Polish investor may use a foreign broker such as eToro. The mere fact of using the platform is not the tax problem. The tax problem is failing to report the income properly in Poland.

So the legality of using the platform does not mean the platform will perform the investor's Polish tax obligations. That is exactly what eToro does not do.

How to calculate tax on eToro

The model is theoretically simple. You determine proceeds, determine cost, calculate income and apply the 19 percent tax rate. In practice, an eToro account is usually not that simple.

Before the calculation itself, you need to separate operation categories, assign costs under FIFO, apply NBP exchange rates, separate cryptocurrencies, identify dividends and check corporate actions.

That is why the question is not only how to calculate the tax. The real question is whether the input data has been prepared correctly.

Does eToro generate a tax report

eToro generates a transaction report, usually in the form of an Account Statement. That is source material for further work, not a ready Polish tax report for PIT 38.

The eToro report does not apply Polish NBP exchange rates, does not calculate the result according to Polish tax logic and does not replace a proper analysis of the account.

Why eToro tax reporting is difficult in practice

When it makes sense to outsource the filing instead of doing it yourself

• when you have more than just a few simple transactions
• when you used CopyTrader
• when the account contains shares, CFDs and cryptocurrencies at the same time
• when you received US dividends
• when splits or reverse splits occurred
• when part of the costs must be reconstructed from prior years