Is anyone else starting to become a bit worried? mod note in first post

Hodl?

Autochange

[Deleted User] wrote: »

Hodl?

Temporarily tether yourself

drunkmonkey

Deleted User wrote: »

Hodl?

Seemingly the bitcoin has only had a positive march once in 7 years but has had a positive April 5 out of 7 times so fingers crossed.

Dohnjoe

Deleted User wrote: »

Hodl?

Traders aside, anyone I know who tried to buy and sell to make a quick buck are way down on friends/colleagues who bought as an investment to leave for years

My portfolio is down 75% since peak in January, but I am still up 100's of percent from first purchases. The only selling I've done it to cash out initial investment or to move from one alt to a better one

Don't get me wrong, there is plenty of money to be made from buying/selling, but unless someone has seriously good knowledge of the market I wouldn't recommend it

Bob24

Dohnjoe wrote: »

Don't get me wrong, there is plenty of money to be made from buying/selling, but unless someone has seriously good knowledge of the market I wouldn't recommend it

Plus every time you sell you need to pay tax on the profits while the government won’t give you money if you make losses.

So unless you know exactly what you’re doing and buying and selling all the time is probably not very tax efficient.

Dades

Bob24 wrote: »

Plus every time you sell you need to pay tax on the profits while the government won’t give you money if you make losses.

So unless you know exactly what you’re doing and buying and selling all the time is probably not very tax efficient.

I'm not sure I agree with that. Making any profit isn't tax efficient.

With crypto you can't safely leave a "profit" anywhere, as every coin is subject to huge swings, and your profit could be eroded very quickly over a short space of time. (On the plus side, you won't have as much tax to pay!)

Bob24

Dades wrote: »

I'm not sure I agree with that. Making any profit isn't tax efficient.

With crypto you can't safely leave a "profit" anywhere, as every coin is subject to huge swings, and your profit could be eroded very quickly over a short space of time. (On the plus side, you won't have as much tax to pay!)

To clarify, what I’m saying assumes the person investing thinks the long term trend is going upwards. Of course if their goal is to catch local highs and they are very good at it even in a downwards market, things are different.

smacl

Bob24 wrote: »

Plus every time you sell you need to pay tax on the profits while the government won’t give you money if you make losses.

So unless you know exactly what you’re doing and buying and selling all the time is probably not very tax efficient.

Not really though, you can store FIAT on many exchanges without needing to withdraw to cash.

If you were doing a lot of trading, you could also set up a company, where all your costs are allowable (including salary, electricity, computer hardware etc... ), and you declare yearly profits on the remainder, on which you pay corporation tax.

Dades

smacl wrote: »

on which you pay corporation tax.

And then income tax on top of that when you take the money out of the company.

smacl

Dades wrote: »

And then income tax on top of that when you take the money out of the company.

Not really, no. If you take money out as salary, it is a cost before profit and hence not subject to corporation tax but is subject to PAYE. If you declare a dividend on profits, or sell or liquidate the company, the money made is subject to CGT, not PAYE, which is pretty much what you pay on crypto profits anyway. Bottom line is you pay income tax on regular income and capital gains tax on one off capital gains. You'll always pay one or the other but shouldn't ever need to pay both.

Bob24

smacl wrote: »

Not really though, you can store FIAT on many exchanges without needing to withdraw to cash.

I assume capital gain tax is due when you sell your cryptocurrency for fiat on the exchange (i.e. when you sell your asset); not when you withdraw the fiat from that exchange. So leaving the money on the exchange or withdrawing it to a bank account wouldn't change anything in terms of tax liabilities.

Doodee

Bob24 wrote: »

smacl wrote: »

Not really though, you can store FIAT on many exchanges without needing to withdraw to cash.

I assume capital gain tax is due when you sell your cryptocurrency for fiat on the exchange (i.e. when you sell your asset); not when you withdraw the fiat from that exchange. So leaving the money on the exchange or withdrawing it to a bank account wouldn't change anything in terms of tax liabilities.

Not if you use Tether

lawred2

These bags are getting increasingly heavier

Bob24

Doodee wrote: »

Not if you use Tether

Even if you did trust Tether as a way to store your cash (disclaimer: don’t!), would that actually work? (i.e. is their no CGT when you trade an asset for another asset?)

smacl

Bob24 wrote: »

Even if you did trust Tether as a way to store your cash (disclaimer: don’t!), would that actually work? (i.e. is their no CGT when you trade an asset for another asset?)

Not entirely sure but at a guess converting coins to FIAT on an exchange outside of Ireland isn't subject to CGT in Ireland until you transfer it into an Irish bank.

nxbyveromdwjpg

smacl wrote: »

Not entirely sure but at a guess converting coins to FIAT on an exchange outside of Ireland isn't subject to CGT in Ireland until you transfer it into an Irish bank.

By the book, thats totally wrong unfortunately. There's an extensive thread on this somewhere.

GarIT

smacl wrote: »

Not entirely sure but at a guess converting coins to FIAT on an exchange outside of Ireland isn't subject to CGT in Ireland until you transfer it into an Irish bank.

Department of finance said any exchange of one crypto to another by someone primarily resident in Ireland requires CGT to be paid. It really makes 0 difference if you eventually transfer back to Euro anyway. CGT is paid based on the euro value increase of your assets. If you make 1k transfer to a different cypto and make 1k youd pay the exact same as if you made 2k without changing crypto.

Bob24

smacl wrote: »

Not entirely sure but at a guess converting coins to FIAT on an exchange outside of Ireland isn't subject to CGT in Ireland until you transfer it into an Irish bank.

I'd say if you convert to fiat you are definitly liable to CGT regardless of where the resulting funds are located, as you are clearly disposing of your asset for cash. It would be too easy otherwise: similarly you could sell a property abroad and say as long as I don't transfer the money back to Ireland I don't owe CGT.

The question was more do you owe CGT if you trade a cryptocurrency for another one. I am still not sure but it says here that "disposing of an asset doesn't just refer to the sale of an asset for money. It includes any transfer of ownership by way of exchange". So based on this exchanging Bitcoin for Tether does seem to constitute an asset disposal and therefore trigger CGT.

So going back to my initial point this is why I was saying constantly buying an selling is not great for an individual from a tax perspective as you keep triggering CGT on the gains you are making and can't average them out with your losses before the tax is calculated.

GarIT

Bob24 wrote: »

The question was more do you owe CGT if you trade a cryptocurrency for another one. I am still not sure but it says here that "disposing of an asset doesn't just refer to the sale of an asset for money. It includes any transfer of ownership by way of exchange". So based on this exchanging Bitcoin for Tether does seem to constitute an asset disposal and therefore trigger CGT?

The minister for finance said in an interview that CGT must be paid on a transfer between any two cryptos, that may not necessarily be backed up by laws though. There was a thread about it at the time and people were asking if what he said had any basis in law, I didn't follow it to it's conclusion.

smacl

Arthur Zealous Butcher wrote: »

By the book, thats totally wrong unfortunately. There's an extensive thread on this somewhere.

Fair enough, though just one more reason to set up a company if you're going to be doing a significant amount of trading, as this allows you to consolidate profit and loss for trades over a longer accounting period. To be honest, if you're making regular money as a regular trader, I would imagine that constitutes income rather than capital gain, as the latter is typically intended for one of events.

From the Revenue web site

If you own or part own an asset, you may sell, gift or exchange it. This is called a disposal. You may have to pay CGT on any gain that you make when you dispose of an asset.

Companies normally include capital gains in their profits for Corporation Tax (CT) purposes.

If you're HODLing for the long term and make a gain, CGT is clearly the way to go. If you're trying to make a living trading cryptos, you need to set up as a sole trader or set up a company. Personally, I would always prefer the latter.

smacl

Interesting article here which suggests that if you're self-assessing you can consolidate profits and losses for crypto-currency over a year, even as an individual.

If you have made an investment in Bitcoin which resulted in a loss, and in the same year, made a separate investment in Etherum which resulted in a gain, you can use your loss from the Bitcoin to offset the gain you made from Etherum.

Losses can also be used against capital gain made in later years.

There are a number of deductions that may be applied to a cryptocurrency CGT tax bill.

These include:

The cost of purchasing the asset
Costs such as fees paid to a solicitor or auctioneer when you acquired and disposed of the asset
Mining (see below)
You can also adjust the purchase price ad enhancement expenditure for inflation.

No idea how accurate this article is, but it would seem to disagree strongly with points made by some previous posters on this thread.

Alas, I'm not likely to be seeing any profit on crypto for some time, but on the off chance I do at some point in the future, I reckon I'll have a word with my accountant and do some research before cashing out. Like anything that involves the revenue, detailed records are clearly essential whatever way you approach it.

If you are considering investing in cryptocurrency, keep in mind that 33% capital gains tax will be due on any profits over €1,270. Also remember that whether you make a profit or a loss, you will need to file a tax return each year.

Note the annual threshold here further indicates CGT applies at an annual basis, not at a per-transaction basis. As always, DYOR.

Bob24

Actually I was googleing this again and and found another source saying you can offset gains with losses (they even say you can carry over past losses to offset future gains the following years) : https://www.irishtimes.com/business/personal-finance/lose-some-win-some-offsetting-a-capital-loss-against-a-capital-gain-1.3075422

So I’m not sure but the way I read that article is that if you lost for exemple 50k selling a property 4 years ago and haven’t made capital gains since, you have a 50k “credit” that you can use anytime for exemple to no pay CGT on gains you are making on cryptocurrency or stocks this year. Is that right??

smacl

Bob24 wrote: »

Actually I was googleing this again and and found another source saying you can offset gains with losses (they even say you can carry over past losses to offset future gains the following years) : https://www.irishtimes.com/business/personal-finance/lose-some-win-some-offsetting-a-capital-loss-against-a-capital-gain-1.3075422

So I’m not sure but the way I read that article is that if you lost for exemple 50k selling a property 4 years ago and haven’t made capital gains since, you have a 50k “credit” that you can use anytime for exemple to no pay CGT on gains you are making on cryptocurrency or stocks this year. Is that right??

Don't know what the situation is for crypto, but you can certainly offset losses for recent previous years against this years profits. Not sure of the time frame, but I'd thought it was 2-3 years. If you think about it, it makes sense as many projects run for quite a few years, are expensive in the early years and make money on completion. It certainly seems that the assertion that you're liable for CGT on individual transactions as they occur, whether or not they involve FIAT, is bogus.

FWIW, with CT you can also do the reverse, and get a refund for CT tax in the previous year against a loss made this year. Can't see this applying to CGT, which again makes using a company potentially more attractive.

kaymin

smacl wrote: »

Don't know what the situation is for crypto, but you can certainly offset losses for recent previous years against this years profits. Not sure of the time frame, but I'd thought it was 2-3 years. If you think about it, it makes sense as many projects run for quite a few years, are expensive in the early years and make money on completion. It certainly seems that the assertion that you're liable for CGT on individual transactions as they occur, whether or not they involve FIAT, is bogus.

FWIW, with CT you can also do the reverse, and get a refund for CT tax in the previous year against a loss made this year. Can't see this applying to CGT, which again makes using a company potentially more attractive.

Capital gains and losses are added together in determining your taxable profit for a single tax year. Capital losses from previous years can be carried forward (no time limits) and offset against future capital gains to reduce the taxable gain. You can't offset capital losses against prior year capital gains.

Overall it is not tax efficient to hold an appreciating asset in a corporate vehicle - the corporation will have to pay CGT and then the shareholder will have to pay either CGT when selling the shares in the company or extracting accumulated income through salary or dividends (by way of higher income tax rates).

smacl

kaymin wrote: »

Capital gains and losses are added together in determining your taxable profit for a single tax year. Capital losses from previous years can be carried forward (no time limits) and offset against future capital gains to reduce the taxable gain. You can't offset capital losses against prior year capital gains.

Reference for this please. According to the revenue (source);

If a company sustains trading losses in an accounting period they can be offset as a means of a relief from tax against:

other trading income for the same accounting period
trading income for the immediately preceding accounting period.

I know this is the case, have done this, and had a refund on that basis.

Overall it is not tax efficient to hold an appreciating asset in a corporate vehicle - the corporation will have to pay CGT and then the shareholder will have to pay either CGT when selling the shares in the company or extracting accumulated income through salary or dividends (by way of higher income tax rates).

While I appreciate what you're saying to a large extent, you seem to be conflating capital gains tax, corporation tax and income tax here. Corporations don't pay CGT, they pay CT. If you own the company and have money coming in, you can take it as salary and pay income tax, or pay corporation tax and capital gains tax on profits you take out. Better than either if you're not in a hurry to get the money is put it into a directors pension plan, which is effectively tax-free salary, or re-invest in the company and hold your wealth in the company.

kaymin

smacl wrote: »

Reference for this please. According to the revenue (source);



I know this is the case, have done this, and had a refund on that basis.

I'm referring to the taxation of individuals. I don't believe the treatment is any different for corporations though (assuming crypto gains are deemed capital gains rather than trading profits):
'Capital losses to be deducted (computed on the same principles as chargeable gains) are those accruing in the accounting period, and those of previous accounting periods so far as not deducted from previous chargeable gains.'

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-05-02.pdf

smacl wrote: »

While I appreciate what you're saying to a large extent, you seem to be conflating capital gains tax, corporation tax and income tax here. Corporations don't pay CGT, they pay CT. If you own the company and have money coming in, you can take it as salary and pay income tax, or pay corporation tax and capital gains tax on profits you take out. Better than either if you're not in a hurry to get the money is put it into a directors pension plan, which is effectively tax-free salary, or re-invest in the company and hold your wealth in the company.

Splitting hairs - corporations pay CT on capital gains at the CGT rate:
https://www.revenue.ie/en/companies-and-charities/capital-gains-for-companies/index.aspx

You will have to pay this tax regardless of whether you then extract these gains from the company by way dividends or income i.e. you will suffer double taxation.

I indicated in my response that in general it is a bad idea to hold appreciating assets in a corporate vehicle - most people will want to get their hands on the gains before retirement age. Obviously if you are using the company as your pension pot then that there are attractions to the corporate vehicle.

smacl

kaymin wrote: »

Splitting hairs - corporations pay CT on capital gains at the CGT rate:
https://www.revenue.ie/en/companies-and-charities/capital-gains-for-companies/index.aspx

I'm not convinced. If your business is trading, whether it be cypto-coins, shares or fruit and veg, these trades are normal transactions and do not constitute sale or transfer of assets. I see a specific exception on the revenue site for lands, but not for any other goods, services or instruments.

kaymin

smacl wrote: »

I'm not convinced. If your business is trading, whether it be cypto-coins, shares or fruit and veg, these trades are normal transactions and do not constitute sale or transfer of assets. I see a specific exception on the revenue site for lands, but not for any other goods, services or instruments.

Companies capital gains are computed in accordance with capital gains tax principles. Unless Revenue have confirmed to you that crypto assets are to be treated differently to other investment types such as shares, options, property etc then I don't see any way around this principle.

smacl

kaymin wrote: »

Companies capital gains are computed in accordance with capital gains tax principles. Unless Revenue have confirmed to you that crypto assets are to be treated differently to other investment types such as shares, options, property etc then I don't see any way around this principle.

Yet if the companies business was solely trading in cryptos, such trades would not be investments, but rather normal transactions, so such principles would not apply. At worst it is ambiguous until such time as the revenue make a specific ruling on the matter. For example, you list property above which is a specific exception, there is no such statement in relation to cryptos at this point in time.

kaymin

smacl wrote: »

Yet if the companies business was solely trading in cryptos, such trades would not be investments, but rather normal transactions, so such principles would not apply. At worst it is ambiguous until such time as the revenue make a specific ruling on the matter. For example, you list property above which is a specific exception, there is no such statement in relation to cryptos at this point in time.

You really have no basis for thinking Revenue will provide an exception for crypto assets. Best you can do is apply the rules as they stand.

There are limits how much salary withdrawn (10%) is tax deductible from an investment company and close company implication(20% surcharge on undistributed investment income) Suggest reading this:

https://www2.deloitte.com/ie/en/pages/deloitte-private/articles/tax-issues-when-investing.html#