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

lifeandtimes wrote: »

Just wanted to ask, everyone in this thread is an upstanding citizen and wants to pay their tax.

But just to play devils advocate what is the legal way to "avoid" paying capital gains tax?

If you made say a million before cashing it into a bank account, would you need to leave the state "travelling" for best part of a year for 2 years to technically not be a resident and then come back or because you made the gain while living here it will always be due? Could you lose citizen ship for being gone for that amount of time?

I'm interested in knowing, not that id be arsed going through all that avoid it, I'm ok to pay the 33%

Depends on what you mean by "made a million".

If I have a holding of crypto whose value has risen by a million euros since I acquired it, I haven't "made a million" yet. I will make a million when I dispose of the crypto in return for either (a) 1 million euros cash, or (b) some other asset - e.g. another crypto - which is worth a million.

So, if you're sitting on a large unrealised gain - your crypto has risen in value hugely - you need to become non-resident in Ireland and remain so for three years (and ensure that you don't become resident in some other jurisdiction where you would have a similar tax liability). Then you can dispose of your crypto and incur no Irish CGT liablity.

The problem, of course, is that the Lord giveth and the Lord taketh away. If you wait three years before disposing of your crypto, it may not be worth a million euros any more. You'll have avoided the CGT, but you'll also have avoided the gain.

Cryptonovice wrote: »

I bought Litecoin on coinbase on 23rd December 2017. Left it there since. I bought Ethereum on 27th December on coinbase and sent it to Binance to swap for Ripple. I bought more Ethereum on the 1st and 2nd of January and then sent it to Binance and swapped it for Tron and Funfair.
I have not touched/moved/swapped anything since....I want these to sit for 5 years and hopefully I might make a few pounds.....

Can someone please explain to me what are the steps I now need to take in this 5 year period...are the 2017 buys to be reported this year and the 2018 buys next year.. I am a complete novice..I am a paye worker..what form do I use...
Ive asked revenue this and got no reply

You may want to talk to an accountant, to get advice that you can rely on, rather than going on what anonymous unqualified contributors to an internet forum (such as myself) say.

But, to start you off, as I understand it.

1. You generally do not have to report the acquisition of assets, unless the Revenue ask you to complete a long form tax return which includes questions about this. In your circumstance, they are very unlikely to ask you to do this. Don't worry about this unless it happens.

2. It's disposals that you need to worry about.

3. You disposed of Eutherium on two occasions - once in 2017 when you swapped Eutherium for Ripple, and a second time in 2018 when you disposed of Eutherium for Tron and Funfair.

4. Assuming that you bought and then disposed of the Eutherium in a short period, the price/value of the Eutherium probably did not move very much, and therefore you probably did not make any significant gain/loss.

5. You have an annual small gains exemption of EUR 1,270 and by happy coincidence your two disposals fell in different years. So if your gain on the first disposal was less than EUR 1,270, or you had no gain at all, you have no CGT liablity; it's within your small gains exemption for 2017. (Your gain is the difference between what you paid for the asset, and what you disposed of it for. So if you paid EUR 1000 to buy EUTH, and then swapped them for Ripple worth, say, EUR 1050, you have a gain of EUR 50.)

6. And the same goes for the disposal you made in 2018.

7. If you do have a CGT liability, you need to calculate and pay it. Any liablity in respect of the 2017 disposal needs to be paid by 31 January 2018 (so you're already late; get moving!); any liability in respect of the 2018 disposal needs to be paid by 15 December 2018. In each case, you calculate what you think is due and send it off to the Revenue with a form called a "CGT Payslip", which you can download from the Revenue site.

8. Even if you have no CGT liablity, you do have to report disposals and the gains/losses. You do this by completing form CG1 and sending it to the Revenue. For the year 2017, you should submit for CG1 by 31 October 2018. For the year 2018, you need to submit by 31 October 2019.

9. If you stick with your plan, you then have nothing more to do until you dispose of your crypto in 5 years time, at which point you have to caculate your CGT liability, if any, pay it, and report the disposal of the crypto.

Noctifer wrote: »

Let's say I payed taxes for last year. How exactly would Revenue go about to figure out if what I paid is the correct amount?

From the information they have through the various mechanisms already in place - e.g. from the information supplied by your employer. If that isn't enough to establish whether the correct tax has been paid, they can ask you to complete a tax return for the year (and you must comply).

Are you thinking specifically of capital gains tax?

Noctifer wrote: »

I trade on an exchange. I pay CCG for the gains. They decide to audit me. How would they know if what I paid is the correct amount?

You show your CGT workings and provide the backup documentation to prove that your workings are correct.

From the information provided in your CGT payslip(s) and your form CGT1. If they have any reason to doubt that information they can ask for more information, they can ask you to explain discrepancies, they can ask you to verify the information you have given it by producing transaction records, etc.. Ultimately they can simply issue an assessment for what they think is the correct amount and wait for you to challenge it.

Noctifer wrote: »

So you are saying I could fake it all and they would have no way of knowing that?

They might, depending on what you have faked. for example if you report disposal of such-and-such a crypto at a value of so much per coin, and they know that others have reported disposal of the same coin on the same day at a very different value, it might occur to them that you have understated the value of the coins. Or, the information you give might not, on audit, match the entries in your bank statements. That kind of thing.

Might you get away with a false return of gains? Yes, you might. Will you get away with it? Very hard to be confident of that. A lot of people who are confident of it end up in very expensive settlements with the Revenue when their confidence turns out to be misplaced.

Peregrinus wrote: »

for example if you report disposal of such-and-such a crypto at a value of so much per coin, and they know that others have reported disposal of the same coin on the same day at a very different value

They can't do that. Depending on the exchange the value of a coin can go up or down 4% within a minute. I once made 4% gain in 30 seconds. Volatility is way too high for them to use that as proper evidence.

You could see the price go up by even more than 4% and then a minute later go back to what it was, all that is required is a massive buy/sell on an exchange with low volume. This isn't stock, this is crypto.

Peregrinus wrote: »

You may want to talk to an accountant, to get advice that you can rely on, rather than going on what anonymous unqualified contributors to an internet forum (such as myself) say.

But, to start you off, as I understand it.

1. You generally do not have to report the acquisition of assets, unless the Revenue ask you to complete a long form tax return which includes questions about this. In your circumstance, they are very unlikely to ask you to do this. Don't worry about this unless it happens.

2. It's disposals that you need to worry about.

3. You disposed of Eutherium on two occasions - once in 2017 when you swapped Eutherium for Ripple, and a second time in 2018 when you disposed of Eutherium for Tron and Funfair.

4. Assuming that you bought and then disposed of the Eutherium in a short period, the price/value of the Eutherium probably did not move very much, and therefore you probably did not make any significant gain/loss.

5. You have an annual small gains exemption of EUR 1,270 and by happy coincidence your two disposals fell in different years. So if your gain on the first disposal was less than EUR 1,270, or you had no gain at all, you have no CGT liablity; it's within your small gains exemption for 2017. (Your gain is the difference between what you paid for the asset, and what you disposed of it for. So if you paid EUR 1000 to buy EUTH, and then swapped them for Ripple worth, say, EUR 1050, you have a gain of EUR 50.)

6. And the same goes for the disposal you made in 2018.

7. If you do have a CGT liability, you need to calculate and pay it. Any liablity in respect of the 2017 disposal needs to be paid by 31 January 2018 (so you're already late; get moving!); any liability in respect of the 2018 disposal needs to be paid by 15 December 2018. In each case, you calculate what you think is due and send it off to the Revenue with a form called a "CGT Payslip", which you can download from the Revenue site.

8. Even if you have no CGT liablity, you do have to report disposals and the gains/losses. You do this by completing form CG1 and sending it to the Revenue. For the year 2017, you should submit for CG1 by 31 October 2018. For the year 2018, you need to submit by 31 October 2019.

9. If you stick with your plan, you then have nothing more to do until you dispose of your crypto in 5 years time, at which point you have to caculate your CGT liability, if any, pay it, and report the disposal of the crypto.

Thanks a million!

jobless wrote: »

this kinda goes against the replies others have gotten from the revenue here though?..what do we do?.. im confused

I've only seen one person post up a reply they got from Revenue. I reckon they got a bum steer (entirely possible, as it shouldn't be too much of a stretch to consider that not every employee in a civil service department like Revenue is necessarily a tax expert), and the recipient may be able to avoid interest and penalties as a result.

However, unless you personally have the same thing in writing from them, you're not going to be able to justify your actions/returns based on something that an anonymous person posted in a web forum purporting to be Revenue's opinion.

jobless wrote: »

this kinda goes against the replies others have gotten from the revenue here though?..what do we do?.. im confused

Contact them yourself don't take anything here for facts. anyone iv conversed with that has spoke to revenue, said the transactions between cryptos isn't true

Don't worry, if things keep going the way they are you won't be reporting any gains...

Fakent.ie wrote: »

There is still no proof you must pay tax on each transaction. I think there is more proof that you don't pay tax on each transaction.

This is just wrong.
All of the published documentation from revenue shows that you have to pay on each disposal.

We have 1 unproven email that says otherwise.
There is zero proof that CGT doesnt apply for each disposal, unless you can point some out, please stop posting this.

Fakent.ie wrote: »

If you bought in before the 1st of december I'd find it hard to believe your at a loss sure who knows

lol I'm not, but I've been in since September, the total is still worth about 3 times what I invested, but it's basically halved from the heights of mid Jan. The only shrewd move I made was selling off my ripple at $2.8 (which I bought for 20c). Big mistake not disposing of Substratum while it was $3.

Quite a number of people here who got in later though.

lifeandtimes wrote: »

What if you have a full time job but spend that time day trading 1000s of trades?u

Arguably then you are conducting a trade. You'd need to consider if you meet the badges of trade... http://lmgtfy.com/?q=Badges+of+trade

I have a sneaky feeling that lots of cryptocurrency "traders" as opposed to "investors" will emerge from the mist, if the arse falls out of cryptos... since a trade loss can be written off against other income in the same year...

That'd make for a really interesting thread!