Tax on Bitcoin Profits

pro_gnostic_8 · 11-06-2017 9:02pm

Unsure and not knowledgeable of bitcoin-to-gold in Ireland, but there are several highly reputable bullion dealing companies online who ship globally ( and in some cases free delivery).
This is new territory to me, so I'm not familiar with the details of it.
I would like to know, tho', if I'm liable for CGT if I cash out my bitcoin to gold.

The Cuban · 11-06-2017 9:10pm

Take a trip to London and visit the many Bitcoin Atms there. All of which allow you to withdraw 500 pounds per day (unregistered max)

pro_gnostic_8 · 11-06-2017 9:14pm

Mr.S wrote: »

If you can even cash out from BTC to Gold, you would still need to pay GCT when you go from Gold to fiat, no?

Indeed ! But in this case I am knowingly kicking the can down the road.
I just want my bitcoin off the exchange for obvious reasons. I also want my main bitcoin stash off my trezor in the run-up to the August 1st UASF. I don't want to be a holder of bitcoin in the present period and want to unwrap the value and place it in a safe haven (gold?) until matters settle down post-UASF.

barneystinson · 11-06-2017 9:14pm

pro_gnostic_8 wrote: »

Unsure and not knowledgeable of bitcoin-to-gold in Ireland, but there are several highly reputable bullion dealing companies online who ship globally ( and in some cases free delivery).
This is new territory to me, so I'm not familiar with the details of it.
I would like to know, tho', if I'm liable for CGT if I cash out my bitcoin to gold.

Yes

Thargor · 11-06-2017 9:18pm

pro_gnostic_8 wrote: »

Indeed ! But in this case I am knowingly kicking the can down the road.
I just want my bitcoin off the exchange for obvious reasons. I also want my main bitcoin stash off my trezor in the run-up to the August 1st UASF. I don't want to be a holder of bitcoin in the present period and want to unwrap the value and place it in a safe haven (gold?) until matters settle down post-UASF.

A lot of people seem to be swapping theirs for ETH, a few exchanges let you do that, but then again if BTC tanks ETH will probably go aswell.

AndrewJRenko · 11-06-2017 9:22pm

The Cuban wrote: »

Take a trip to London and visit the many Bitcoin Atms there. All of which allow you to withdraw 500 pounds per day (unregistered max)

Thanks for reminding me of one extra addition to my earlier point.

You presume wrong. All kinds of large purchases are reported to Revenue. If you buy a house or a car or artwork or a boat or if your travel history doesn't match your declared income profile, you will be flagged up for special attention.

tecknika · 11-06-2017 9:23pm

OSI wrote: »

Yes, any gains over €1270 are taxable under capital gains tax. This includes gains from the sale of currency other than Euro.

:lol

pro_gnostic_8 · 11-06-2017 9:33pm

Thargor wrote: »

A lot of people seem to be swapping theirs for ETH,

No, I have enough ETH as it is -- I wouldn't be comfortable adding more by converting my BTC to Eth.

Take a trip to London and visit the many Bitcoin Atms there. All of which allow you to withdraw 500 pounds per day (unregistered max)

Less than half (much less) of all ATM's allow Crypto to Fiat. And those that do allow, require verification etc and a waiting time for five confirmations. A drag. With the present snail's pace of bitcoin tx's on the network you'ld need to rent a week in some London hotel at the cost of an arm and a leg.

(I think the ATM in GSM Solutions shop in Abbey Street is Fiat to Crypto only ?)

Thargor · 11-06-2017 9:54pm

pro_gnostic_8 wrote: »

(I think the ATM in GSM Solutions shop in Abbey Street is Fiat to Crypto only ?)

Thats gone with ages, you hand over the cash at the counter now and get a docket with instructions telling you who to email your wallet address to, the BTC appear in your wallet a couple of days later, I just bit the bullet and made a Coinbase account.

The Cuban · 11-06-2017 9:57pm

AndrewJRenko wrote: »

Thanks for reminding me of one extra addition to my earlier point.

You presume wrong. All kinds of large purchases are reported to Revenue. If you buy a house or a car or artwork or a boat or if your travel history doesn't match your declared income profile, you will be flagged up for special attention.

let them flag away, what can they prove? fook all. People are far too soft with them, as Ive stated before I`ll not be giving revenue a cent and theirs nothing they can do about it.

If you really want to get the better of revenue then leave your money in crypto, they cannot trace it. Its the new evolution of money. The Governments cannot do a thing about it. The amount of places starting to accept payment in Bitcoin is growing faster now. Within 5 years it will be mainstream.
Keeping your wealth in Bitcoin is not a new thing, I remember many of the older generation would not keep money in the Bank but keep there own cash. That way they controlled their own wealth. Bitcoin is no different in that sense

AndrewJRenko · 11-06-2017 10:05pm

The Cuban wrote: »

let them flag away, what can they prove? fook all. People are far too soft with them, as Ive stated before I`ll not be giving revenue a cent and theirs nothing they can do about it.

If you really want to get the better of revenue then leave your money in crypto, they cannot trace it. Its the new evolution of money. The Governments cannot do a thing about it. The amount of places starting to accept payment in Bitcoin is growing faster now. Within 5 years it will be mainstream.
Keeping your wealth in Bitcoin is not a new thing, I remember many of the older generation would not keep money in the Bank but keep there own cash. That way they controlled their own wealth. Bitcoin is no different in that sense

You seem to misunderstand tax law. Revenue don't have to prove a thing - quite the opposite. If they audit you, YOU have to prove that everything you have was bought with clean, taxed income. And if you can't prove it, you end up with a very large bill and the sheriff at your door.

And all those places that accept payment in Bitcoin - how long do you think it is going to be before they start reporting purchases to the Revenue in their country, who will be sharing data with our Revenue here?

thegolfer · 11-06-2017 10:11pm

A point to note here is that in normal cases CGT applies to currency trading, however depending on the frequency and quantity of trades made it could be seen as revenue income and not capital, or income tax and not cgt.

For the most part, cgt most likely will apply.

Tax in Ireland is a self reporting system, obligation is down to you individually to pay and file.

pro_gnostic_8 · 11-06-2017 10:13pm

The Cuban wrote: »

let them flag away, what can they prove? fook all. People are far too soft with them, as Ive stated before I`ll not be giving revenue a cent and theirs nothing they can do about it.

Oh I do like the cut of your jib, sir!

If you really want to get the better of revenue then leave your money in crypto, they cannot trace it. Its the new evolution of money. The Governments cannot do a thing about it. The amount of places starting to accept payment in Bitcoin is growing faster now. Within 5 years it will be mainstream.
Keeping your wealth in Bitcoin is not a new thing, I remember many of the older generation would not keep money in the Bank but keep there own cash. That way they controlled their own wealth. Bitcoin is no different in that sense

Agree with all the above.
It's just that I have major concerns about the issues surrounding UASF at the beginning of August, and I want out of BTC in advance of that date. There is too big an amount involved to take a gamble on the unknown with.
It is only a temporary move, and I will go back in when the dust settles. However, like you I have an aversion to being taxed at 30% for my prudence in playing safe

jester77 · 11-06-2017 10:36pm

Could move over here to Germany. Any gains you've made on btc that are older than 1 year are tax free. Might be worth it if you are dealing with very large amounts.

The Cuban · 11-06-2017 10:42pm

AndrewJRenko wrote: »

You seem to misunderstand tax law. Revenue don't have to prove a thing - quite the opposite. If they audit you, YOU have to prove that everything you have was bought with clean, taxed income. And if you can't prove it, you end up with a very large bill and the sheriff at your door.

And all those places that accept payment in Bitcoin - how long do you think it is going to be before they start reporting purchases to the Revenue in their country, who will be sharing data with our Revenue here?

No I understand full well the tax law. I`m not stupid enough to be going around flaunting wealth that cannot be accounted for.
as for reporting purchases in Bitcoin, what will they report to revenue? Crypto wallets are anonymous, you can have as many as you want. It is in every way the same as paying in cash. The cash you have in your pocket does not have a record of who had it last, who you are or what it was used for before just like Bitcoin.

AndrewJRenko · 11-06-2017 11:02pm

The Cuban wrote: »

No I understand full well the tax law. I`m not stupid enough to be going around flaunting wealth that cannot be accounted for.
as for reporting purchases in Bitcoin, what will they report to revenue? Crypto wallets are anonymous, you can have as many as you want. It is in every way the same as paying in cash. The cash you have in your pocket does not have a record of who had it last, who you are or what it was used for before just like Bitcoin.

Try spending more than €10k cash on any car or artwork or other asset and you'll see exactly what records will end up with Revenue.

What will the vendors who accept bitcoin report to Revenue? The same as they report to Revenue when you pay cash - the ID of the seller, a verified ID for large purchases and the details of the purchase.

And even if you ignore all that stuff, you may well be flagged up for Revenue audit simply as an exception. If you have a €900k house when most other people with your level of declared income have a €500k house, you could well be flagged up. If you have an €50k car when most other people with your declared level of income have a €20k car, then you may well be flagged up.

nate.drake · 12-06-2017 11:54am

The Cuban wrote: »

No I understand full well the tax law. I`m not stupid enough to be going around flaunting wealth that cannot be accounted for.
as for reporting purchases in Bitcoin, what will they report to revenue? Crypto wallets are anonymous, you can have as many as you want. It is in every way the same as paying in cash. The cash you have in your pocket does not have a record of who had it last, who you are or what it was used for before just like Bitcoin.

As I mentioned in my earlier post, while Bitcoin transactions are faceless, the exchanges used to buy and sell them aren't. Generally you need to register using ID plus link your bank account.

There's also the possibility that if you use a software wallet, that your IP address can be linked to specific transactions. You can reduce the chance of this happening by using a paper wallet or full node wallet as we discussed.

Technically speaking you could go onto LocalBitcoins.com and cash out your Bitcoins for actual money, then take your wad of cash and put it in a hole somewhere but would you really want to take that risk with a large sum of money? Why not simply find legal ways to avoid CGT such as setting up a small self administered pension scheme or move to a jurisdiction which doesn't charge this tax?

rogercross · 12-06-2017 12:32pm

jester77 wrote: »

Could move over here to Germany. Any gains you've made on btc that are older than 1 year are tax free. Might be worth it if you are dealing with very large amounts.

How would that work, move for a year, make the gains, cash out then move back here?

nate.drake · 12-06-2017 12:34pm

rogercross wrote: »

How would that work, move for a year, make the gains, cash out then move back here?

In principle yes but I think you need to be away for more than a year:

You are resident in Ireland for tax purposes if you are in Ireland for a total of:
183 days or more in a tax year or

280 days or more in a tax year plus the previous tax year taken together, with a minimum of 30 days in each year.

For these tests, a 'day' means any part of a day.

See : http://www.revenue.ie/en/jobs-and-pensions/tax-residence/how-to-know-if-you-are-resident-for-tax-purposes.aspx

rogercross · 12-06-2017 12:40pm

nate.drake wrote: »

In principle yes but I think you need to be away for more than a year:

See : http://www.revenue.ie/en/jobs-and-pensions/tax-residence/how-to-know-if-you-are-resident-for-tax-purposes.aspx

Interesting, if there were significant gains for me in the future a year+ abroad could be worth it vs handing 33% over here to revenue.

Do you still have to declare anything here though when you come back suddenly with a mad amount of money say 18 months after going away, income would be similar if not the same as before but suddenly have way more spending power

nate.drake · 12-06-2017 12:43pm

rogercross wrote: »

Interesting, if there were significant gains for me in the future a year+ abroad could be worth it vs handing 33% over here to revenue.

Do you still have to declare anything here though when you come back suddenly with a mad amount of money say 18 months after going away, income would be similar if not the same as before but suddenly have way more spending power

That's an excellent question Roger, if you have evaded CGT by moving abroad you wouldn't have to pay that but you'd still be liable for tax on the interest of any money you'd saved up, plus any income you earned once you return to Ireland. I certainly think you've hit on the most elegant (and legal!) solution to avoiding giving away 33% of your profits!

joeguevara · 12-06-2017 12:48pm

AndrewJRenko wrote: »

Try spending more than €10k cash on any car or artwork or other asset and you'll see exactly what records will end up with Revenue.

What will the vendors who accept bitcoin report to Revenue? The same as they report to Revenue when you pay cash - the ID of the seller, a verified ID for large purchases and the details of the purchase.

And even if you ignore all that stuff, you may well be flagged up for Revenue audit simply as an exception. If you have a €900k house when most other people with your level of declared income have a €500k house, you could well be flagged up. If you have an €50k car when most other people with your declared level of income have a €20k car, then you may well be flagged up.

Thats only if it is suspicious under the Criminal Justice (Money Laundering and Terrorist Offences) Act 2010 as amemnded. They do not report every transaction over 10k in cash. The seller, as a Designated Person has an obligation to receive prrof of ID, verification of address and a reasonable explanation of source of funds. They do not provide all of this to the Revenue or the Financial Intelligence Unit, unless there is a suspicion. Just so you know, there was only 25,000 such reports made in 2015 and something similar in 2016.

AndrewJRenko · 12-06-2017 2:46pm

joeguevara wrote: »

Thats only if it is suspicious under the Criminal Justice (Money Laundering and Terrorist Offences) Act 2010 as amemnded. They do not report every transaction over 10k in cash. The seller, as a Designated Person has an obligation to receive prrof of ID, verification of address and a reasonable explanation of source of funds. They do not provide all of this to the Revenue or the Financial Intelligence Unit, unless there is a suspicion. Just so you know, there was only 25,000 such reports made in 2015 and something similar in 2016.

Correct, they don't report every such transaction. But they are obliged to identify the customer and record the details, including making them available for inspection by anti-money-laundering officials;

http://www.amlcu.gov.ie/website/aml/amlcuweb.nsf/page/high_value_goods_dealers-en

joeguevara · 12-06-2017 2:55pm

AndrewJRenko wrote: »

Try spending more than €10k cash on any car or artwork or other asset and you'll see exactly what records will end up with Revenue.

What will the vendors who accept bitcoin report to Revenue? The same as they report to Revenue when you pay cash - the ID of the seller, a verified ID for large purchases and the details of the purchase.

And even if you ignore all that stuff, you may well be flagged up for Revenue audit simply as an exception. If you have a €900k house when most other people with your level of declared income have a €500k house, you could well be flagged up. If you have an €50k car when most other people with your declared level of income have a €20k car, then you may well be flagged up.

AndrewJRenko wrote: »

Correct, they don't report every such transaction. But they are obliged to identify the customer and record the details, including making them available for inspection by anti-money-laundering officials;

http://www.amlcu.gov.ie/website/aml/amlcuweb.nsf/page/high_value_goods_dealers-en

Yes but you were initially implying that every transaction over 10k is reported. That is not the case.

AndrewJRenko · 12-06-2017 4:06pm

joeguevara wrote: »

Yes but you were initially implying that every transaction over 10k is reported. That is not the case.

That's correct. Every transaction is recorded, and is available for inspection by Revenue at their discretion.

Would a wise man bet the farm on this?

joeguevara · 12-06-2017 4:24pm

AndrewJRenko wrote: »

That's correct. Every transaction is recorded, and is available for inspection by Revenue at their discretion.

Would a wise man bet the farm on this?

But what is your point? You previously stated that all transactions over 10k are reported to the Revenue. Now you know they aren't.

daveharnett · 12-06-2017 4:31pm

rogercross wrote: »

Hmmm wouldn't be my first choice :-) Any other options? Is there any way of just cashing the coins out to physical cash not a bank account?

I expect the darkweb markets that sell drugs/counterfeits/botnets for bitcoin would sell cash too?

barneystinson · 12-06-2017 6:57pm

joeguevara wrote: »

But what is your point? You previously stated that all transactions over 10k are reported to the Revenue. Now you know they aren't.

Since one has no way of knowing which transaction(s) might or might not trigger a report, shouldn't a person operate on the basis that every transaction in their account is one that Revenue is / will be aware of...

AndrewJRenko · 12-06-2017 10:12pm

joeguevara wrote: »

But what is your point? You previously stated that all transactions over 10k are reported to the Revenue. Now you know they aren't.

The point is that all large transactions are available to Revenue via the seller's records if Revenue choose to look.

joeguevara · 13-06-2017 4:20am

barneystinson wrote: »

Since one has no way of knowing which transaction(s) might or might not trigger a report, shouldn't a person operate on the basis that every transaction in their account is one that Revenue is / will be aware of...

Absolutely not....as a money laundering reporting officer (MLRO) of about 20 designated persons (from 3 art galleries, 2 second car dealerships, 1 gold bullion dealer, 2 bureau de change, 6 alternative investmestment funds, 4 UCITS funds, 1 life assurance company and 1 MiFD firm) and as one of Ireland's leading experts in anti-money laundering legislation who trains the Criminal Assets Bureau, the Revenue Commissioners, the Finanial Intelligence Unit as well as the Central Bank of Ireland, I reckon I have a pretty good understanding of what or would not trigger a report.

Tax on Bitcoin Profits

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