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

Fakent.ie

AlmightyCushion wrote: »

Only if you have a disposal in that year. A disposal mean selling some of your coin or trading some of your coin for another coin.

and supposedly they want a list of each tx between coins?

GreeBo

Fakent.ie wrote: »

and supposedly they want a list of each tx between coins?

Really only for an audit.
You can say
"I invested 1K, I realised €300 profit so my CGT is €90" which may be fine, or they may look for more info at a later date

Fakent.ie

GreeBo wrote: »

Really only for an audit.
You can say
"I invested 1K, I realised €300 profit so my CGT is €90" which may be fine, or they may look for more info at a later date

Doubt they'd care to much about anything under like 10,000, but if your up to like a 1 million, they'd ask but that would be so many tx's they wouldn't even be able to go through them all

GreeBo

Fakent.ie wrote: »

Doubt they'd care to much about anything under like 10,000, but if your up to like a 1 million, they'd ask but that would be so many tx's they wouldn't even be able to go through them all

For 300K I reckon they could bother to take a quick look (albeit via 10 trainee accountants)

Never underestimate how thorough an auditing accountant can be.

(also 1, 000,000 could easily be under 10 txns, it could be 1!)

Benzino

GreeBo wrote: »

Really only for an audit.
You can say
"I invested 1K, I realised €300 profit so my CGT is €90" which may be fine, or they may look for more info at a later date

Just to confirm I understand, in the above scenario you wouldn't make any payment as it's less than 1200, but you would still file CGT by October 31st, correct?

GreeBo

Benzino wrote: »

Just to confirm I understand, in the above scenario you wouldn't make any payment as it's less than 1200, but you would still file CGT by October 31st, correct?

Assuming you had no other CGT gains, yep!

[Deleted User]

GreeBo wrote: »

Assuming you had no other CGT gains, yep!

I assume if you don't owe any tax though that not making a return is not a big deal.

GreeBo

Angel Dead Apartment wrote: »

I assume if you don't owe any tax though that not making a return is not a big deal.

Depends on if revenue feel you do owe tax, then you have to prove you dont.

It might be something a simple as, for example
You transfer 5K from 5 different banks into crypto and at the end of the year transfer 26k back into 1 account.

Revenue might want to know where that came from.

Elessar

Question on deducting the purchase price before tax - does it have to be the same coin?

Say you wanted to cash out 10k of XRP that once cost you 1k in ETH to buy - but you have 5k also in eth separately that cost you 2k. Can you deduct the 2k aswell as the 1k? What about if you had an amount in bitcoin you wanted to deduct against the eth instead of waiting to cash that out? Or does it have to be from the original transaction?

GreeBo

Elessar wrote: »

Question on deducting the purchase price before tax - does it have to be the same coin?

Say you wanted to cash out 10k of XRP that once cost you 1k in ETH to buy - but you have 5k also in eth separately that cost you 2k. Can you deduct the 2k aswell as the 1k? What about if you had an amount in bitcoin you wanted to deduct against the eth instead of waiting to cash that out? Or does it have to be from the original transaction?

Forget the idea of cashing out.

Its easier to think that CGT is due everytime you exchange one currency for another.
Its irrelevant if that currency is XRP to ETH or BTC to EUR.
In your example there are many CGT events you need to track.

EUR to ETH (no event)
ETH to XRP (Event, how much did the ETH inccrease in value between when you bought and sold?)

XRP to ETH (Event the same as above)
ETH to EUR (Event same as above)

Im not following your question on "deducting" things, can you explain further?

However, if it helps, trading in crypto (as of now) is treated the same as stocks, i.e. in a FIFO manner.

So if you buy say 50 ETH for €1K and then some time later buy another 50 ETH but this time for €2K you now have 100 ETH that is worth €4K.
(your earlier 50 ETH has doubled in value up to €2K)

Note at this point no CGT event has taken place.

Lets say the price of ETH stays at €40 forever more.

If you want to buy XRP with some of your ETH, you cant decide to use the coins you bought at €40 to avoid CGT.
Its FIFO, so if you want to buy 50ETH worth of XRP you are realizing a gain on the ETH you bought at €20. (its getting you twice as much XRP now)

Not sure if that helps or confuses more!

jobless

GreeBo wrote: »

Forget the idea of cashing out.

Its easier to think that CGT is due everytime you exchange one currency for another.
Its irrelevant if that currency is XRP to ETH or BTC to EUR.
In your example there are many CGT events you need to track.

EUR to ETH (no event)
ETH to XRP (Event, how much did the ETH inccrease in value between when you bought and sold?)

XRP to ETH (Event the same as above)
ETH to EUR (Event same as above)

Im not following your question on "deducting" things, can you explain further?

However, if it helps, trading in crypto (as of now) is treated the same as stocks, i.e. in a FIFO manner.

So if you buy say 50 ETH for €1K and then some time later buy another 50 ETH but this time for €2K you now have 100 ETH that is worth €4K.
(your earlier 50 ETH has doubled in value up to €2K)

Note at this point no CGT event has taken place.

Lets say the price of ETH stays at €40 forever more.

If you want to buy XRP with some of your ETH, you cant decide to use the coins you bought at €40 to avoid CGT.
Its FIFO, so if you want to buy 50ETH worth of XRP you are realizing a gain on the ETH you bought at €20. (its getting you twice as much XRP now)

Not sure if that helps or confuses more!

What about coins like neo that give you a free neo gas coin every so often...it's not a fork... The free coins is usually percentage of the main coin How would that be taxed?

GreeBo

jobless wrote: »

What about coins like neo that give you a free neo gas coin every so often...it's not a fork... The free coins is usually percentage of the main coin How would that be taxed?

I think I said earlier (though it might be another thread!)
Things like GAS remind me of a dividend...

lifeandtimes

Not sure if anyone is aware but Theres a thread over in the investment forum discussing this for about 8 months now. 40 or so pages

https://touch.boards.ie/thread/2057749855/1

This nugget was interesting

EndaHonesty wrote: »

CGT is liable on the profits from the sale of currency.

What is the legal definition of currency in Ireland?

I would imagine it would revolve around the term "legal tender".

IMO Cryptocurrencies are not, as of now, legal tender.

Until there is specific legislation around cryptocurrencies it is not factually correct to say the CGT is definitely liable on the sale of crypto.

As an asset, again IMO, until cryptocurrencies are specifically legislated for, there are no definite rules.

thegolfer

lifeandtimes wrote: »

Not sure if anyone is aware but Theres a thread over in the investment forum discussing this for about 8 months now. 40 or so pages

https://touch.boards.ie/thread/2057749855/1

This nugget was interesting

I posted this earlier, and the legislation defines assets, set out below. If not currency then incorporeal property most likely covers it..

Incorporeal Property is not defined in legislation and would have a very wide meaning...Intangible property, with value, but lacking physical substance..

The legislation defines an asset as....

S532 TCA.

All forms of property shall be assets for the purposes of the Capital Gains Tax Acts whether situated in the State or not, including –

(a) options, debts and incorporeal property generally,

(b) any currency other than [the currency of the State]1, and

(c) any form of property created by the person disposing of it, or otherwise becoming owned without being acquired.

If not under S.532(a), then the incorporeal property as intangible assets (b) would cover the definition.

This definition can be very wide in its application, which is to be expected.

Peregrinus

You can disregard all the langauge after "including . . .", since that's all belts and braces stuff to deal with some possibly doubtful cases. A reference to "all animals, including birds, fish and insects" obviously embraces cats, dogs and cows; they are not mentioned because they are clearly animals. "All forms of property" are assets for CGT purposes, so the question you need to ask is "Is (e.g.) Bitcoin 'property'"? And the answer is, if you can own it, it's property. If you can buy it or sell it, it's property. The fact that it can be classed as a currency, or as incorporeal property, merely copperfastens the initial conclusion.

Yes, a holding of Bitcoin is an asset for CGT purposes. There are some questions around cryptocurrencies that might be worth taking a punt on in front of the Appeal Commissioners, but this is definitely not one of them.

Peregrinus

jobless wrote: »

What about coins like neo that give you a free neo gas coin every so often...it's not a fork... The free coins is usually percentage of the main coin How would that be taxed?

By analogy with how bonus issues of shares are treated, I think it would work like this:

Say you hold 10 coins of X cryptocurrency. You acquired them at a price of EUR 1.50 each, so your acquisition cost is EUR 15 for your entire holding.

You are allotted an extra 2 coins at no cost, so now you have 12 coins.

You haven't disposed of anything, so there is no liablity to CGT at this point. You didn't pay anything for your extra 2 coins, so there is no increase to your acquisition cost. So you now have a holding of 12 coins, with an acquisition cost of 15 euros.

A year later, the price is 10 euros per coin. You sell three coins for a total of 30 euros. That's a disposal. Your gain is calculated as follows:

Disposal proceeds: 30 euros

Acquisition cost: 15 euros x (3/12) = 3.75 euros

Gain: (20 - 3.75 16.25 euros

You'll note that the value of the coins at the time you were issued the two extra coins doesn't enter into this calculation at all.

jobless

GreeBo wrote: »

I think I said earlier (though it might be another thread!)
Things like GAS remind me of a dividend...

how are dividends taxed? .....

edit.. ignore post... didnt read above

jobless

Peregrinus wrote: »

By analogy with how bonus issues of shares are treated, I think it would work like this:

Say you hold 10 coins of X cryptocurrency. You acquired them at a price of EUR 1.50 each, so your acquisition cost is EUR 15 for your entire holding.

You are allotted an extra 2 coins at no cost, so now you have 12 coins.

You haven't disposed of anything, so there is no liablity to CGT at this point. You didn't pay anything for your extra 2 coins, so there is no increase to your acquisition cost. So you now have a holding of 12 coins, with an acquisition cost of 15 euros.

A year later, the price is 10 euros per coin. You sell three coins for a total of 30 euros. That's a disposal. Your gain is calculated as follows:

Disposal proceeds: 30 euros

Acquisition cost: 15 euros x (3/12) = 3.75 euros

Gain: (20 - 3.75 16.25 euros

You'll note that the value of the coins at the time you were issued the two extra coins doesn't enter into this calculation at all.

thanks for this... i dont get what the 20 represents in last calculation...could you explain....?...

Also i think this is the kind of area that needs clarification.... even you used the words 'i think'

Peregrinus

jobless wrote: »

thanks for this... i dont get what the 20 represents in last calculation...could you explain....?...

My apologies. The '20' in the last line of the calculation reprsents the disposal proceeds; it should be '30'. So the last line should read:

Gain: (30 - 3.75 26.25 euros

jobless wrote: »

Also i think this is the kind of area that needs clarification.... even you used the words 'i think'

New questions of tax practice are clarified by practice. That is, we'll have a clear answer on this when someone actually has a gain in circumstances analogous to my example, and accounts for the tax liabilities on the basis I have outlined, and the Revenue accept that. Or the account for it on some different basis, and the Revenue accept that. Or, in either case, the Revenue don't accept it, and the whole thing goes to the Appeal Commissioners. It's called practice because it's what happens in practice and, until it happens in practice, it hasn't happened. Hence "I think".

But, note, "I think" is not just a leap into the dark. "I think" is based on what already happens in practice in the very analogous situation of a bonus issue of shares, and on the fact (already noted in this thread) that there is nothing in the Taxes Acts to suggest that holdings of cryptocurrency should be treated differently for CGT purposes from holdings of other kinds of assets.

forrestgolfer

I have been thinking about this one for a while now. I'm originally from Ireland, but have been living in the UK for the last 3 years. I am about to move to Australia and will then have bank accounts in 3 countries. I invested £2000 about 2 months ago and now have over £30000 in my account. The investment was done by way of deposits to coinbase through my UK bank account which I then moved onto binance and beyond. I am wondering what is the most efficient way of keeping my taxes to a minimum? I was thinking of utilising the £11,000 or so cap gains tax free allowance in the UK which would allow me to cash out roughly £13,000 (including my initial investment).

For the rest i was considering putting it into my coinbase euro wallet.
From there I was thinking I would deposit the sterling equivalent of €1000 into coinbase and then withdraw €1000 from coinbase into my irish account. Then i would withdraw the same amount back into my UK account. So from the UK side it looks like I've deposited and withdrawn the same amount from coinbase and made no profit. And from the Irish side I would be using coinbase as a currency exchange facility to transfer my savings home.
This plan probably has lots of holes but said I'd post it anyway to get some feedback.

GreeBo

forrestgolfer wrote: »

I am wondering what is the most efficient way of keeping my taxes to a minimum?

Why not just go the whole hog and pay nothing?

You are already planning tax evasion.

barneystinson

forrestgolfer wrote: »

I have been thinking about this one for a while now. I'm originally from Ireland, but have been living in the UK for the last 3 years. I am about to move to Australia and will then have bank accounts in 3 countries. I invested £2000 about 2 months ago and now have over £30000 in my account. The investment was done by way of deposits to coinbase through my UK bank account which I then moved onto binance and beyond. I am wondering what is the most efficient way of keeping my taxes to a minimum? I was thinking of utilising the £11,000 or so cap gains tax free allowance in the UK which would allow me to cash out roughly £13,000 (including my initial investment).

For the rest i was considering putting it into my coinbase euro wallet.
From there I was thinking I would deposit the sterling equivalent of €1000 into coinbase and then withdraw €1000 from coinbase into my irish account. Then i would withdraw the same amount back into my UK account. So from the UK side it looks like I've deposited and withdrawn the same amount from coinbase and made no profit. And from the Irish side I would be using coinbase as a currency exchange facility to transfer my savings home.
This plan probably has lots of holes but said I'd post it anyway to get some feedback.

My feedback would be that you seem to be looking for advice on your plan to evade tax...

sunrainmooncl

So if I have about 60e profits in December. Do I need to fill out the CGT form and submit it to revenue?

I have asked this before but I got told "you definitely don't need to" and "you definitely do need to":P

lifeandtimes

sunrainmooncl wrote: »

So if I have about 60e profits in December. Do I need to fill out the CGT form and submit it to revenue?

I have asked this before but I got told "you definitely don't need to" and "you definitely do need to":P

No because the first €1200 or so of profit is not subject to CGT.

Fakent.ie

If i made my first investment in November 20th, When was I supposed to file a tax report and If I should of already where can I?

Peregrinus

Fakent.ie wrote: »

If i made my first investment in November 20th, When was I supposed to file a tax report and If I should of already where can I?

Making an investment isn't a chargeable event and doesn't trigger a liablity to file or pay anything.

If you dispose of an investment on 20 Nov, and make a gain, and incur a liability to CGT, you need to calculate and pay the CGT by 15 Dec. This is accompanied by a payment slip which basically says "I've made one or more gains in the period from 1 January to 30 Nov. Here is the CGT for which I am liable. Here is my name. Here is my PPS number." This is not a full tax return and does not set out details of gains, or of the calculation of the CGT due.

By 31 October in the following year, you have to file a tax return. There are a couple of different forms which can be used to file a tax return, involving different levels of details, and if you are in doubt as to which one you should complete the Revenue will advise you. (They'll generally write and tell you even if you don't ask them but, if they don't, you can ask.)

Gach eolas anseo.

Fakent.ie

Peregrinus wrote: »

Making an investment isn't a chargeable event and doesn't trigger a liablity to file or pay anything.

If you dispose of an investment on 20 Nov, and make a gain, and incur a liability to CGT, you need to calculate and pay the CGT by 15 Dec. This is accompanied by a payment slip which basically says "I've made one or more gains in the period from 1 January to 30 Nov. Here is the CGT for which I am liable. Here is my name. Here is my PPS number." This is not a full tax return and does not set out details of gains, or of the calculation of the CGT due.

By 31 October in the following year, you have to file a tax return. There are a couple of different forms which can be used to file a tax return, involving different levels of details, and if you are in doubt as to which one you should complete the Revenue will advise you. (They'll generally write and tell you even if you don't ask them but, if they don't, you can ask.)

Gach eolas anseo.

Well iv been trading most days since then but I didn't realize up until recently that i was supposed to report this as this is the first time I've ever did anything like this so since i first put euros into an exchange and bought on November 20th will it be okay to report it at the end of next year?

Peregrinus

Fakent.ie wrote: »

Well iv been trading most days since then but I didn't realize up until recently that i was supposed to report this as this is the first time I've ever did anything like this so since i first put euros into an exchange and bought on November 20th will it be okay to report it at the end of next year?

if you only bought your first cryptocurrency on 20 Nov, even if you traded actively every day after that, at this point you only need to worry about trades that you made between 20 and 30 Nov - just ten days.

This is what you do:

1. Calculate all the gains and losses you made each time you sold crypto between 20 and 30 Nov.

2. Add up all the gains, and subtract all the losses. This give you your net chargeable gain.

3. If your net chargeable gain is less than EUR 1,270 (your annual small gains allowance) you're fine; you have no CGT liability in respect of gains made up to 30 Nov, and you had no obligation to make any payment by 15 Dec.

4. If your net chargeable gain exceeds EUR 1,270 then you do have a CGT liability and you are in default. You can do one of two things:

(A) You can calculate your CGT liablity and send off a payment now, accompanied by the appropriate payments slip and a covering letter explaining that you're new to the game, you've only just learned that you had a payment obligation by 15 Dec, you acknowledge that you are late, and you apologise. If the actual amount of your CGT liablity is modest, all will probably be well. At worst, they'll impose a nominal penalty for late payment. When you realise that you're in default, you're always better off to tell the Revenue this rather than wait until they notice it and tell you.

(B) You can take yourself and your calculations off to an accountant/tax adviser, and get him to deal with the Revenue on your behalf. Myself, I'd be inclined to do this if the CGT liablity was more than modest.

Whichever option you take, if you intend to continue in the crypto trading game, I think it's time you got some professional advice. Your failure to do so has already got you into a slightly embarrassing position; do not let this happen again.

Payment of any CGT liability you may have in respect of gains arising from further disposals in the period 1 Dec to 30 Dec is due by 15 April. Your new year resolution should be to go and see an adviser so that, before that date, you will understand how your tax liabilities are calculated, understand when payment is due, and have in place a system that tracks your affairs so that you can comply with your tax obligations in a timely fashion, and without drama.

Fakent.ie

Peregrinus wrote: »

if you only bought your first cryptocurrency on 20 Nov, even if you traded actively every day after that, at this point you only need to worry about trades that you made between 20 and 30 Nov - just ten days.

This is what you do:

1. Calculate all the gains and losses you made each time you sold crypto between 20 and 30 Nov.

2. Add up all the gains, and subtract all the losses. This give you your net chargeable gain.

3. If your net chargeable gain is less than EUR 1,270 (your annual small gains allowance) you're fine; you have no CGT liability in respect of gains made up to 30 Nov, and you had no obligation to make any payment by 15 Dec.

4. If your net chargeable gain exceeds EUR 1,270 then you do have a CGT liability and you are in default. You can do one of two things:

(A) You can calculate your CGT liablity and send off a payment now, accompanied by the appropriate payments slip and a covering letter explaining that you're new to the game, you've only just learned that you had a payment obligation by 15 Dec, you acknowledge that you are late, and you apologise. If the actual amount of your CGT liablity is modest, all will probably be well. At worst, they'll impose a nominal penalty for late payment. When you realise that you're in default, you're always better off to tell the Revenue this rather than wait until they notice it and tell you.

(B) You can take yourself and your calculations off to an accountant/tax adviser, and get him to deal with the Revenue on your behalf. Myself, I'd be inclined to do this if the CGT liablity was more than modest.

Whichever option you take, if you intend to continue in the crypto trading game, I think it's time you got some professional advice. Your failure to do so has already got you into a slightly embarrassing position; do not let this happen again.

Payment of any CGT liability you may have in respect of gains arising from further disposals in the period 1 Dec to 30 Dec is due by 15 April. Your new year resolution should be to go and see an adviser so that, before that date, you will understand how your tax liabilities are calculated, understand when payment is due, and have in place a system that tracks your affairs so that you can comply with your tax obligations in a timely fashion, and without drama.

Luckily i fall under the first option where i didn't profit more then 1270 euro I wasn't really using the exchange much then as I was new to all of this and was hesitant but now 2.5 months later I am using exchanges a lot more frequently, So now any gains made between 1 Dec 2017 and 30th Dec 2017 I would owe to the revenue by 15th of April 2018?

How am I supposed to work out if i made a gain or loss in euro if it doesn't have the euro value here?
I am also confused with the words "disposed of" does that mean I have traded back to Euro or traded between currencies?


Looking online and it says January 31st 2018 is the cut of date for the "later period" of the year 1st Dec to the 31th, above you stated 15th April did i misread something?

Peregrinus

It doesn't have to be immediately tradeable for euros in order to have a value capable of being expressed in euros. After all, you generally can't buy land in Japan with euros - they kind of expect Japanese yen, for some reason - but if an Irish resident makes a gain sellling land in Japan, they have to express that gain in euros for CGT purposes. They manage, somehow.

You wouldn't be trading in these things if you couldn't, ultimately, directly or indirectly, convert your gains into fiat currency (because what would be the point?). If your gains can be converted, directly or indirectly, into fiat currency, or into any tradeable items which can be sold for fiat currency, then they have a value which can be expressed in euros. And if your gain really can't be converted, directly or indirectly, into money or money's worth, why in God's name are you "trading" in these things? You could have saved yourself an awful lot of time and trouble just by taking the euros you originally invested and burning them instead.

After all, you told us that you started out by putting euros into an exchange and, somehow, you managed to convert those euros into a cryptocurrency which "doesn't have the euro value". Just reverse the process by which you assigned a euro value to the currency when you bought it to assign a euro value to it as at the date you sold it.