Crypto tax situation - Read post 1 for thread banned users

Irish_rat

https://www.boards.ie/discussion/comment/120494075#Comment_120494075

Software holds intrinsic value. The more it's used, the more valuable it becomes.

You don't know anything about blockchain but keep that "currency" mindset there if you like.

We are talking about the future of finance, data handling, privacy etc

maninasia

https://www.boards.ie/discussion/comment/120494075#Comment_120494075

Do you understand that Ethereum is more like a distributed financial software platform that is owned by Joe Public and it pays you dividends too?

To call it a currency misleads a lot of people.

Its constantly evolving and growing.

It's basically a decentralised open source financial operating system , the Microsoft Windows of the decentralised finance world.

As they secure the network the owners of ETH get a cut of every single transaction on the network

Who wouldn't want to own some of that ? Especially as its now deflationary.

Imagine you could buy berkshire hathaway shares 30 years ago. Or MS or Apple.

Jim2007

https://www.boards.ie/discussion/comment/120495440#Comment_120495440

Hmmm.... But you are not investing in the blockchain nor any of the underlying software, all you have is an amount of a given currency nothing else. You argument is not different to claiming that because you have Euros in your pocket you are invested in the ECB, SEPA etc....

But you are right the underlying technology is very useful, which is why since I retired have been working with and investing in a few promising fintechs in this area. So yes I understand the underlying maths and I have written a lot of the code as well.

If you want to speculate in a currency and convince yourself you are actually somehow getting to own slice of the technology when you buy Bitcoin or whatever that is up to you.

maninasia

Some people would give their kids the ledger and tell them go have a long break overseas in HK or Portugal when you are older, GO HAVE FUN.

Gt552

I suppose I could go ahead with and hopefully in years to come and well in the profit, myself and the wife can gift the 3k each a year to our daughter without incurring CAT.

FoxForce5

https://www.boards.ie/discussion/comment/120494076#Comment_120494076

Op buys token at 1c puts in cold wallet for ten years , token now worth 100000. , Op takes out 70% LTV crypto loan gives his kid the 70k tax free as a gift and op defaults on loan loses the 30k balance. Other option is OP buys kid a cold wallet and downloads the 1c token onto it kid says nothing and in ten years gets the crypto loan himself .

Peregrinus

https://www.boards.ie/discussion/comment/120497280#Comment_120497280

In your example the OP gives 70k to his kid. But if, instead, he sells the crypto, pays the CGT and gives the kid the net proceeds, he's still giving the kid 70k. So how does your suggestion produce a better outcome for anyone?

FoxForce5

https://www.boards.ie/discussion/comment/120497785#Comment_120497785

Because that LTV is a worse case scenario with an alt coin . I hv seen LTV of 85-90% but only on BTC and some stable coins.

Peregrinus

https://www.boards.ie/discussion/comment/120497821#Comment_120497821

Unless the lender is an idiot, or some other security is also offered, the LTV should always reflect a full discount for the CGT liability on disposal of the crypto. If it doesn't, the security offered is inadequate to clear the loan, and why would any lender lend on that basis?

(We also need to consider whether the borrower, when he defaults on the loan and allows the security to be enforced over his crypto, is going to be treated for CGT purposes as disposing of the crypto for the loan proceeds, with a consequential charge to CGT. I leave that question for the honours students.)

Jim2007

https://www.boards.ie/discussion/comment/120497280#Comment_120497280

Yep, trump currency speculation by leveraging it! The objective in investing rather than speculation is to take calculated risks in order to achieve a particular return not take a flyer at it and hope for the best.

FoxForce5

https://www.boards.ie/discussion/comment/120497834#Comment_120497834

Lender wud be the exchange or the network. If a coin is stable no reason LTV is close to Irish CGT. If a person defaults on their mortgage they have no tax liability on the money they borrowed. That's why crypto loans are perfect way to offset CGT . I done it my self 3% Apr crypto loans paid back over 6 months cheaper than banks and my assets had increase after I got the loan repaid.

Abel Magwitch

Hi,

This is a pretty niche question but looking for the opinion of those who are staking with Lido

I was staking with Kraken and received my (locked) Eth2S rewards every Sunday

This is now definitely an income (since Shapella) and so has to be filed as IT atend of year

Staking with Lido gives as 1:1 swap from Eth to stEth which would be liable for CGT (or loss, depending on when you bought that Eth). Now after Shapella the stEth rebase token increases so this is also clearly an IT to be filed

I have heard that if this rebase token stEth is wrapped (so it can be used in defi or L2s) to WstEth, which triggers another CGT liability, then the daily rewards are not liable for IT since WstEth is only a share of a pool. When swapping the WstEth for stEth or just Eth itself that would trigger a sale and thus CGT

If this were true then one could save quite a lot of money potentially

Has anyone talked to an accountant about this? Ireland only obv

runswithascript

https://www.boards.ie/discussion/comment/118605901#Comment_118605901

Are you describing the method described here, and if so can you confirm it is all completely legal? https://irishfinancial.ie/how-to-avoid-tax-on-crypto-in-ireland/

I have been thinking about how this would work, and any tax implications, taking a loan at the top of the market and not at the top of the market, and if it could offer any benefit when trading rather than investing.

I see others discussing how depending on the number of trades you may be deemed a trader and assessed by PAYE. Have any of you set up a small limited company to be more tax efficient?

bigswingingrichard

I thought the whole idea of crypto was to make a fortune, leave Ireland for a crypto tax free country and live the good life.

I turned 2.5k into 300k last bull run, held on with dreams of the good life away from Ireland , now back at 50k🤪, even more determined to get out of here when the bull returns, FF/FG/Greens won’t be getting a penny tax from me to pay for their idiotic policies.

cnocbui

...

Peregrinus

https://www.boards.ie/discussion/comment/120922833#Comment_120922833

If you're confident that the bull is going to return you should leave now. You have to be three years out of Ireland to avoid liability to Irish CGT on your disposal, so if you wait until after the massive gains have accrued and then leave, you are vulnerable to another downturn in the next three years.

Ideally, you want to be already out of Ireland for more than three years, and already resident in a country with no CGT, when the next bull happens so that you can cash in on it.

antimatterx

I don't mind contributing towards my country.

cnocbui

Good, you can pay my share if I do a runner.

joeyboy11

https://www.boards.ie/discussion/comment/120922833#Comment_120922833

Where you thinking of going? Portugal? Switzerland? Germany? Malta?

joeyboy11

My situation is purchased alot of during this bear market and hope to make significant gains.

I only returned to Ireland in April this year after 5 years away. So can I be tax resident here in 2023 and 2024 and if the portfolio is looking great I can head off to a country with no cgt in 2025 and have no liability in ireland as I won't be ordinarily resident?

joeyboy11

https://www.boards.ie/discussion/comment/120496192#Comment_120496192

They are good points. How would you recommend investing in the technology?

Investing in fin techs like you mentioned?

Peregrinus

https://www.boards.ie/discussion/comment/121340049#Comment_121340049

This isn't really a bear market, unless you think the crypto prices that prevailed around 2021 are "normal", and crypto has been in a slump at all other times before and since.

You have to not be resident for three successive years before you cease to be ordinarily resident. So if you are resident and ordinarily resident in Ireland in 2024 then the first year in which you can be not ordinarily resident will be 2028. So if your portfolio looks great in 2025 and you head off to Portugal you'll have to wait until 2028 before you dispose of your assets — by which time, of course, your portfolio may not look great.

joeyboy11

https://www.boards.ie/discussion/comment/121340153#Comment_121340153

On your first paragraph, you're right I've only been aware of crypto since 2021 so waited for things to come down to start investing.

On the ordinarily resident status. As far as I'm aware you need to be resident for 3 years to become ordinarily resident. And if you become ordinarily resident (after the 3 years) you don't shake off that status until you have not been resident for 3 years.

So could I keep my tax residency in Ireland to 2 years (2023 and 2024) (noting that I wasn't tax resident since 2017) then I don't enter ordinary resident status... and can leave Ireland in later 2024 or early 2025 and liquidate the assets in 2025 with no CGT liable? Making sure I don't return in 2025..

That's my thoughts from reading revenue.ie...

Peregrinus

https://www.boards.ie/discussion/comment/121340538#Comment_121340538

Sorry, my bad; I missed that detail in your post.

Yes, if you're only tax-resident in Ireland for two successive years you haven't become ordinarily resident in the first place, so you can dispose of your (non-Irish) assets in the year after the year you cease to be resident without incurring a liability to Irish CGT.

You talk about heading off in 2025. I think you should get professional advice on the exact dates you need to leave; it may be necessary for you to leave before 2025 to make this work.

ZeroThreat

Just curious, have there been many cases with Irish revenue pursing people abroad seeking capital taxes that may have arisen while the target was still ordinarily resident in Ireland but a non-resident? Maybe these cases just aren't given any publicity, or were settled before being included on public defaulters lists.

joeyboy11

https://www.boards.ie/discussion/comment/121340672#Comment_121340672

I'll probably get a few professional opinions before I'd go anywhere. Be nice to leave it as late as possible to see if prices get back to the 2021 prices.

relax carry on

https://www.boards.ie/discussion/comment/121341012#Comment_121341012

You'd never get that detail even with publication.

Peregrinus

https://www.boards.ie/discussion/comment/121342625#Comment_121342625

If you're going to do this at all you have to go for at least a full tax year, obviously, or it won't work. Which means that a considerable time can elapse between the date you leave and the date you actually dispose of the asset. Which means that if you're confident that it will continue to appreciate in value you can sit on it for a while longer.

Crypto (like any other asset) has no memory, and there is no inherent reason to think that, just because it attained a particular value in the past, it will or is likely to attain that value in the future. The future price of crypto will be determined by future events, and not by past events.

The relevance of the past price of crypto is this: if you reckon you can reliably identify the factors that led to crypto reaching the prices it did in 1921, you can then make a judgment about whether and when those factors are likely to recur, in which case you might hope that, when that happens, crypto will reach similarly high prices.

Worztron

Hi. I'm considering cashing out a small bit of my BTC. I know the first €1270 of taxable gains in a tax year are exempt from CGT. Can I cash out that amount in Bitcoin without going through Revenue.ie or must I also still declare it even if when I don't need to pay tax on it?

Peregrinus

https://www.boards.ie/discussion/comment/121357863#Comment_121357863

You must file a return even if the gain is within the small gains exemption.