Capital Gains tax-Crypto?

KevMayo88

This is one I'm vague on guys, so appreciate the help. Lets say you buy Bitcoin and intend to sit on it for a few years as an investment. Would you have to tell revenue this on your 2021 returns, even if its an investment you plan to hold in your online wallet?

Refractions

KevMayo88 wrote: »

This is one I'm vague on guys, so appreciate the help. Lets say you buy Bitcoin and intend to sit on it for a few years as an investment. Would you have to tell revenue this on your 2021 returns, even if its an investment you plan to hold in your online wallet?

You haven't gained anything (in fiat terms) until the moment you cash it out, so no.

Lex Luthor

sure the banks are printing money like toilet paper at the moment, why would you pay CGT?

looks like rain ted

Refractions wrote: »

You haven't gained anything (in fiat terms) until the moment you cash it out, so no.

Some Countries want you to declare transfers between cryptocurrenies too. Is this the case with ireland?

grindle

looks like rain ted wrote: »

Some Countries want you to declare transfers between cryptocurrenies too. Is this the case with ireland?

Yep. A disposal is a disposal, you confirm that you're dollar-rich the moment you buy something that would have cost X amount of dollars.

Irish_rat

KevMayo88 wrote: »

This is one I'm vague on guys, so appreciate the help. Lets say you buy Bitcoin and intend to sit on it for a few years as an investment. Would you have to tell revenue this on your 2021 returns, even if its an investment you plan to hold in your online wallet?

If you hold then no you don't

bingobars

Anyone have any idea of revenues stance on…

Forking
Airdrops
Yield farming
Liquidity pooling
Staking
NFT profits

grindle

bingobars wrote: »

Anyone have any idea of revenues stance on…

Forking
Airdrops
Yield farming
Liquidity pooling
Staking
NFT profits

All are income earned except forks and airdrops, you have to claim them for them to be considered as income.

NFT profits could be CGT if you're buying and selling later rather than investing in the production of one and then selling it immediately at release/auction time.

mossy95

grindle wrote: »

Yep. A disposal is a disposal, you confirm that you're dollar-rich the moment you buy something that would have cost X amount of dollars.

How the heck would they find out about it though

grindle

mossy95 wrote: »

How the heck would they find out about it though

If your money is poured into a KYC-friendly exchange (most of the good ones) and flowing out, your transactions are noted. Blockchain is designed for this and there are a few companies already set up to note which wallets you interact with and which wallets they interact with. It's a dream for data analysis.

grindle

e.g.
You buy a sh!tload of Sh!tCoinX through ReputableExchange.com, you move your coins to Uniswap - they can see what you're doing and there's already a large industry built around this now.

KilOit

grindle wrote: »

e.g.
You buy a sh!tload of Sh!tCoinX through ReputableExchange.com, you move your coins to Uniswap - they can see what you're doing and there's already a large industry built around this now.

They can barely use emails, still in fax age, you think they have the ability to go through 1000's of transactions from defi to cen exchanges for 1 user?
I work in a government department, they are not even remotely capable of doing what you suggest here
I still declare myself but unless you are pumping 1000's into your bank account you are not on their radar

grindle

KilOit wrote: »

They can barely use emails, still in fax age, you think they have the ability to go through 1000's of transactions from defi to cen exchanges for 1 user?
I work in a government department, they are not even remotely capable of doing what you suggest here
I still declare myself but unless you are pumping 1000's into your bank account you are not on their radar

Not sure where you got the idea but I never said the government would do it personally, I'm more than aware of how backwards they are. There are multiple firms they can hire which use machine learning to sort and order all blockchain transactions, Chainalysis being the largest or most well-known and there's CipherTrace & Elliptic as well.

Anybody putting more than a tenner a week into crypto for a few years will likely have the opportunity to pull tens or hundreds of thousands out at some point and when that happens they will be on the radar.

SkyRevNet

KilOit wrote: »

They can barely use emails, still in fax age, you think they have the ability to go through 1000's of transactions from defi to cen exchanges for 1 user?
I work in a government department, they are not even remotely capable of doing what you suggest here
I still declare myself but unless you are pumping 1000's into your bank account you are not on their radar

They don't need fancy tech. In the not so distant future, as regulation starts to catch up, they'll be able to request information from the various KYC exchanges or, possibly, those exchanges will be obliged to file certain returns/reports when certain conditions are triggered by an account holder e.g. cashing/transferring large crypto balances.

shawki

KilOit wrote: »

They can barely use emails, still in fax age, you think they have the ability to go through 1000's of transactions from defi to cen exchanges for 1 user?
I work in a government department, they are not even remotely capable of doing what you suggest here
I still declare myself but unless you are pumping 1000's into your bank account you are not on their radar

Such a stupid incorrect post.

wally1990

KilOit wrote: »

They can barely use emails, still in fax age, you think they have the ability to go through 1000's of transactions from defi to cen exchanges for 1 user?
I work in a government department, they are not even remotely capable of doing what you suggest here
I still declare myself but unless you are pumping 1000's into your bank account you are not on their radar

Not being smart but Are you just on here looking for confirmation to not declare income subject to capital gains
or (income tax etc )and look for excuses (not reasons) as to why ?

In all honesty, nobody on here is going to advocate to do that

There is tax rules and laws in place and we are to abide by them.

You and God knows how many people have been down this path before.

Dont declare it if you don't want to but getting into the situation or area of ' they are backwards, or how would they know or whatever else excuse is pointless

Go open an account in Panama and join mossack Fonseca if they are still about

Rob2D

wally1990 wrote: »

There is tax rules and laws in place and we are to abide by them.

For now we do. But for the next cycle I'm going to do my best to avoid it. 33% with a grand allowance is an absolute joke. Especially considering the current government we have to give it to.

The J Stands for Jay

KilOit wrote: »

They can barely use emails, still in fax age, you think they have the ability to go through 1000's of transactions from defi to cen exchanges for 1 user?
I work in a government department, they are not even remotely capable of doing what you suggest here
I still declare myself but unless you are pumping 1000's into your bank account you are not on their radar

Faxes to Revenue? You mean the same crowd who communicate via secure online messaging, exchange XML data files with other tax authorities and have financial institutions upload data on payments made to customers?

Lorne Malvo

Guys; Would you need to declare CGT if you transfer to a stable coin whilst resident in Ireland?

Also, If you leave Ireland for Portugal and set up residence there, and apply for split year relief whilst in Ireland, would you be exempt from CGT to revenue in Ireland if you make any trade to your crypto in Portugal?

dougal0691

Lorne Malvo wrote: »

Guys; Would you need to declare CGT if you transfer to a stable coin whilst resident in Ireland?

Also, If you leave Ireland for Portugal and set up residence there, and apply for split year relief whilst in Ireland, would you be exempt from CGT to revenue in Ireland if you make any trade to your crypto in Portugal?

the answer to the first question is the same as last week, if you make a gain on the transaction you owe capital gains tax on the gain.

others here will have more knowledge on the 2nd question.

HGVRHKYY

Lorne Malvo wrote: »

Guys; Would you need to declare CGT if you transfer to a stable coin whilst resident in Ireland?

Also, If you leave Ireland for Portugal and set up residence there, and apply for split year relief whilst in Ireland, would you be exempt from CGT to revenue in Ireland if you make any trade to your crypto in Portugal?

Only after you've been nonresident and non domiciled in Ireland for >3 years, so technically you'd need to be living in Portugal for 4 years, on the 4th year then you can trade without worrying about our CGT

HGVRHKYY

McGaggs wrote: »

Faxes to Revenue? You mean the same crowd who communicate via secure online messaging, exchange XML data files with other tax authorities and have financial institutions upload data on payments made to customers?

Any info on this? Curious what it means, thanks

If you're talking about the 'XML' part then it's simply a file format - very useful for exporting/importing data into different systems. It may as well have been written as "...exchange data files..."

If you mean the format and actual contents of these files then you need someone else to answer.

Lorne Malvo

HGVRHKYY wrote: »

Only after you've been nonresident and non domiciled in Ireland for >3 years, so technically you'd need to be living in Portugal for 4 years, on the 4th year then you can trade without worrying about our CGT

What about 'split year relief'

Lex Luthor

does anyone declare the free tesco vouchers they get? its similar as staking rewards but nobody declares them

relax carry on

HGVRHKYY wrote: »

Any info on this? Curious what it means, thanks

https://www.revenue.ie/en/companies-and-charities/international-tax/aeoi/index.aspx

Idioteque

Lex Luthor wrote: »

does anyone declare the free tesco vouchers they get? its similar as staking rewards but nobody declares them

How's it similar to staking?

HGVRHKYY

Lorne Malvo wrote: »

What about 'split year relief'

Not too sure on that, you'd be better off having a word with a good tax advisor that knows about the specifics, plenty on here would love to hear the details as well I'd say, and fair play to anyone who successfully manages it!

relax carry on wrote: »

https://www.revenue.ie/en/companies-and-charities/international-tax/aeoi/index.aspx

Thanks for that! That ties in with the importance of sticking to the rules 100% for anyone who'd be relocating to other EU countries so

The J Stands for Jay

HGVRHKYY wrote: »

Any info on this? Curious what it means, thanks

Google FATCA and CRS.

LawBoy2018

Lorne Malvo wrote: »

What about 'split year relief'

How would split year relief make any difference if you're ordinarily resident here in Ireland?

Dades

Basically you can't just spend half a year outside of Ireland and avoid tax.

You need to be non-resident for 3 years (non-ordinarily resident) for gains such as crypto to drop out of the net.

Lorne Malvo

Dades wrote: »

Basically you can't just spend half a year outside of Ireland and avoid tax.

You need to be non-resident for 3 years (non-ordinarily resident) for gains such as crypto to drop out of the net.

From revenue.ie, 'You can claim 'split-year treatment' in the year of departure. This means that you continue to be treated as resident up to the date of departure. All your employment income up to that date is taxed in the normal way. Your employment income from the date of departure is ignored for Irish tax purposes'.

I think it applies to income only...

https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspx

Its fairly simple. Seems there are very little expenses as well. I would have thought laptop, smartphone, office equipment etc used for trading but nope. Its basically just fees that are considered an expense.

An Ri rua

KilOit wrote: »

They can barely use emails, still in fax age, you think they have the ability to go through 1000's of transactions from defi to cen exchanges for 1 user?
I work in a government department, they are not even remotely capable of doing what you suggest here
I still declare myself but unless you are pumping 1000's into your bank account you are not on their radar

That's a really stupid comment when readers may act (foolishly) on that confident tripe. You may well work in a government department but Revenue are a different breed. And your naivety is astounding. Fiat values are not the only risk measure.

Lorne Malvo

KilOit wrote: »

They can barely use emails, still in fax age, you think they have the ability to go through 1000's of transactions from defi to cen exchanges for 1 user?
I work in a government department, they are not even remotely capable of doing what you suggest here
I still declare myself but unless you are pumping 1000's into your bank account you are not on their radar

If one were to up and leave for another country without disclosing crypto gains, likely nothing would be heard again from revenue??

LawBoy2018

Lorne Malvo wrote: »

If one were to up and leave for another country without disclosing crypto gains, likely nothing would be heard again from revenue??

Nobody here with any sense is going to justify tax evasion for you.

Lorne Malvo

LawBoy2018 wrote: »

Nobody here with any sense is going to justify tax evasion for you.

Speak for yourself...

LawBoy2018

Lorne Malvo wrote: »

Speak for yourself...

Lol are you an undercover Revenue auditor?

Lorne Malvo

LawBoy2018 wrote: »

Lol are you an undercover Revenue auditor? [/QUOT

In the UK where a UK resident leaves before the tax year ends to a tax haven, sets up residence and can exchange contracts and does only return for brief periods (max 89 days), no cgt is due to HMRC...

Legally relocate to a tax haven, set up residency without the intention of returning and be devoid of cgt due in this country?

Jackben75

if you look at tax return reports in the press (where available) in literally every developed country , you could argue the returns are being offset against something. Did i see somewhere that the wealthy take out loans against their own investments in the stock market and thus declare this against their profits, is this one legitimate legal way around it? Obviously crypto is not the stock market but it may be worth finding accountants/financial advisors who have worked for the likes of Davy, goodbody etc.

Would be interesting to know....

Lorne Malvo

Dades wrote: »

Basically you can't just spend half a year outside of Ireland and avoid tax.

You need to be non-resident for 3 years (non-ordinarily resident) for gains such as crypto to drop out of the net.

Am I correct in saying if you were to set up residence in a country with a double tax treaty with Ireland the above doesn't apply? ie 3 year rule

BizWiz66

Paying 23% VAT
Paying 12.5% Corporate Tax
Paying 40% Income Tax
Paying 8% USC
Paying 4% PRSI
Paying 33% CGT on stocks and some commodities I sold (gold and silver).

Now I am asked to pay 33% on a currency that the governments have been shaming and made a mockery of for a decade.
All this so the government can burn money and give tax break to people who never worked a day in their life.

Not sure if looking for ways to avoid paying CGT on Crypto can be considered more "unethical" than it is having the audacity to ask people to pay CGT on something which is closer to gambling than to investing.

iAcesHigh

BizWiz66 wrote: »

Paying 23% VAT
Paying 12.5% Corporate Tax
Paying 40% Income Tax
Paying 8% USC
Paying 4% PRSI
Paying 33% CGT on stocks and some commodities I sold (gold and silver).

Now I am asked to pay 33% on a currency that the governments have been shaming and made a mockery of for a decade.
All this so the government can burn money and give tax break to people who never worked a day in their life.

Not sure if looking for ways to avoid paying CGT on Crypto can be considered more "unethical" than it is having the audacity to ask people to pay CGT on something which is closer to gambling than to investing.

all this is completely correct but rules are rules and while you can elect to break them, even for good moral reasons, that won't hold you on court/when they send you a bill with extra fees for avoidance I've been there, I get it, but the only way out is to change gov/represenatatives

mcsean2163

Someone told me I have to hold for 30 days in order to claim a loss.

i.e. I sell from coinx to coiny realising €18,000 profit and now owe €6,000 to revenue but. I hold but coiny drops in value to €2,000. If I sell to fiat before 30 days I still owe €6,000 to revenue. Is that correct?

relax carry on

mcsean2163 wrote: »

Someone told me I have to hold for 30 days in order to claim a loss.

i.e. I sell from coinx to coiny realising €18,000 profit and now owe €6,000 to revenue but. I hold but coiny drops in value to €2,000. If I sell to fiat before 30 days I still owe €6,000 to revenue. Is that correct?

Please read and understand the below link if you are investing in Cryptocurrency.

https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspx

Seurat

I’m going to throw my 2 cents here having being around the crypto scene for a while.

Let’s presume (for arguments sake) that Revenue *are* the biggest idiots ever.
And that taxation is theft and immoral.

You are still going to get caught if you try avoiding paying tax on crypto. Maybe not for 10 years. Which is actually worse because they charge you interest and the fine gets bigger. You will have a super sore ass then.

This June Kraken has to serve up data to the Irs of all Us residents who traded more than $20k p/y between 2014-2018. So they have already started. They will get to the small dude. Eventually. There is money to be brought in. Corona has caused huge outgoings in every State. They need to recover as much as they can. And they will.

As previously stated by other user Revenue can just contract out this work to ChainAnalysis etc.

So say you buy €1000 of Eth on CB or Kraken or whatever, withdraw and start trading on uniswap (really it’s pancake because your Uni fees will be half your principle because you are low fish) they can still run an analysis on that data. Then you shift that to another account/exchange - they still know. Know that scammy Chinese exchange called ScamExchange2021? They will hand over everything when they are asked. They all will. Ever heard of Ladar Levison? I bet you haven’t. Ask yourself why? Let me tell you why : 99.999999999% of business want to make money and avoid legal costs. So they bend over. They aren’t your buddies. It’s the same story if you run an Eth validator in your bedroom connected to Lido. The minute you swap that stEth you are on the blockchain.

The bottom line is you have no idea how absolutely completely ****ed you are going to be in the future if you try avoiding taxes. They are going to fine you so hard and make you pay interest. They can prohibit you from buying shares/stock etc until your fine is paid. Your house is paid off but you can’t pay the fine? Maybe they won’t agree to a 10 year payback and make you sell your house.
Pay the tax. Nobody likes it. It’s ****

Now what you can do is harvest your losses.
So you have some Eth you bought at €1,300 last week and today Eth is €1,100
Sell that Eth and buy it back. All of it. You pay <€5 in tx fees on an exchange but just accrued a loss of €200 which can go against your profits you make later in year. All institutions do this in March (tax yr end) and December (other parts of world tax yr end). It is totally legal. But if you do it every week etc it can be regarded as trading, which is a different story.

Be smart.
Pay your taxes.
As little as is legally possible.
Your future you will thank you for not being rekt

BizWiz66

I would honestly burn 100% of my gains from cryptos rather than give the government 33% of it after all I already pay in taxes, I am disgusted with it.

Was looking at the revenue website the list of tax defaulters and it looks like they catch on average <100 people each quarter, and only few of them for no (or under) declaration of CGT: https://www.revenue.ie/en/corporate/press-office/list-of-defaulters/index.aspx

Considering in Ireland in 2018 120k people help crypto, and now I guess we are in the 150k-20k range, what's realistically the chance of getting caught?

Seurat

I think you really need to read the Revenue website properly. That is a list of people who got caught *&* didnt cooperate. It is not the people who Rev sent a letter to asking for returns and then paid up.
Listen it’s your choice ultimately what you do.
I am just letting you know you so much easier it is to Revenue to track you via blockchain and exchanges (with 3rd party companies) than how they would track you if you were buying Apple stocks on Degiro.
It is way way way easier, less hassle and they will get vastly greater returns.
They will have no sympathy for your sob story about how you need to pay for this or that and cant afford the fine
I’ve been in crypto long enough I have seen plenty of people I know get burned by their govts.
You have a chance to not get rekt.
Your financial freedom is far more important than your ego

BizWiz66 wrote: »

I would honestly burn 100% of my gains from cryptos rather than give the government 33% of it after all I already pay in taxes, I am disgusted with it.

Was looking at the revenue website the list of tax defaulters and it looks like they catch on average <100 people each quarter, and only few of them for no (or under) declaration of CGT: https://www.revenue.ie/en/corporate/press-office/list-of-defaulters/index.aspx

Considering in Ireland in 2018 120k people help crypto, and now I guess we are in the 150k-20k range, what's realistically the chance of getting caught?

BizWiz66

Seurat wrote: »

It is not the people who Rev sent a letter to asking for returns and then paid up.

Thanks for the explanation - Out of curiosity, in these letters do they say how much is the amount due? Are interest applied from the start? If yes, would you know how much?

Another problem for me is that I would find absolutely impossible to reconcile my balance transactions. I have moved crypto across Coinbase, Binance, Bitfinex, Crypto.com and others, and to and from my hard wallet. Even if I pull all reports available from different exchanges I have so many transaction for fractional amounts that I would never be able to figure the right amount due. Unlike DeGiro where you get a detailed report to download at the end of the year with cryptos is an absolute mess, how would the tax man even think to be able to reconcile everything is beyond me tbh.

BizWiz66

BizWiz66 wrote: »

Thanks for the explanation - Out of curiosity, in these letters do they say how much is the amount due? Are interest applied from the start? If yes, would you know how much?

Another problem for me is that I would find absolutely impossible to reconcile my balance transactions. I have moved crypto across Coinbase, Binance, Bitfinex, Crypto.com and others, and to and from my hard wallet. Even if I pull all reports available from different exchanges I have so many transaction for fractional amounts that I would never be able to figure the right amount due. Unlike DeGiro where you get a detailed report to download at the end of the year with cryptos is an absolute mess, how would the tax man even think to be able to reconcile everything is beyond me tbh.

Use Koinly

Seurat

I would highly doubt any govt will tell you first off how much they think you owe. They would let you disclose first. It makes no sense for them to show their hand before you sit at the table. See what you come up with. Then if it is pebbles they will prob just accept it. If it is significant they may want to do a full audit. Which is what you absolutely don’t want. The hassle alone would be horrible.
The interest they charge is on a daily rate. It would be on the Revenue website. They also can fine you. General rule with revenue in any country is if they catch you the fine is large, but if you disclose first there is no fine. Of course anything can happen

I use cointracking.info for tracking gains/loss etc. They will tell how much fees you spent, which is also deductible
Depends on how much your net worth is. There is a free and paid subscription.
You can upload csv from any exchange or use api, they track defi also.