Crypto tax situation - Read post 1 for thread banned users

punch bob

Hi. I hope someone can shed light into this situation. Let's say I bought 10 ETH at €100 and sold at €850 which means I gained €7650. I know I would have paid CG tax (of about €2105) by this time. However, instead of paying tax, I invested the whole amount of €8500 from selling ETH to investing VET thinking it’ll moon.

My question is how will this put me in a complicated tax situation? I know people do this but I wonder how do they manage their taxes?

NB. I have never considered this due to tax obligations but it’s tempting to do so in this bull run and make the most out of it. Thanks.

keane2097

punch bob wrote: »

Hi. I hope someone can shed light into this situation. Let's say I bought 10 ETH at €100 and sold at €850 which means I gained €7650. I know I would have paid CG tax (of about €2105) by this time. However, instead of paying tax, I invested the whole amount of €8500 from selling ETH to investing VET thinking it’ll moon.

My question is how will this put me in a complicated tax situation? I know people do this but I wonder how do they manage their taxes?

NB. I have never considered this due to tax obligations but it’s tempting to do so in this bull run and make the most out of it. Thanks.

If you sold it you owe the €2105 regardless of what you do with the proceeds.

Figel Narage

I've been getting FOMO for the last month but what stopped me from getting involved months ago was the tax situation and where to buy the crypto's. I guess I'll wait for the crash before considering investing but I'd need to understand it a lot more before I decide to invest

Stormington

Figel Narage wrote: »

I've been getting FOMO for the last month but what stopped me from getting involved months ago was the tax situation and where to buy the crypto's. I guess I'll wait for the crash before considering investing but I'd need to understand it a lot more before I decide to invest

You could be waiting a long while, depending how you define the crash.

Koinly does tax reports. I used it to report taxes in December and will use it again next week.

Link your wallets (as many you want).
Run the report - its free.
If you want a document to send for tax returns, buy a report (80 quid).
Use the below link to get money off a tax report.
https://koinly.io/?via=D3F3A819

Peregrinus

punch bob wrote: »

Hi. I hope someone can shed light into this situation. Let's say I bought 10 ETH at €100 and sold at €850 which means I gained €7650. I know I would have paid CG tax (of about €2105) by this time. However, instead of paying tax, I invested the whole amount of €8500 from selling ETH to investing VET thinking it’ll moon.

My question is how will this put me in a complicated tax situation? I know people do this but I wonder how do they manage their taxes?

NB. I have never considered this due to tax obligations but it’s tempting to do so in this bull run and make the most out of it. Thanks.

keane2097 wrote: »

If you sold it you owe the €2105 regardless of what you do with the proceeds.

Not necessarily. Suppose the sale of the ETH happens early in the year. The tax isn't due for many months. In the meantime you park the money in VET, hoping for a further gain. Your hopes are disappointed; VET tanks. Towards the end of the year you can see the writing on the wall, so you sell the VET, or some of it, to generate an allowable loss which you can offset against the gain which accrued on your sale of ETH earlier in the year.

Crucial that you do this in the same year that you accrued the gain; if you accrue a loss in the following year you can't carry it back to reduce this year's tax liablity.

punch bob

Ethereum was purchased with euro using an Irish bank account while in Ireland using Binance. Then Ethereum was sold and the profits were then withdrawn to a Slovakian bank. Where would the taxes be paid? Asking for a friend. Thanks.

myshirt

punch bob wrote: »

Ethereum was purchased with euro using an Irish bank account while in Ireland using Binance. Then Ethereum was sold and the profits were then withdrawn to a Slovakian bank. Where would the taxes be paid? Asking for a friend. Thanks.

Where are you tax resident?

Edit: Sorry, where is your friend tax resident? Where do you live, work, etc. Where have you lived, worked, bought groceries, socialised for the last 3/4 years?

punch bob

myshirt wrote: »

Where are you tax resident?

Edit: Sorry, where is your friend tax resident? Where do you live, work, etc. Where have you lived, worked, bought groceries, socialised for the last 3/4 years?

He’s been here for long and been living and working here for many years now. I’m sure he’s a tax resident here. So, he has to pay it here despite receiving the money to a non-Irish account?

Bob24

punch bob wrote: »

He’s been here for long and been living and working here for many years now. I’m sure he’s a tax resident here. So, he has to pay it here despite receiving the money to a non-Irish account?

If he is still working here, he definitly is a tax resident (or ordinarily resident). But this isn't the only deciding factor.

I don't want to give direct tax advice and your friend should satisfy himself that he understands the tax rules and act accordingly, but the following quotes from this document should give directions (as you can see, being "domiciled" in Ireland or not does make a difference):

Deloitte wrote:

---

An Irish-resident or ordinarily resident and domiciled individual is liable to Irish capital gains tax on the gains arising on the disposal of chargeable assets worldwide.

A non-Irish-domiciled individual who is resident or ordinarily resident is liable to capital gains tax on the following:
• Gains arising on the disposal of chargeable assets situated in Ireland at the time of the disposal
• Remittances into Ireland of proceeds of gains from the disposal of assets situated outside of Ireland.

Deloitte wrote:

---

Domicile
This term is not defined in the Irish tax code. It is a complex term and is primarily a question of fact, based on the notion of an individual’s permanent home to which that person intends ultimately to return. A person can be considered domiciled in the country which is the individual’s permanent home although they are temporarily resident in another country.
An individual can never be without a domicile. Generally, an individual is domiciled in the country of nationality and in which the greater part of the person’s life is spent i.e. the domicile of origin. Once an individual has reached the age of majority, “domicile of origin” can be abandoned and a “domicile of choice” can be acquired.
In this situation, factors of presence and intention would be required.

myshirt

punch bob wrote: »

He’s been here for long and been living and working here for many years now. I’m sure he’s a tax resident here. So, he has to pay it here despite receiving the money to a non-Irish account?

Yes, absolutely.

You could send it to an account in Timbuktu and it's the same story. If he is domiciled in Slovakia he may get hit on the double, so it was a bad move moving the funds to an account over there. Keep future funds in Ireland would be my take. The tax here is bad enough, than to be hitting yourself on the double.

Have him pay the tax and pay it quickly, as he won't want to find himself in a bad place when the time comes. Often people think they have the nut cracked, and sher they'll never get me etc, and if they do sher I won't have a washer in my pocket so they can go get fxcked.
Etc etc.

Heard it all before. Hammered would be an understatement for people who try pull a stunt.

jmlad2020

Question. I have a friend who works here but started buying crypto years ago when working in Uk. A lot of the exchanges in which they used still retain a UK based address on them.

Can my friend 'GIFT' the crypto to his British cousin via an exchange, as a Birthday present so he can cash out and pay for his new house, thus paying UK CGT?

Peregrinus

jmlad2020 wrote: »

Question. I have a friend who works here but started buying crypto years ago when working in Uk. A lot of the exchanges in which they used still retain a UK based address on them.

Can my friend 'GIFT' the crypto to his British cousin via an exchange, as a Birthday present so he can cash out and pay for his new house, thus paying UK CGT?

Gains accrue when the asset is disposed of. If your friend is an Irish resident when the asset is sold, then any gain is chargeable in Ireland regardless of where the asset is situated, what address he uses in his correspondence with the exchange or what is done with any proceeds.

Unless your friend is non-Irish domiciled. But that's unusual and if he was you would certainly have mentioned it.

suave.4u

I had some ETH and planning to sell some and would definitely cross CGT threshold of 1250 EUR.
Does anyone have a referral / recommendations on the website to use to calculate.

I know that we need to declare, but is everyone doing this? What is the percentage of people declaring?

Stormington

suave.4u wrote: »

I had some ETH and planning to sell some and would definitely cross CGT threshold of 1250 EUR.
Does anyone have a referral / recommendations on the website to use to calculate.

Koinly does tax reports.
Link your wallets (as many you want).
Run the report - its free.
If you want a document to send for tax returns, buy a Year's worth of reports (80 quid for Jan to Nov and Dec 2020 or 2021).
Use the below link to get money off a tax report.
https://koinly.io/?via=D3F3A819

I know that we need to declare, but is everyone doing this? What is the percentage of people declaring?

Low.
But they won't be worrying if Revenue sit up and notice BTC hitting 100k this year.

Lazy Bhoy

Peregrinus wrote: »

Gains accrue when the asset is disposed of. If your friend is an Irish resident when the asset is sold, then any gain is chargeable in Ireland regardless of where the asset is situated, what address he uses in his correspondence with the exchange or what is done with any proceeds.

Unless your friend is non-Irish domiciled. But that's unusual and if he was you would certainly have mentioned it.

This is an interesting answer and it is something that I was talking about with a friend of mine during the week.


What we were discussing was, what would happen if you were to have a lot of crypto (Bitcoin or any other). And by a lot, I mean millions of euros worth. So if you purchased the crypto in Ireland a few years ago for a few grand (or a lot less than it is worth now) but did not dispose of them. Then after the mad gains that BTC and other crypto coins have seen lately they were suddenly worth millions.


If you were to cash in and dispose of them here you would have to pay 33% CGT minus your 1270 Euro allowance.


But why on earth would anybody do that?


Surely when you get into those figures it would be much better to move to Malta or Germany or Japan or somewhere where there is little or no tax on Bitcoin for a few years. Then sell the bitcoins for fiat currency and either move back to Ireland or live wherever you like.


I mean, that strategy would not be worth your while for just a few grand worth of gains. But surely if your gains were in the hundreds of thousands or millions of euros then that would be the way to go. And it would not even be illegal.



Or am I missing something.

Bob24

Lazy Bhoy wrote: »

This is an interesting answer and it is something that I was talking about with a friend of mine during the week.


What we were discussing was, what would happen if you were to have a lot of crypto (Bitcoin or any other). And by a lot, I mean millions of euros worth. So if you purchased the crypto in Ireland a few years ago for a few grand (or a lot less than it is worth now) but did not dispose of them. Then after the mad gains that BTC and other crypto coins have seen lately they were suddenly worth millions.


If you were to cash in and dispose of them here you would have to pay 33% CGT minus your 1270 Euro allowance.


But why on earth would anybody do that?


Surely when you get into those figures it would be much better to move to Malta or Germany or Japan or somewhere where there is little or no tax on Bitcoin for a few years. Then sell the bitcoins for fiat currency and either move back to Ireland or live wherever you like.

Yes, this is been discussed here before and of course in that scenario it makes *A LOT* of sense to move elsewhere as part of your tax planning strategy.

But keep in mind that as far as Revenue is concerned, you are still considered to be domiciled in Ireland for 3 years after leaving (and thus liable for Irish CGT even though living abroad). So if you want to do things by the books, you actually need to move years before you are planning to sell.

Lazy Bhoy

Bob24 wrote: »

Yes, this is been discussed here before and of course in that scenario it makes *A LOT* of sense to move elsewhere as part of your tax planning strategy.

But keep in mind that as far as Revenue is concerned, you are still considered to be domiciled in Ireland for 3 years after leaving (and this liable for Irish CGT even though living abroad). So if you want to do things by the books, you actually need to move years before you are planning to sell.

Yeah, that is exactly what I meant by staying in the other country for a few years. (3 years).


I don't know anybody who has enough crypto to try it. But surely with the gains that BTC have been making of late, it wont be long before we see some people taking that route.


Serves the government right if they do. 33% is robbery anyway so anybody with the means to avoid that is obviously going to do just that. It's a no-brainer really.

grindle

correct horse battery staple wrote: »

Anyone have any trouble with local banks and large sums arriving in? last thing I need is account being frozen when a large sum arrives as my salary goes there too

Will go have a chat with a financial adviser during the week, but wondering what experience has been for others.

Inform your bank. Surprise bundles of cash alert them, knowledge beforehand with your paper trail = no issue.

Peregrinus

Lazy Bhoy wrote: »

Yeah, that is exactly what I meant by staying in the other country for a few years. (3 years).

I don't know anybody who has enough crypto to try it. But surely with the gains that BTC have been making of late, it wont be long before we see some people taking that route.

The drawback to this strategy is that, given the volatililty of crypto, the fact that your holding is worth squillions today is no guarantee that it will be worth squillions in three years time.

Lazy Bhoy wrote: »

Serves the government right if they do. 33% is robbery anyway so anybody with the means to avoid that is obviously going to do just that. It's a no-brainer really.

It has been the case since CGT was introduced in (I think) 1975 that you could avoid CGT by making yourself non-resident and non-ordinarily resident in Ireland, and taking up residence in a country with no CGT, before disposing of your asset. The numbers of people doing so have not been large, presumably because most people have personal and/or professional reasons for not wishing to spend three years in Belgium, and the country has somehow survived and, over the long term, prospered.

TheW1zard

correct horse battery staple wrote: »

Want to cashout a large 6 digit amount, i dont mind paying taxes (already good chunk my salary and other earnings get taken) as the gains have been so incredible, and i have paid CGT before over the last few years (kicking myself selling so much so early!), i have been using crypto since 2012. Have my purchase order from 2015 on hand as well at a well known exchange

Anyone have any trouble with local banks and large sums arriving in? last thing I need is account being frozen when a large sum arrives as my salary goes there too

Will go have a chat with a financial adviser during the week, but wondering what experience has been for others.

I withdrew 50k in december to Revo with no problems. Ive never had a call off any bank re deposits.

Blanco100

TheW1zard wrote: »

I withdrew 50k in december to Revo with no problems. Ive never had a call off any bank re deposits.

How did you go about paying CGT?

bosco12345

TheW1zard wrote: »

I withdrew 50k in december to Revo with no problems. Ive never had a call off any bank re deposits.

Have they come after you yet? lol

bosco12345

Surely there will have to be some sort of compromise in regards CGT for crypto trading. 33% is a complete scam for the level of risk you take trading alt coins.

relax carry on

bosco12345 wrote: »

Surely there will have to be some sort of compromise in regards CGT for crypto trading. 33% is a complete scam for the level of risk you take trading alt coins.

If you wish to change the taxation laws around this then petition the department of finance and as many politicians as you can.

Just a query as to why you feel that gains for this asset should be treated differently to other assets? No one is forcing you to engage in this taxable activity.

Peregrinus

bosco12345 wrote: »

Surely there will have to be some sort of compromise in regards CGT for crypto trading. 33% is a complete scam for the level of risk you take trading alt coins.

Don't be silly. Why should the tax system favour riskier investments over less risky ones? It's not as though investing in crypto were a socially desirable activity; quite the opposite.

bosco12345

relax carry on wrote: »

If you wish to change the taxation laws around this then petition the department of finance and as many politicians as you can.

Just a query as to why you feel that gains for this asset should be treated differently to other assets? No one is forcing you to engage in this taxable activity.

Fair enough, your probably right but christ am I the only one here that thinks this is bonkers? We get absolutely fisted in this country. CGT should be max 20%. End of rant

Irish_rat

Peregrinus wrote: »

Don't be silly. Why should the tax system favour riskier investments over less risky ones? It's not as though investing in crypto were a socially desirable activity; quite the opposite.

Betting is free. But I guess its not an asset

Peregrinus

Irish_rat wrote: »

Betting is free. But I guess its not an asset

Betting attracts betting duty, which is collected from the bookmaker rather than the punter, and is levied on the stake rather than the winnings (and so has to be paid whether the bet wins or loses). It's certainly not free of tax.

Bob24

bosco12345 wrote: »

Fair enough, your probably right but christ am I the only one here that thinks this is bonkers? We get absolutely fisted in this country. CGT should be max 20%. End of rant

A bit too high and also there should move a tax wrapper and exemptions for the average person investing a relatively small amount of money (like in the UK).

But realistically the chances of this changing are 0.

And rather than introducing special rules for crypto they’d better have the same rules for every asset class to keep it fair and simple (ie do away with the stupid exit tax and deemed disposal rule on ETFs). But again we can talk about it all we want, this isn’t a sexy topic for a political manifesto and politicians won’t offer this on their menu. So saying something like “if you don’t like it, vote to change it at the next election” actually doesn’t really make sense.

NoviGlitzko

Hey guys. I use Binance and was thinking of setting up a bot for my crypto, but worried about how the constant buying and selling will be traceable for CGT. I can't find much info about this online. Can anyone help me?