Can we pool our knowledge regarding TAX and crypto and make some kind of FAQ/sticky?

sublime1 · 21-12-2017 2:06pm #1

There is huge confusion out there regarding the tax situation with crypto. I have seen pretty much every opinion expressed ranging from "crypto is play money and therefore tax free" to "not only is it taxable, but it's considered as income, and every trade (even from one crypto to another) is a taxable event". Many people sit somewhere in between these extremes, and think that only fiat events are taxable, and then only as capital gains. There's the taxback article saying pretty much the latter, and some users here have stated similar, but really there is no consensus, Revenue haven't really clarified the situation, apart from this comment 3 years ago, and we are all potential lambs to the slaughter if we don't sort this out.

What I want to avoid is more speculation from those who are not informed - there is more than enough of that out there already. I have spoken to an accountant, and while he considers that there is room for manoeuvre as this is new territory, he insists that even small numbers of trades could be considered sufficient to meet “badges of trade” criteria, hence being liable for income tax. He considers crypto trading as pretty much equivalent to foreign exchange trading. For those of us who bought a few LTC or ETH and then swapped those for a few of the dozens altcoins, these are scary concepts, and it quickly becomes a real headache trying to resolve.

To me, one of the key questions is: are crypto to crypto trades taxable, or it is only when we sell for fiat? In the US, these are considered "like-kind exchanges" and are not taxable.

So we get an informed conversation going on this please? I'm sure accountants up and down the country have been getting calls from clients wondering how to resolve this, so if we can pool our knowledge, maybe some kind of consensus can be reached, so we can keep Revenue, and therefore ourselves, happy.

Shamo · 21-12-2017 2:37pm

The taxback article states that: If you are making a profit through the disposal (selling, gifting or exchanging your asset) of your cryptocurrency, you will need to declare it to Revenue for Capital Gains Tax (CGT).

This means crypto to crypto and crypto to Euro trades. Would they post that without consulting Revenue first? I really doubt it.

There is a bill proposed in the US to specifically state that like-kind exchange is for real estate only: https://cointelegraph.com/news/house-and-senate-tax-bills-kill-cryptocurrency-like-kind-exchanges-expert-blog

Whether it is valid to put it in for like-kind exchange at the moment in the US isn't certain either.

sublime1 · 21-12-2017 3:15pm

Thanks for responding. I actually doubt that anyone has consulted Revenue directly. The few accountants I spoke too have a policy of not raising these matters directly with Revenue, which is absurd I know, but they assure me is the best strategy.
I can't even see the rationale of crypto to crypto being taxable. Surely, the moment of re-emergence back to Euro/fiat is the only sane point of taxation. As someone with little experience of taxation, the entire thing strikes me as absurd. Lest we forget, Bitcoin was originally a token with a game called Second Life. Will we start taxing video game scores next?

Anyway, I proposed that we avoid speculation, and here I am only adding fuel to the fire. I'll stop now.

grindle · 22-12-2017 12:35am

sublime1 wrote: »

Lest we forget, Bitcoin was originally a token with a game called Second Life.

You have been misled. Linden Dollars are a very different thing that you could have maybe bought BTC with.

Linden Dollars: Bitcoin on sedatives!

unkel · 22-12-2017 11:03am

The minister of finance has stated in 2014 that speculating with crypto currencies is subject to capital gains tax. As soon as you realise a profit (by selling or by converting it to another crypto) the CGT becomes due

Minister Noonan 2014 wrote:

Crypto-currencies, such as Bitcoin, are not legal tender in the Euro area. E-commerce, including the use of virtual currencies, presents a challenge to tax administrations throughout the world. The Revenue Commissioners and tax administrations in other countries are actively monitoring developments. From the information provided, it is not clear how Bitcoin would be treated for CGT purposes.

However, it is likely that gains accruing from speculation on Bitcoin would be liable for CGT in the normal way.

Now mining crypto and then immediately selling it is not so clear. Any thoughts anyone?

daheff · 22-12-2017 12:56pm

sublime1 wrote: »

I can't even see the rationale of crypto to crypto being taxable. Surely, the moment of re-emergence back to Euro/fiat is the only sane point of taxation.

Crypto to Crypto would be like swapping Gold for Silver (or any other commodity).

AFAIK Taxation point is the point at which you realise a value when exiting the holding of the asset.

If revenue only taxed when you moved back to cash, then you would find a lot of people finding loopholes (like barter/ exchanging crytpos for payment etc) and revenue wouldnt be able to claim the tax due.

sublime1 · 26-12-2017 9:32pm

daheff wrote: »

If revenue only taxed when you moved back to cash, then you would find a lot of people finding loopholes (like barter/ exchanging crytpos for payment etc) and revenue wouldnt be able to claim the tax due.

I do see your point here, but the reality is that there already plenty of ways of finding loopholes with crypto. It's just not practical to put this kind of overhead on people when in 99.999% of cases, you end up with the same number payable to the taxman.

As an aside, there's a very in depth discussion going on here on Reddit, which I found enlightening, even if it is US focused. There are a few comments from CPAs and accountants who advise just to do your best, and that, given how strained the taxman's resources already are, you should be ok if you make a reasonable effort.

sublime1 · 26-12-2017 9:46pm

unkel wrote: »

Now mining crypto and then immediately selling it is not so clear. Any thoughts anyone?

True, mining is a tough one. Also forks, ICOs, gifted coins (some exchanges do this) - it's all a headache waiting to happen.

What I find interesting is that the first year I've seen serious discussion about the tax implications of crypto. Is there anyone out there who has submitted returns in previous years?

Lockedout2 · 26-12-2017 10:14pm

Any currency other than EURO is a chargeable asset for CGT purposes.

The realization of a gain or loss by either sale, swop or gift of that asset gives rise to a CGT event. So as other posters have said it’s not when you convert in back into EURO but when you realize the value.

In order to have a deductible value for CGT you have to have a base cost. If you get free share or coins then you have no value, if I understand that is what mining is.

The question of income tax arises where there are a significant number of trades over a short period of time.

sublime1 · 26-12-2017 10:46pm

Lockedout2 wrote: »

The question of income tax arises where there are a significant number of trades over a short period of time.

Can you define a significant number of trades over a short period of time? One thing I noticed recently when I sold some BTC was that my sell order was split into 9 or 10 small trades, each for a slightly different price. Is that treated as a single trade?
Thanks

Flossy Flossy · 01-01-2018 9:50pm

Altcoin trading is highly speculative and is closer to gambling than foreign exchange. Further guidance is required from revenue how to deal with altcoins.

Ireland's laws are closely related to the UK - this document is worth reading

The UK has a £11k capital gains allowance compared to our €1.2k

Pyrrhic7 · 01-01-2018 10:01pm

Flossy Flossy wrote: »

Altcoin trading is highly speculative and is closer to gambling than foreign exchange. Further guidance is required from revenue how to deal with altcoins.

Ireland's laws are closely related to the UK -

The UK has a £11k capital gains allowance compared to our €1.2k

Silly question but is the €1.2k allowance per annum or for an individual withdraw? (Will be checking your link)

Flossy Flossy · 02-01-2018 1:02am

"The first €1,270 of taxable gains in a tax year are exempt from CGT."

http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_gains_tax.html

h0neybadger · 02-01-2018 3:46am

unkel wrote: »

The minister of finance has stated in 2014 that speculating with crypto currencies is subject to capital gains tax. As soon as you realise a profit (by selling or by converting it to another crypto) the CGT becomes due

Now mining crypto and then immediately selling it is not so clear. Any thoughts anyone?

My accountant is still in the process of confirming how this will be handled with Revenue.
Waiting almost 2 months for Revenue to clarify.
(I’m mining under a limited company) so it’s possibly different compared to residential miners.

wonderboysam · 03-01-2018 11:08pm

Agreed - a sticky would be very useful especially if the market continues to grow like it is $$ :-)

dashoonage · 04-01-2018 9:36am

So has anyone actually cashed out and paid the man their share?

is it a case of
1) sell
2) pay the man the 33%
3) lambo

??

The Oort Cloud · 05-01-2018 1:17am

Panama.

wonderboysam · 05-01-2018 4:12am

I sometimes wonder if the IRS defined a clear cryptocurrency/bitcoin tax would it cause a massive crash because at the moment people are too unsure of the procedure to cash out

sublime1 · 05-01-2018 12:29pm

The Oort Cloud wrote: »

Panama.

This is exactly the low-effort kind of contribution I was trying to avoid in this discussion.

Another suggestion that someone pointed out to me is the idea of doing trades through a company structure. Seeing the low rates of corporate tax, this could be worth looking into. Has anyone any thoughts?

jester77 · 05-01-2018 1:42pm

The Oort Cloud wrote: »

Panama.

Germany is closer

ZeroThreat · 05-01-2018 1:43pm

sublime1 wrote: »

This is exactly the low-effort kind of contribution I was trying to avoid in this discussion.

Another suggestion that someone pointed out to me is the idea of doing trades through a company structure. Seeing the low rates of corporate tax, this could be worth looking into. Has anyone any thoughts?

Maybe you could, but if you made a lot you'd be hit by top rate of tax, plus top rates of USC for self employed, plus PRSI - 40 + 11 + 4 = 55% income tax when you withdraw money from the company :eek:

ZeroThreat · 05-01-2018 1:47pm

jester77 wrote: »

Germany is closer

problem there (as previously mentioned on some threads in these forums), is that you have to spend 3 full years resident there before revenue stop chasing you for taxes.

Strangely enough, you're ineligible to vote during all this period, seems to me it's taxation without representation for the sheeple.

EagererBeaver · 05-01-2018 1:53pm

ZeroThreat wrote: »

Strangely enough, you're ineligible to vote during all this period, seems to me it's taxation without representation for the sheeple.

You think you should be eligible to vote as soon as it start paying tax? I think it's perfectly fine to have a minimum period of residency.

As I moved to Spain to take up employment, I pay a flat 24% tax on all my employment income. That's it. All crypto profits are free.

jester77 · 05-01-2018 2:12pm

ZeroThreat wrote: »

problem there (as previously mentioned on some threads in these forums), is that you have to spend 3 full years resident there before revenue stop chasing you for taxes.

Strangely enough, you're ineligible to vote during all this period, seems to me it's taxation without representation for the sheeple.

I'm paying taxes over 15 years in Germany and still can't vote. Well except for the EU parliament and the local lord mayor, that's all I am entitled to.

Fakent.ie · 07-01-2018 11:38am

EagererBeaver wrote: »

You think you should be eligible to vote as soon as it start paying tax? I think it's perfectly fine to have a minimum period of residency.

As I moved to Spain to take up employment, I pay a flat 24% tax on all my employment income. That's it. All crypto profits are free.

There is no tax on crypto gains in spain?

Fakent.ie · 07-01-2018 11:38am

ZeroThreat wrote: »

problem there (as previously mentioned on some threads in these forums), is that you have to spend 3 full years resident there before revenue stop chasing you for taxes.

Strangely enough, you're ineligible to vote during all this period, seems to me it's taxation without representation for the sheeple.

So if your a German citizen you don't need to pay tax on crypto or am i missing something?

shakedown · 07-01-2018 2:27pm

Fakent.ie wrote: »

So if your a German citizen you don't need to pay tax on crypto or am i missing something?

You also need to be living there for a period of time. Just being a citizen is not enough to avail of the 0% CGT.

Fakent.ie · 07-01-2018 2:50pm

shakedown wrote: »

You also need to be living there for a period of time. Just being a citizen is not enough to avail of the 0% CGT.

How long of a peroid ? :O

sublime1 · 07-01-2018 4:37pm

Sorry lads, but I set this thread up to have a serious discussion about crypto taxation in Ireland for those of us who have to pay our taxes in Ireland. Please start a new thread if you want to talk about Germany, Spain, Panama or wherever else you lads live. You're just making noise.

lifeandtimes · 07-01-2018 5:01pm

Mr.S wrote: »

I'd be interested in hearing from anyone who's actually withdrew to an Irish account and declared and paid GGT. On paper the process seems straight forward enough if you are a PAYE worker. Does revenue confirm everything is in order once you file?!

The general consensus i've been reading is that you need to keep a record of all your trades, and not just declare the final trade where you sell and then cash out.
That gets a bit...confusing.

Most exchanges will keep a record for you and you can export the file via crv etc so not too hard to show them all the transactions but what's to say you didn't fabricate the spread sheet?

rekcaks · 07-01-2018 5:17pm

Do i have to make a return every year or just when i cash out?

lifeandtimes · 07-01-2018 5:20pm

rekcaks wrote: »

Do i have to make a return every year or just when i cash out?

I'd once a year but we still haven't got clarification on what transactions though

rekcaks · 07-01-2018 5:27pm

I bought my first crypto on Dec 26th 2017. Is it ok to make the return this year?

Fakent.ie · 07-01-2018 5:31pm

Mr.S wrote: »

I'd be interested in hearing from anyone who's actually withdrew to an Irish account and declared and paid GGT. On paper the process seems straight forward enough if you are a PAYE worker. Does revenue confirm everything is in order once you file?!

The general consensus i've been reading is that you need to keep a record of all your trades, and not just declare the final trade where you sell and then cash out.
That gets a bit...confusing.

Ye I dont understand how they expect us to keep track of every single trade we made, some people have made 100,000's of trades Id imagine...

privateBeavis · 07-01-2018 9:22pm

rekcaks wrote: »

I bought my first crypto on Dec 26th 2017. Is it ok to make the return this year?

CGT is due only when you sell (and also when you trade between cryptos but still not sure about that part but personally assuming I do)

According to this:
http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_gains_tax.html
If you sold in Dec then due this month if gains are over the 1270 limit.

Zascar · 07-01-2018 9:46pm

Lets say I moved to a tax free island tomorrow. I had made some money in crypto but never sold any and never cashed out, are the revenue going to come looking for their slide since the gains were made in Ireland?

Snipp · 07-01-2018 9:49pm

Flossy Flossy wrote: »

"The first €1,270 of taxable gains in a tax year are exempt from CGT."

http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_gains_tax.html

this. anything over, you pay CGT.

td2008 · 07-01-2018 10:23pm

Maybe a stupid question, but lets say I have 2 ltc that i bought for 90, i want to buy some alt coins and buy 2 more ltc (230) and transfer to a different exchange.
When i use these ltc coins do i need to pay cgt on any gains on my initial 2 ltc? :pac:

lifeandtimes · 07-01-2018 10:26pm

Zascar wrote: »

Lets say I moved to a tax free island tomorrow. I had made some money in crypto but never sold any and never cashed out, are the revenue going to come looking for their slide since the gains were made in Ireland?

Or maybe set up an account in the Cayman islands and transfer the money there? Not sure if it counts as the money never entered Ireland. Begs the question if you're on holidays and make gains over that break do you pay tax in thay country or your home country???

ZeroThreat · 07-01-2018 10:34pm

Zascar wrote: »

Lets say I moved to a tax free island tomorrow. I had made some money in crypto but never sold any and never cashed out, are the revenue going to come looking for their slide since the gains were made in Ireland?

The answer you be yes, unless you're not ordinarily resident (ie after 3 years non-resident in Ireland you become non-ordinarily resident at the start of the 4th year) you have your obligation to the Irish government.

Mr. Fancypants · 08-01-2018 11:57am

I went through the process of collecting all my trades for 2017 using cointracking which was very useful. It can spit out a tax report for you to use with Revenue. You can import trades from exchanges. I found i needed a bit of manual work when i used things like Shapeshift and Etherdelta. If you are using Shapeshift i highly recommend using the option to get an email receipt for your records to make things a lot easier.

I also tried using bitcoin.tax but found it nowhere near as good as cointracking.

I will leave a referral and a non referral link to cointracking if thats ok. The referral link gives a 10% discount if you need to sign up (over 200 trades). It also gives me a kick back.

https://cointracking.info?ref=M324815

https://cointracking.info

Gryzor · 08-01-2018 12:02pm

I signed up for this a while back. I used the api import, but found it way off, think downloading csvs from each exchange and uploading it manually is the solution.

Dakota Dan · 08-01-2018 12:14pm

privateBeavis wrote: »

CGT is due only when you sell (and also when you trade between cryptos but still not sure about that part but personally assuming I do)

According to this:
http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_gains_tax.html
If you sold in Dec then due this month if gains are over the 1270 limit.

I thought it was due in October, any gains after octber 17 would be payable in October 18 with self employed anyway. What if you sold high and bought back low the same currency would you have to pay cgt on any gains even though you reinvested the lot in the same currency?

sublime1 · 08-01-2018 12:44pm

mbroaders wrote: »

I went through the process of collecting all my trades for 2017 using cointracking which was very useful. It can spit out a tax report for you to use with Revenue. You can import trades from exchanges. I found i needed a bit of manual work when i used things like Shapeshift and Etherdelta. If you are using Shapeshift i highly recommend using the option to get an email receipt for your records to make things a lot easier.

I also tried using bitcoin.tax but found it nowhere near as good as cointracking.

I will leave a referral and a non referral link to cointracking if thats ok. The referral link gives a 10% discount if you need to sign up (over 200 trades). It also gives me a kick back.

https://cointracking.info?ref=M324815

https://cointracking.info

Thanks for this. These are actually pretty good if you're not doing anything too fancy with margins or leverage, and certainly are a great step forward in terms of organising all the trades into a manageable format.

There's still a few outstanding issues that I see:
1. method used to calculate gains - I think most people would prefer "Last In First Out", but will Revenue see it that way?
2. also taxation on long term holding (i.e. more than 1 year) - I haven't seen a distinction made on this, but I believe there could be an argument made for a different tax approach to sale of coins held long term vs short term.

Thoughts?

lifeandtimes · 08-01-2018 12:47pm

mbroaders wrote: »

I went through the process of collecting all my trades for 2017 using cointracking which was very useful. It can spit out a tax report for you to use with Revenue. You can import trades from exchanges. I found i needed a bit of manual work when i used things like Shapeshift and Etherdelta. If you are using Shapeshift i highly recommend using the option to get an email receipt for your records to make things a lot easier.

I also tried using bitcoin.tax but found it nowhere near as good as cointracking.

I will leave a referral and a non referral link to cointracking if thats ok. The referral link gives a 10% discount if you need to sign up (over 200 trades). It also gives me a kick back.

https://cointracking.info?ref=M324815

https://cointracking.info

i use this too, very useful

lifeandtimes · 08-01-2018 12:49pm

sublime1 wrote: »

2. also taxation on long term holding (i.e. more than 1 year) - I haven't seen a distinction made on this, but I believe there could be an argument made for a different tax approach to sale of coins held long term vs short term.

Would this not be the same as any stock or shares people hold for years at present within the country?

I dont know the ins and outs of it personally but as they are similar in that the length of time can be years the same rule should apply right?

GreeBo · 08-01-2018 12:52pm

Fakent.ie wrote: »

Ye I dont understand how they expect us to keep track of every single trade we made, some people have made 100,000's of trades Id imagine...

The exchange(s) will have a record of every transaction.

In any case, thats the obligation, you could just, yunno write it down somewhere each time?

lifeandtimes wrote: »

I'd once a year but we still haven't got clarification on what transactions though

Disposal of any asset is eligible.

Mr.S wrote: »

Where the gains made in Ireland if they where made online from exchanges based abroad with currencies tied to no country?

The gains were made by you, an Irish citizen, hence CGT is liable.

Mr. Fancypants · 08-01-2018 6:41pm

1. I don't see any reason why First in First Out would be an issue. Makes the most sense really.
2. I set it to short term CGT 33% CGT and set it to use short term only. A separate Long Term rate doesnt apply in Ireland unfortunately.

sublime1 wrote: »

There's still a few outstanding issues that I see:
1. method used to calculate gains - I think most people would prefer "Last In First Out", but will Revenue see it that way?
2. also taxation on long term holding (i.e. more than 1 year) - I haven't seen a distinction made on this, but I believe there could be an argument made for a different tax approach to sale of coins held long term vs short term.

Thoughts?

Dades · 08-01-2018 6:59pm

ZeroThreat wrote: »

Zascar wrote: »

Lets say I moved to a tax free island tomorrow. I had made some money in crypto but never sold any and never cashed out, are the revenue going to come looking for their slide since the gains were made in Ireland?

The answer you be yes, unless you're not ordinarily resident (ie after 3 years non-resident in Ireland you become non-ordinarily resident at the start of the 4th year) you have your obligation to the Irish government.

Well, the real answer to whether the revenue will "come looking" is very unlikely.

You are liable for tax for sure, but we essentially operate on a self-assessment system. Unless you get audited (not gonna happen if you are PAYE) the system expects you to declare any gains/losses.

GreeBo · 08-01-2018 7:22pm

Dades wrote: »

Well, the real answer to whether the revenue will "come looking" is very unlikely.

You are liable for tax for sure, but we essentially operate on a self-assessment system. Unless you get audited (not gonna happen if you are PAYE) the system expects you to declare any gains/losses.

But they will come looking eventually if you are depositing large amounts to your bank...because they bank will inform them.

Even if you do multiple small amounts, there is a threshold and they inform revenue...on your behalf.

Dades · 08-01-2018 7:25pm

Ohh, to get to that point!

Would be interested to know what those amounts are.

Can we pool our knowledge regarding TAX and crypto and make some kind of FAQ/sticky?

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