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.

Quick Answer

Tax-loss harvesting is the intentional selling of investments at a loss to offset capital gains and lower your tax. In Poland you settle in PIT-38, netting losses against gains in the same year, and unused losses can be carried forward over the next 5 years (max 50% per year). The strategy applies only to regular taxable accounts, not IKE or IKZE, where there is no Belka tax to offset. Poland has no formal wash sale rule, but transaction costs must stay below the tax saved. This is general information, not tax advice.

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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

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FAQ

Can I offset stock losses against ETF or crypto gains in Poland?

Within PIT-38, capital gains and losses from instruments taxed under the same regime can generally be netted in the same tax year. Crypto is taxed separately under its own rules (PIT-38 crypto section), so it cannot be mixed with stock and ETF gains. Always check the current PIT-38 instructions before assuming offsets.

How long can I carry forward unused losses?

Polish law lets you deduct an unused capital loss across the next 5 tax years, with a cap of 50% of the original loss in any single year (newer rules also allow a one-time deduction up to a limit — check current law). Track the year the loss arose, because the 5-year window starts from then. Beyond the window, the loss is lost.

Does Poland have a wash sale rule like the US?

Polish tax law does not have a formal "wash sale" rule equivalent to the US 30-day repurchase ban. In practice, selling and immediately repurchasing the exact same instrument purely to manufacture a loss can be challenged by the tax authority as artificial. A safer approach is to switch to a similar but not identical instrument (different issuer, same index).

Does tax-loss harvesting work inside IKE or IKZE?

No. IKE and IKZE are sheltered from Belka tax on gains, so realizing losses there gives you no offset against tax. The strategy only applies to a regular taxable brokerage account where Belka tax of 19% is charged on net gains.

Do transaction costs eat the benefit?

They can — especially on low-cost positions where commissions, spreads, and FX conversion add up. A rule of thumb: the tax saved should clearly exceed the round-trip cost of selling and rebuying a similar instrument. This is general information, not tax advice; consult a tax advisor for your specific situation.