CGT while living abroad

Romanenko

I acquired some cryptocurrency a few years ago while travelling and it is worth a substantial amount now. I am an Irish citizen and have been back here for the last 18 months having lived abroad in Asia/Australia for most of last decade. As a freelance developer so I can work from anywhere, so is it as simple as heading to live in a country with zero CGT (eg. croatia) for a year if I want to sell my holdings without losing a third of the proceeds? I bought it in an airport in Malaysia if I remember correctly!:pac:

Peregrinus

Romanenko wrote: »

I acquired some cryptocurrency a few years ago while travelling and it is worth a substantial amount now. I am an Irish citizen and have been back here for the last 18 months having lived abroad in Asia/Australia for most of last decade. As a freelance developer so I can work from anywhere, so is it as simple as heading to live in a country with zero CGT (eg. croatia) for a year if I want to sell my holdings without losing a third of the proceeds? I bought it in an airport in Malaysia if I remember correctly!:pac:

No. Assuming you are Irish domiciled (and if you're not, I'm sure you'd have mentioned it) you are liable to CGT on your worldwide gains if you are either resident or ordinarily resident in Ireland at the time of the disposal. If you become non-resident, you remain "ordinarily resident" for a further three years, so you'd need to lose your Irish residence, wait three years and then dispose of your crypto.

(By which time, of course, they may not be worth what they are worth today.)

Romanenko

Thanks for you response. I'm not entirely clear about how domicile is determined, but I would not be classed as "ordinarily resident" as I have not been resident in Ireland for the last three years. I've lived abroad for majority of the last decade and would be happy to live in another country for the next couple of years. I will probably be moving abroad anyway regardless of this issue but if I can become resident in another country with no CGT is seems like that would be smart.

relax carry on

Romanenko wrote: »

Thanks for you response. I'm not entirely clear about how domicile is determined, but I would not be classed as "ordinarily resident" as I have not been resident in Ireland for the last three years. I've lived abroad for majority of the last decade and would be happy to live in another country for the next couple of years. I will probably be moving abroad anyway regardless of this issue but if I can become resident in another country with no CGT is seems like that would be smart.

Domicile usually acquired at birth.

https://www.revenue.ie/en/jobs-and-pensions/tax-residence/what-is-domicile.aspx

Peregrinus

Romanenko wrote: »

Thanks for you response. I'm not entirely clear about how domicile is determined . . .

As relax carry on says, domicile is acquired at birth, and the only way to lose your domicile is to acquire a new domicile, which you do by settling permanently in a different country. ("Permanently" as in "I've put down roots here, and bought a grave plot.") If you were born in Ireland, you have an Irish domicile unless and until you settle permanently in some other country which, from your own account, you havn't done.

Romanenko wrote: »

. . . but I would not be classed as "ordinarily resident" as I have not been resident in Ireland for the last three years.

OK, that helps. In that case, as long as you cease to be Irish resident before you are here long enough to establish ordinary residence, you should be OK.

Best to do your research about the country you will move to. Countries that don't have capital gains tax sometimes have wider conepts of income tax, and will seek to tax as income earnings which, in Ireland, would be subject to CGT. So check this out before you choose your destination.

Romanenko

OK thanks.

I returned in August 2016 so, for that year I will not be resident (not 183 days). So 2017 was my first years as a resident, 2018 will be another. So If I am moving abroad next January (not spend 30 days in ireland in 2019) I will not become ordinarily resident. Hmmm, where to go then.....somewhere sunny:pac:

Peregrinus

Romanenko wrote: »

OK thanks.

I returned in August 2016 so, for that year I will not be resident (not 183 days). So 2017 was my first years as a resident, 2018 will be another. So If I am moving abroad next January (not spend 30 days in ireland in 2019) I will not become ordinarily resident. Hmmm, where to go then.....somewhere sunny:pac:

OK. You could have elected to be treated as resident for 2016 (so that, e.g. you could claim full tax credits for the year) in which case you would become ordinarily resident at the end of this year. But presumably if you had done this you would know about it.

On the assumption that you didn't do this, your strategy seems to me to work. The only drawback is that it requires you to defer disposing of your crypto for 12 months when, if this decision were driven purely by investment considerations, you might choose to dispose of them now. Obviously, with an assets as volatile as crypto, there's a risk that in 12 months time the value of your holding may have declined (relative to today's value) by more than the amount of CGT that you are saving.

Only you can decide what your attitude to this risk is. I'm always leery of allowing investment decisions to be distorted by tax considerations - I'd rather have the gain and pay tax on it than risk not having the gain - but your mileage may vary.

Mellor

Peregrinus wrote: »

As relax carry on says, domicile is acquired at birth, and the only way to lose your domicile is to acquire a new domicile, which you do by settling permanently in a different country. ("Permanently" as in "I've put down roots here, and bought a grave plot.") If you were born in Ireland, you have an Irish domicile unless and until you settle permanently in some other country which, from your own account, you havn't done.

Side point, but do they assess that?

Peregrinus

In any circumstance in which domicile is relevant to your tax liablity, it's always up to you to satisfy the Revenue Commissioners that you're not domiciled in Ireland. Taxpayers are by default treated as Irish-domiciled and, if they say they aren't, it's up to them to establish the facts that show they aren't.

Mellor

Peregrinus wrote: »

In any circumstance in which domicile is relevant to your tax liablity, it's always up to you to satisfy the Revenue Commissioners that you're not domiciled in Ireland. Taxpayers are by default treated as Irish-domiciled and, if they say they aren't, it's up to them to establish the facts that show they aren't.

I'm more curious what would happen if I came up. I'm not even sure if I would want to be not domiciled or what the benefit would be.

I haven't been resident in Ireland for almost 10 years. Ordinarily resident ceased years ago also.

Peregrinus

Simply being away from Ireland, even for a long time, does nothing to alter your domicile. Your domicile is, basically, the place where you are permanently settled. You can only have one domicile, and if you start out with an Irish domicile the only way you can lose it is by acquiring a domicile somewhere else.

So, if you have not only moved to Australia but married an Australian, bought a house in Australia, begotten children in Australia, raised your children in Australia, obtained Australian professional qualifications, made a new career in Australia, etc, etc, then you have a good case for saying that you are permanently settled in Australia and have acquired Australian domicile. It's not that you need to tick all those boxes exactly, but the more such boxes you can tick, the stronger your case. It also helps if you haven't retained ties to Ireland - for example, if you still own a house in Ireland which you let out, that tells against you having settled permanently in Australia, since it might suggest that you are keeping open the possiblity of returning home at some point.

Does it matter whether you are domiciled in Ireland or not? Depends on your circumstances.

If you are not resident, and not ordinarily resident, in Ireland, being domiciled in Ireland will not affect you, unless you are super-rich (worldwide income in excess of €1m) and have significant property or investments in Ireland (in excess of €5m in value), in which case you are subject to the Irish Domicile Levy, which may be as much as €200,000. No offence, but I'm going to assume that this is not relevant to you.

Domicile makes a difference if you are resident in Ireland, but not domiciled. An Irish resident is liable to tax on his or her world-wide income, but if the taxpayer is non-domiciled then the non-Irish income is only taxed if it is remitted to Ireland. So as an Irish resident but non-domiciled person, your income from (say) rent on your Australian property is taxed in Ireland only if you remit it to Ireland. If you simply let it accumulate in an Australian bank account (or if you do anything with it that doesn't involve remitting it to Ireland) it avoids Irish tax. But if you are Irish-resident and Irish domiciled, then it's taxed in Ireland no matter what you do with it.

The issue mostly arises, obviously, where you have someone who is resident in Ireland but who has foreign income. If you were borne in Ireland (and so have an Irish domicile of origin) and are now living in Ireland, it's kind of hard to argue convincingly that you are permanently settled in some other country, so it's rare (though not unknown) for an Irish-born person to persuade the Revenue in these circumstances that they are non-domiciled. Whereas if you were born in the United States, but are currently resident in Ireland because you have been posted to Ireland by your US employer, the Revenue will readily accept that you are not Irish domiciled; the expectation is that you will leave when your posting comes to an end.

Mellor

Cheers for the reply. And on offense taken, not quite topping 5m in property yet

I think the short answer is that it makes no difference. I'll either pay tax here or there. It's not like I'm living in a tax free haven

Romanenko

Peregrinus wrote: »

OK. You could have elected to be treated as resident for 2016 (so that, e.g. you could claim full tax credits for the year) in which case you would become ordinarily resident at the end of this year. But presumably if you had done this you would know about it.

On the assumption that you didn't do this, your strategy seems to me to work. The only drawback is that it requires you to defer disposing of your crypto for 12 months when, if this decision were driven purely by investment considerations, you might choose to dispose of them now. Obviously, with an assets as volatile as crypto, there's a risk that in 12 months time the value of your holding may have declined (relative to today's value) by more than the amount of CGT that you are saving.

Only you can decide what your attitude to this risk is. I'm always leery of allowing investment decisions to be distorted by tax considerations - I'd rather have the gain and pay tax on it than risk not having the gain - but your mileage may vary.

Could I have elected to be tax resident without knowing? eg. by claiming job seekers for a few months after I came home before I found a job.... Or is it a clear cut thing I would have had to intentionally do and would know if I did?

JaCrispy

Romanenko wrote: »

I acquired some cryptocurrency a few years ago while travelling and it is worth a substantial amount now. I am an Irish citizen and have been back here for the last 18 months having lived abroad in Asia/Australia for most of last decade. As a freelance developer so I can work from anywhere, so is it as simple as heading to live in a country with zero CGT (eg. croatia) for a year if I want to sell my holdings without losing a third of the proceeds? I bought it in an airport in Malaysia if I remember correctly!:pac:

Acquaint yourself with centra or tenx type cryptocurrencies

Romanenko

If it can be avoided its best I don't become ordinarily resident, but for me this hinges on me having not been resident in 2016. If I was counted as resident in 2016 I will need to bail before I have 30 days in 2018.

I spent 170 days in the country in 2016, which is not enough on its own (183) and according to revenue website:

'You may not have spent the required number of days in Ireland to be resident for tax purposes. You can choose to be treated as tax resident for the year you arrive in Ireland, if you are going to be tax resident the following year. If you choose to be tax resident in Ireland you will be taxed on your worldwide income. You can also claim full tax credits.

You must tell Revenue in writing if you choose to become a tax resident in Ireland.'

Is there any chance I could have signed something to this effect in the process of dealing with social welfare about other issues during those 170 days? Or does it take a very deliberate action?

Peregrinus

Romanenko wrote: »

If it can be avoided its best I don't become ordinarily resident, but for me this hinges on me having not been resident in 2016. If I was counted as resident in 2016 I will need to bail before I have 30 days in 2018.

I spent 170 days in the country in 2016, which is not enough on its own (183) and according to revenue website:

'You may not have spent the required number of days in Ireland to be resident for tax purposes. You can choose to be treated as tax resident for the year you arrive in Ireland, if you are going to be tax resident the following year. If you choose to be tax resident in Ireland you will be taxed on your worldwide income. You can also claim full tax credits.

You must tell Revenue in writing if you choose to become a tax resident in Ireland.'

Is there any chance I could have signed something to this effect in the process of dealing with social welfare about other issues during those 170 days? Or does it take a very deliberate action?

I'm not sure, is the answer. It might be worth checking with an accountant about this. My guess would be that you'd have to do this fairly formally, and probably in connection with a tax return, but my guess could be wrong.

Do you still have your tax information from 2016? You could check to see if you were give a full set of tax credits, etc. If you were, then you were treated as resident, which may have been a mistake if you didn't elect to be treated as resident, but if so it's a mistake you want to get sorted out before working your "become a non-resident for 2019" plan.