CGT on foreign currency purchases

JaManSnowFlake

Are purchases made in a foreign currency subject to the same rules for other assets?

Say if a foreign currency I hold appreciates in value and I purchase goods with it, am I liable for 30% CGT once I go over the yearly threshold?

Or in a devaluing scenario I am increasing my tax shield which I can carry forward?

Marcusm

JaManSnowFlake wrote: »

Are purchases made in a foreign currency subject to the same rules for other assets?

Say if a foreign currency I hold appreciates in value and I purchase goods with it, am I liable for 30% CGT once I go over the yearly threshold?

Or in a devaluing scenario I am increasing my tax shield which I can carry forward?

The right to foreign currency (including foreign curency accounts) is a chargeable asset and, in theory, each withdrawal from an account is a part disposal of the asset. The UK changed the law to exclude certain day to day transactions many years ago but this was not carried through in Ireland.

It can be a bit of a hassle if you follow it through strictly.

Convert EURO into USD. (acquisition of chargeable asset, base cost point)

Use USD to acquire shares (disposal of one chargeable asset - currency - and acquisition of another - shares, need to calculate any taxable gain on the currency).

Sell shares and redeposit USD in bank (disposal of one chargeable asset - shares - and acquisition of another - currency, need to calculate any taxable gain on the shares).

In practice, I expect that most taxpayers and advisers only calculate gains/losses on the share disposals but ignore transactions in currency. It's not the correct way to do it, however.