Can we pool our knowledge regarding TAX and crypto and make some kind of FAQ/sticky?

Blacktie.

Cryptonovice wrote:

Anyone see Litepay (Litecoin) to be released feb 26th..game changer they reckon..ability yo change Litecoin to fiat and visa versa instantly...wonder how revenue will view that one...we may be the only country on earth held back as usual..there will be a serious amount of cg1 forms going in if they stick to their nonsense

How does this change anything to do with revenue?

Cryptonovice

Blacktie. wrote: »

How does this change anything to do with revenue?

Disposals? Sell gift or "exchange". They say its going to be a visa card...should bring confusion

Blacktie.

Cryptonovice wrote: »

Disposals? Sell gift or "exchange". They say its going to be a visa card...should bring confusion

This still changes nothing. Will it be hard to trace? Sure. But it's still your obligation to pay taxes on disposal of assets which will be when you use the card. Like people have previously said over and over just because you might not get caught it doesn't change your obligation to revenue.

Cryptonovice

Blacktie. wrote: »

This still changes nothing. Will it be hard to trace? Sure. But it's still your obligation to pay taxes on disposal of assets which will be when you use the card. Like people have previously said over and over just because you might not get caught it doesn't change your obligation to revenue.

Correct and right

.G.

Is there a specific method we have to use such as FIFO etc? Most methods are giving similar results except one which is half of all the others. Its called "average cost"

EDIT:- Its FIFO

Whelo79

This thread is like Ireland's biggest Merry-go-round!

Cryptonovice

Whelo79 wrote: »

This thread is like Ireland's biggest Merry-go-round!

Great thread! Some very knowledgeable people in here..im not one of them unfortunately! Learning though!

Peregrinus

nompere wrote: »

I don't think Revenue agree with that statement:

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-01-14a.pdf

Well, the Revenue practice statement says that "a chargeable gain/allowable loss can arise to a person buying and selling foreign currency otherwise than in the course of trade." But what we're looking at here is not buying and selling foreign currency; it's buying foreign currency and then using it to buy stuff. Just like you do every time you go on holiday outside the Eurozone, for example.

Peregrinus

Cryptonovice wrote: »

Anyone see Litepay (Litecoin) to be released feb 26th..game changer they reckon..ability yo change Litecoin to fiat and visa versa instantly...wonder how revenue will view that one...we may be the only country on earth held back as usual..there will be a serious amount of cg1 forms going in if they stick to their nonsense

It's already the case that if you think that, say, the US dollar is going to rise in value relative to the Euro, you can buy a bunch of US dollars and keep them in a shoebox under the bed (or in a US dollar bank account) and then sell them again when the expected rise has happened. It's all but impossible for the Revenue to detect this if you don't declare it.

So this isn't really a game-changer; it's just giving Litcoin more of the characteristics of a currency that fiat currencies already have. And it doesn't create a new risk/opportunity for tax evasion; given the highly liquid nature of currency, this is a risk/opportunity has always existed for those speculating in currency.

(If anything, the use of a Visa card to dispose of Litecoin should make transactions that little bit easier for Revenue to trace, because the issue of a visa card means there's a licensed and regulated bank in the loop.)

Emmo-m-

I see a lot of trading examples , exchanges , profit/loss on disposable assets etc. A LOT of overly complicated explanations from some smart people it seems but there is hardly a post or sticky with a simple example or explanation.

Simple example , lets see can I get a simple answer .

I buy 1 ethereum at €700 , I participate in an ICO and get 700 coins , those coins never get sent to an exchange by me they just sit in my wallet.

Throughout the year , the price of those 700 coins fluctuates like crazy as is the norm with crypto. Worth €1000 one week , €100,000 another week and €50 the next week.

How could this be liable for CGT?

Noctifer

Emmo-m- wrote: »

I see a lot of trading examples , exchanges , profit/loss on disposable assets etc. A LOT of overly complicated explanations from some smart people it seems but there is hardly a post or sticky with a simple example or explanation.

Simple example , lets see can I get a simple answer .

I buy 1 ethereum at €700 , I participate in an ICO and get 700 coins , those coins never get sent to an exchange by me they just sit in my wallet.

Throughout the year , the price of those 700 coins fluctuates like crazy as is the norm with crypto. Worth €1000 one week , €100,000 another week and €50 the next week.

How could this be liable for CGT?

When you hold those 700 coins you don't owe tax on them. You owe tax when you dispose of them for a profit. When you buy those 700 coins for 1 eth you are liable to pay tax on a disposal (eth was disposed for another coin). When you convert those 700 coins to something else (btc, euro, yen, whatever) you are liable to pay tax (in case you made a profit).

If you bought coins for of 700 euro, and then sell them a year later for 1.2 btc and that 1.2 btc is worth 2000 euro, then you made a gain of 1300 euro in that transaction, even though you converted to btc and not euro.

The only thing that matters is the price of the coin at the moment of disposal. If you buy BTC in 2015 for 2000 euro, you don't have to pay any tax or inform Revenue of it until the moment you dispose of it by either selling it for fiat or converting to something else.

Emmo-m-

Noctifer wrote: »

When you hold those 700 coins you don't owe tax on them. You owe tax when you dispose of them for a profit. When you buy those 700 coins for 1 eth you are liable to pay tax on a disposal (eth was disposed for another coin). When you convert those 700 coins to something else (btc, euro, yen, whatever) you are liable to pay tax (in case you made a profit).

If you bought coins for of 700 euro, and then sell them a year later for 1.2 btc and that 1.2 btc is worth 2000 euro, then you made a gain of 1300 euro in that transaction, even though you converted to btc and not euro.

The only thing that matters is the price of the coin at the moment of disposal. If you buy BTC in 2015 for 2000 euro, you don't have to pay any tax or inform Revenue of it until the moment you dispose of it by either selling it for fiat or converting to something else.

When you buy those 700 coins for 1 eth you are liable to pay tax on a disposal (eth was disposed for another coin).

So what would this equate to?

Noctifer

Emmo-m- wrote: »

When you buy those 700 coins for 1 eth you are liable to pay tax on a disposal (eth was disposed for another coin).

So what would this equate to?

You bought ETH for 700 euro, then you disposed of it when you get another coin. So you have to look at what the price of ETH was when you exchanged it for another coin. Considering how the price is constantly changing it's unlikely the price of ETH remained the same.

If you bought ETH for 700 euro and 2 minutes later exchanged it for another coin when it was worth 705 euro, you made a gain of 5 euro in that transaction.

Emmo-m-

Noctifer wrote: »

You bought ETH for 700 euro, then you disposed of it when you get another coin. So you have to look at what the price of ETH was when you exchanged it for another coin. Considering how the price is constantly changing it's unlikely the price of ETH remained the same.

If you bought ETH for 700 euro and 2 minutes later exchanged it for another coin when it was worth 705 euro, you made a gain of 5 euro in that transaction.

That is ridiculous. if that's what we assume is the procedure.

Appreciate the feedback.

barneystinson

Emmo-m- wrote: »

That is ridiculous. if that's what we assume is the procedure.

Appreciate the feedback.

It's the exact same if you substitute Sterling and Yen, or any other type of currency or chargeable asset, like land, shares, art.

That's how CGT works - you calculate your gain or loss in Euros, based on the difference between the € value at acquisition and the € value at disposal.

Emmo-m-

barneystinson wrote: »

It's the exact same if you substitute Sterling and Yen, or any other type of currency or chargeable asset, like land, shares, art.

That's how CGT works - you calculate your gain or loss in Euros, based on the difference between the € value at acquisition and the € value at disposal.

So similar to above :

1. Buy eth at €700
2. 2 weeks later eth is down to €500 and I buy 700 ico coins (CGT loss??)
3. 6 months later my 700 ICO coins are now worth €7000 in my wallet
4. I sell my ICO coins for eth which is now at €1000(CGT gain??)

How would it apply here? And that is a simple enough example.. Let alone if you were to sell half off your ico coins to another coin once or another 50 times?

If I buy eth at 2 different prices/time on the same day and do 4 ICO's...which price do you count towards the CGT on the eth then?

barneystinson

Emmo-m- wrote: »

So similar to above :

1. Buy eth at €700
2. 2 weeks later eth is down to €500 and I buy 700 ico coins (CGT loss??)
3. 6 months later my 700 ICO coins are now worth €7000 in my wallet
4. I sell my ICO coins for eth which is now at €1000(CGT gain??)

How would it apply here? And that is a simple enough example.. Let alone if you were to sell half off your ico coins to another coin once or another 50 times?

If I buy eth at 2 different prices/time on the same day and do 4 ICO's...which price do you count towards the CGT on the eth then?

You bought €700 worth of ETH and its value when you disposed of it was €500 - that's a €200 loss.

Your ICO coins have a base cost of €500 and you dispose of them when they are worth €7000, that's a €6500 gain.

AlmightyCushion

Emmo-m- wrote: »

So similar to above :

1. Buy eth at €700
2. 2 weeks later eth is down to €500 and I buy 700 ico coins (CGT loss??)
3. 6 months later my 700 ICO coins are now worth €7000 in my wallet
4. I sell my ICO coins for eth which is now at €1000(CGT gain??)

How would it apply here? And that is a simple enough example.. Let alone if you were to sell half off your ico coins to another coin once or another 50 times?

If I buy eth at 2 different prices/time on the same day and do 4 ICO's...which price do you count towards the CGT on the eth then?

That is exactly how it applies. Step 2. you made a loss. Step 3 you made a gain (you can also offset the gain with the loss you made from step 2). Yes, it gets complicated when you have a lot of trades but that is the same for every asset.

For disposals it's first in, first out. If you buy 1 ETH now at €400, another ETH at €1000 in an hour and 2 weeks from now you sell 1 ETH, it is the first ETH you bought at €400 that is being sold.

Emmo-m-

AlmightyCushion wrote: »

That is exactly how it applies. Step 2. you made a loss. Step 3 you made a gain (you can also offset the gain with the loss you made from step 2). Yes, it gets complicated when you have a lot of trades but that is the same for every asset.

For disposals it's first in, first out. If you buy 1 ETH now at €400, another ETH at €1000 in an hour and 2 weeks from now you sell 1 ETH, it is the first ETH you bought at €400 that is being sold.

So formula =

Eth price when bought -/+ eth price when sent to ICO = CGT gain/loss

ICO coins overall value when sold - original eth investment = CGT gain

Cryptonovice

So am I wrong in assuming if I buy ETH @ €150 and get 126 XRP @ €1.21 = €152.46 that my answer is not a gain of €2.46...its the value of the ETH when I swapped it which was €138...so a loss of €12???

Emmo-m-

How could any of this actually be tracked by an outside source if not yourself though? It would be hard enough task with data from centralized exchanges like Coinbase etc but practically impossible once decentralized exchanges go live

Thoughts?

Cryptonovice

Emmo-m- wrote: »

How could any of this actually be tracked by an outside source if not yourself though? It would be hard enough task with data from centralized exchanges like Coinbase etc but practically impossible once decentralized exchanges go live

Thoughts?

If revenue asked coinbase for info on all irish customers would they not just give it to them?

Emmo-m-

Cryptonovice wrote: »

If revenue asked coinbase for info on all irish customers would they not just give it to them?

Yes they would I assume.

But a decentralized exchange has no central entity for a government to request records. This is the whole point of the blockchain

Cryptonovice

Emmo-m- wrote: »

Yes they would I assume.

But a decentralized exchange has no central entity for a government to request records. This is the whole point of the blockchain

Can you tell us these names of exchanges that are decentralised. Interesting

Noctifer

Cryptonovice wrote: »

So am I wrong in assuming if I buy ETH @ €150 and get 126 XRP @ €1.21 = €152.46 that my answer is not a gain of €2.46...its the value of the ETH when I swapped it which was €138...so a loss of €12???

Exactly

Noctifer

Cryptonovice wrote: »

If revenue asked coinbase for info on all irish customers would they not just give it to them?

Coinbase would not release the info unless the would be required by law, like a court order. The have legal battles with the IRS in the states. The IRS was request all the info on all the users, they got it down to some of them, not all.

But you should assume that Revenue will get the info from exchanges at one point in time.

Cryptonovice

Noctifer wrote: »

Exactly

Exactly...€12 Loss ya? Interesting..I thought it was price of asset A vs price of Asset B when swapped/exchanged

barneystinson

Emmo-m- wrote: »

How could any of this actually be tracked by an outside source if not yourself though? It would be hard enough task with data from centralized exchanges like Coinbase etc but practically impossible once decentralized exchanges go live

Thoughts?

Absolutely.

And if Revenue have to estimate your tax liability would you like to bet on them underestimating or overestimating it...?

It's possible they'd look at the value of your holdings at a point in time, and if you can't prove what the original investment/base cost was, hit you with tax on most or all of it.

The tax system is based on self assessment, and the individual taxpayer is the person in possession of all the knowledge and information necessary for their true liability to be ascertained.

The way to ensure your liabilities are, or can be correctly calculated (even if you choose to evade paying) is to keep proper records of your transactions. This applies to cryptocurrency as it applies to all other assets.

AlmightyCushion

Cryptonovice wrote: »

So am I wrong in assuming if I buy ETH @ €150 and get 126 XRP @ €1.21 = €152.46 that my answer is not a gain of €2.46...its the value of the ETH when I swapped it which was €138...so a loss of €12???

I'm confused. You buy 1 ETH today at €150. Tomorrow you transfer ETH to XRP and get exactly 126XRP for your ETH (meaning you have no ETH left). At the time of the transfer ETH was worth €138 and XRP was worth €1.21 each so €152.46. Is that correct? If so, could someone not just buy a load of ETH and exchange it for XRP, then sell the XRP back to euro and make some easy money?

Noctifer

AlmightyCushion wrote: »

I'm confused. You buy 1 ETH today at €150. Tomorrow you transfer ETH to XRP and get exactly 126XRP for your ETH (meaning you have no ETH left). At the time of the transfer ETH was worth €138 and XRP was worth €1.21 each so €152.46. Is that correct? If so, could someone not just buy a load of ETH and exchange it for XRP, then sell the XRP back to euro and make some easy money?

You would lose money on the ETH to XRP transfer but you would have a gain on the XRP to EUR transfer (or whatever other fiat or crypto currency).