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

AlmightyCushion · 08-02-2018 10:58PM

sunrainmooncl wrote: »

Sound. Now if I disposed of BTC for 400 euro.. do I pay that in CGT tax and then get refunded in tax credits (because it's below the 1200ish relief amount) or... what?

No, you just don't pay any CGT at all.

Peregrinus · 09-02-2018 01:55AM

Noctifer wrote: »

Does Revenue usually ask where the money comes from we use for trading?

Not usually. But they can ask.

Noctifer wrote: »

I made good gains last year, but since I am not a tax resident in Ireland last year I won't report the tax for that here. However, I won't report it either in my home country as they don't consider it a gain till I actually cashed it out to a local bank account (asked accountant about it, the fact that I cashed out this year on an Ireland account does not count as a gain).

So, would I ever need some kind of justification of where the money came from? Would they care even though the money was illegally acquired?

In your circumstances the Revenue are unlikely to be interested in where your initial investmen capital came from. You're a new tax resident in Ireland. Any investment capital you have at your disposal is presumably something you earned (or inherited, or were gifted, or whatever) in the past, and that you brought with you when you came to Ireland. There's no reason to think that the circumstances in which you earned, inherited, etc that money give rise to a charge to tax in Ireland. Therefore, they are not likely to be interested. Even if they do ask, "I earned this money last year when I was resident in Germany" or similar is an answer which is likely to satisfy them.

Peregrinus · 09-02-2018 02:02AM

sunrainmooncl wrote: »

Sound. Now if I disposed of BTC for 400 euro.. do I pay that in CGT tax and then get refunded in tax credits (because it's below the 1200ish relief amount) or... what?

No.

It works like this:

1. If you have a CGT liablity you have to calculate and pay it fairly quickly. For gains accruing between January and November in each year, you have to calculate and pay by 15 December. For gains occuring in December, you have until 31 January. You just send in the money with a CGT payslip which basically identifies you and says the money is in respect of CGT. If your aggregate gains for the year are below the small gains exemption you have no CGT liability so you don't have to make any payments under this rule.

2. If you have capital gains then regardless of whether you have a CGT liability you have to complete and file a capital gains tax return (form CG1). You have to file a return for the calendar year (January-December) by 31 October in the following year.

This means that, if you have a CGT liability, you pay the CGT before you file the return. When you file the return, the Revenue will use the information in it to check whether you have correctly calculated and paid the CGT due. If you haven't made any payment, the Revenue will use the information to check that you had no liability.

Cryptonovice · 09-02-2018 10:04AM

Anyone on here have any experience filling in the CG1 form...what would an accountant charge if u went to one? I see taxback will do it starting at about 240 euro..seems a bit weird to be paying that kind of money when your gain isn't even anywhere near that!
Does anyone here fill them out themselves??

If one has no gains, we are still required to complete the CG1 form to show reliefs/losses....is this correct?

Halflifept · 09-02-2018 10:53AM

Peregrinus wrote: »

No.

It works like this:

1. If you have a CGT liablity you have to calculate and pay it fairly quickly. For gains accruing between January and November in each year, you have to calculate and pay by 15 December. For gains occuring in December, you have until 31 January. You just send in the money with a CGT payslip which basically identifies you and says the money is in respect of CGT. If your aggregate gains for the year are below the small gains exemption you have no CGT liability so you don't have to make any payments under this rule.

2. If you have capital gains then regardless of whether you have a CGT liability you have to complete and file a capital gains tax return (form CG1). You have to file a return for the calendar year (January-December) by 31 October in the following year.

This means that, if you have a CGT liability, you pay the CGT before you file the return. When you file the return, the Revenue will use the information in it to check whether you have correctly calculated and paid the CGT due. If you haven't made any payment, the Revenue will use the information to check that you had no liability.

Lets say hypothetically that I did not payed the payslips in 2017.
Can I pay it now when filling the CG1?

Noctifer · 09-02-2018 10:54AM

Cryptonovice wrote: »

If one has no gains, we are still required to complete the CG1 form to show reliefs/losses....is this correct?

Yes. Even though there is no tax to paid you still have to report any disposals you made to Revenue.

If not, you could get fined if they find out.

Peregrinus · 09-02-2018 11:00AM

Halflifept wrote: »

Lets say hypothetically that I did not payed the payslips in 2017.
Can I pay it now when filling the CG1?

Yes. Or, better still, pay it now, and file the CG1 any time between now and 31 October. Don't delay paying it in order to pay simultaneously with lodging the CG1, in other words.

Others are debating whether to instruct an accountant to assist with this, and how much it might cost. In a situation where you realise that you have a CGT liablity and you're already in default in paying it, that might tip the balance towards consulting an accountant, if only for basic advice on how to conduct yourself so as to minimise the consequences of your default. You could still do the donkey-work of completing and submitting the CG1 yourself to minimise the cost in professional fees to the accountant.

Cryptonovice · 09-02-2018 11:05AM

Lets say down the line I want to take all I have on binance say ripple, funfair and tron...whatever they are worth in 5 year's. ..I will have to swap them back to ETH as coinbase only has like 4 coins and ETH is one of them. I want to then go from coinbase to my bank account to convert to euro...is this part considered the disposal or is it the swap initially on binance back to ETH....
Anyone get me? Anyone do this?

Peregrinus · 09-02-2018 11:13AM

Cryptonovice wrote: »

Lets say down the line I want to take all I have on binance say ripple, funfair and tron...whatever they are worth in 5 year's. ..I will have to swap them back to ETH as coinbase only has like 4 coins and ETH is one of them. I want to then go from coinbase to my bank account to convert to euro...is this part considered the disposal or is it the swap initially on binance back to ETH....
Anyone get me? Anyone do this?

There are two disposals; you dispose of your Ripple (say) for ETH, and then you dispose of your ETH for euros.

The gain on disposal of your Ripple you already know about. The gain or loss on disposal of your ETH will depend on price movements between your acquisition of the ETH and your disposal of it. As that will be a short time the price movements may be small and the gain/loss correspondingly small. But if you do this at a time of great volatility then obviously there is a risk of a larger gain/loss.

jobless · 09-02-2018 02:27PM

so it seems we have two different reponses from revenue.... better send an enquiry myself!

barneystinson · 09-02-2018 02:39PM

jobless wrote: »

so it seems we have two different reponses from revenue.... better send an enquiry myself!

There's one right one, and one ambiguous one.

Cryptonovice · 09-02-2018 04:04PM

barneystinson wrote: »

There's one right one, and one ambiguous one.

Hope mine is the ambiguous one!!

.G. · 09-02-2018 05:44PM

Peregrinus wrote: »

Not necessarily. I think you can use any reasonable method of valuing the assets involved as long as you use the same method consistently across all your transactions.

I seem to recall - I could be quite wrong here - that in relation to foreign exchange transactions, if you have a lot of them the Revenue are happy with calculations done on the basis of the mid-point of the daily range of the relevant exchange rate, or on the closing price each day, rather than on the basis of the actual rate that was being quoted at the instant your transactions settled. My guess is that they would be happy with a similar approach to crypto transactions, if a taxpayer wished to use it.

Here is an online chart which shows a price for ETH, expressed in USD, for every day since the currrency was introduced. Here is the same chart for Ripple. Data like this certainly exists, and is readily obtainable; I found these charts by googling. My guess is that the Revenue would be happy with calculations which rely on daily data from sources like these. If you wanted to use more specific data because it gives you a better tax outcome, the Revenue would be happy with that too, provided you use it consistently.

Added on edit: In the example given, where the taxpayer buys ETH and then trade it for XRP the same day, if the daily average price/closing price approach is used then the ETH will be treated as bought and sold at the same price, so no gain/no loss. In effect, you could treat the cash amount paid to acquire the ETH holding as the acquisition cost of the XRP holding.

Which is all fine and dandy as all coins mentioned above have FIAT trading pair so you can easily determine their worth in FIAT at the time of disposal. There are hundreds that don't have a FIAT trading pair. Also in crypto, the closing position of a coin could be many thousands more than it was when you bought it so I really think folk need to do their best to get as accurate a value in FIAT as they can at the exact time they made their disposal

davberd · 10-02-2018 09:59AM

Peregrinus wrote: »

Move to one of these places, wait three years so that you cease to be ordinarily resident in Ireland for tax purposes, hope to God that your crypto does not decline in value during this period and then cash out.

Some time back I had a brief conversation about this with a tax lawyer and I don't think this is quite right. I can't remember the exact details, but here's how I understood it...

If you moved to Germany you could sell your crypto right now and your capital gains would be payable there in Germany instead of in Ireland (assuming for this year you would be tax resident in Germany). However, Irish revenue can lay claim to CGT if you move back within the next three years. Some tax agreement between Ireland and Germany is what trumps the requirement to pay CGT while still an ordinary resident for the three years after leaving Ireland. Can anyone confirm or elaborate on this?

Noctifer · 10-02-2018 10:22AM

davberd wrote: »

Peregrinus wrote: »

Move to one of these places, wait three years so that you cease to be ordinarily resident in Ireland for tax purposes, hope to God that your crypto does not decline in value during this period and then cash out.

Some time back I had a brief conversation about this with a tax lawyer and I don't think this is quite right. I can't remember the exact details, but here's how I understood it...

If you moved to Germany you could sell your crypto right now and your capital gains would be payable there in Germany instead of in Ireland (assuming for this year you would be tax resident in Germany). However, Irish revenue can lay claim to CGT if you move back within the next three years. Some tax agreement between Ireland and Germany is what trumps the requirement to pay CGT while still an ordinary resident for the three years after leaving Ireland. Can anyone confirm or elaborate on this?

The double taxation law doesn't mean you don't have to pay taxes in Ireland when you pay them in Germany. It means you don't have to pay higher taxes than what the highest possible tax is of those countries.

For example, let's say German CGT is 10% and Irish one is 33%. If you pay the 10% in Germany, you still owe Revenue the other 23% if you are a tax resident in Ireland. Double taxation agreement means you don't have to pay 10% in Germany and 33% in Ireland.

I_warren · 10-02-2018 10:43AM

Sorry to go off the main topic here but got some questions:
Is it possible to claim crypto gains as self employment?

Can you voluntarily report it as a trade versus investment, and thus be subject to income tax vs capital gains?
(Reading articles aimed at the UK where it mentions the difference between them, for limited companies)

Scenario A: Let’s just say you were self employed, made 20k from the day job, invested 20k in crypto and didn’t make any further trades or disposal, net gain at the end of the year would be 0?

Scenario B,
Made 20k from day job, invested 5k in cryptocurrency, no further trades or disposal, taxable amount end of year is 15k?

Scenario C:
Made 20k, invested 5k, no further trades but the cryptocurrency value tripled so you cashed out to fiat, taxable amount end of year is 35k?

Scenario

Made 20k, invested 5k, ended up crashing and crypo ended up being worth 0, end of year amount is 15k?

Obviously the higher tax bracket would result in being taxed higher than capital gains but trying to wrap my head around this! Is it possible for it to make more sense to claim it as a trade vs investment in some cases?
If self employed I’m not seeing the logic in paying taxes at the higher rate, to make investments in crypto which are then taxed at capital gains if they turn a profit?

Might also be the benefit of not having to pay until later than the CGT due date, if it’s classed as self employment?

Maybe I’m totally lost on this but any input is appreciated!

Peregrinus · 10-02-2018 11:45AM

I_warren wrote: »

Sorry to go off the main topic here but got some questions:
Is it possible to claim crypto gains as self employment?

Can you voluntarily report it as a trade versus investment, and thus be subject to income tax vs capital gains? . . .

You can't just choose to have your crypto activity taxed as a trade rather than as investment; you have to get the Revenue to agree that you really are carrying on a trade of buying and selling crypto, which is not something they tend to accept lightly.

There's a link earlier in this thread to the section of the Revenue's Tax Practice Manual which discusses when a pattern of activity will be regarded as a trade, and when it won't.

If your activity is a trade, then your profits are computed on a slightly different basis, but the main difference is that they are taxed as income, at income tax rates. For most people this will mean a higher tax than if their earning fell under the CGT regime. However if you have actually made losses, then if you're carrying on a trade your losses are deductible for income tax purposes, and they can serve to reduce the tax you pay on your earnings from your "day" job. It's usually in these circumstanced that people claim to have been carrying on a trade, and it's not really surprising that the Revenue tend not to agree.

davberd · 11-02-2018 05:07PM

Noctifer wrote: »

The double taxation law doesn't mean you don't have to pay taxes in Ireland when you pay them in Germany. It means you don't have to pay higher taxes than what the highest possible tax is of those countries.

For example, let's say German CGT is 10% and Irish one is 33%. If you pay the 10% in Germany, you still owe Revenue the other 23% if you are a tax resident in Ireland. Double taxation agreement means you don't have to pay 10% in Germany and 33% in Ireland.

@Noctifer that's interesting - thanks for the info. The conversation I had was brief and casual so perhaps he got that wrong. Here's the taxation agreement between Ireland and Germany:

revenue.ie/en/tax-professionals/tax-agreements/double-taxation-treaties/g/germany-2011.pdf

(Sorry - it seems that as a new user I'm unable to post a proper link, so just prefix that with "www.".)

Article 13 relates to capital gains tax. I don't believe paragraphs 1-4 apply and paragraph 5 says the following:

Gains from the alienation of any property, other than that referred to in
paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the
alienator is a resident.

This would suggest that no CGT would be payable, but paragraph 6 goes on to say the following:

Where an individual was a resident of a Contracting State for a period of 3
years or more and has become a resident of the other Contracting State, paragraph 5
shall not prevent the first-mentioned State from taxing under its domestic law an
amount that is effectively determined by reference to the capital appreciation of the
shares in a company for the period of residence of that individual in the first mentioned
State. In such case, the appreciation of capital by reference to which the
amount was taxed in the first-mentioned State shall not be included in the
determination of the subsequent appreciation of capital by the other State.

Is this what you're referencing in your example? I have to say I don't quite understand what this means in the context of selling cryptocurrency, specifically "an amount that is effectively determined by reference to the capital appreciation of the shares in a company for the period...". Next time I chat to my tax lawyer friend, I'll see if he can clarify.

Noctifer · 11-02-2018 05:14PM

I am no expert when it comes to law and I mainly know how double taxation works from my home countries taxation views. So yes, if you want to know more I suggest you ask your account friend.

Peregrinus · 12-02-2018 02:37AM

davberd wrote: »

. . . Is this what you're referencing in your example? I have to say I don't quite understand what this means in the context of selling cryptocurrency, specifically "an amount that is effectively determined by reference to the capital appreciation of the shares in a company for the period...". Next time I chat to my tax lawyer friend, I'll see if he can clarify.

I think what it means is this: Suppose you are and Irish resident. You buy an asset. (It may or may not be crypto; there are no special rules for crypto.) You remain in Ireland for three years, then move to Germany and, two years after the move, five years after buying the asset you sell it, realising a nice fat gain. The gain will be apportioned, with 3/5ths of it being subject to Irish CGT, and the remaning 2/5ths being subject to the German equivalent.

Peregrinus · 12-02-2018 02:41AM

superg wrote: »

Which is all fine and dandy as all coins mentioned above have FIAT trading pair so you can easily determine their worth in FIAT at the time of disposal.

Are you saying that there are cryptocurrencies which cannot be exchanged for fiat currency on any exchange anywhere in the world? Can you give an example of an actual cryptocurrency which suffers from this limitation?

What can these cryptocurrencies be exchanged for?

Noctifer · 12-02-2018 08:33AM

Peregrinus wrote: »

What can these cryptocurrencies be exchanged for?

There are 1526 cryptocurrencies according to Coinmarketcap. Most of those are traded only for BTC, not fiat.

Peregrinus · 12-02-2018 08:42AM

Noctifer wrote: »

There are 1526 cryptocurrencies according to Coinmarketcap. Most of those are traded only for BTC, not fiat.

But BTC is traded for fiat, isn't it? So when you sell one of these and get BTC in return, putting a fiat value on the proceeds of sale seems like a fairly straightforward exercise. It'll be the fiat value of whatever quantity of BTC you received.

It's no different to a share swap. If my highly attractive little software startup, whose shares are not listed and therefore do not have a quoted cash value, is acquired by Microsoft and I'm paid in Microsoft shares, well, the proceeds of the disposal are the euro value of the Microsoft shares that I have received.

.G. · 12-02-2018 07:45PM

Peregrinus wrote: »

But BTC is traded for fiat, isn't it? So when you sell one of these and get BTC in return, putting a fiat value on the proceeds of sale seems like a fairly straightforward exercise. It'll be the fiat value of whatever quantity of BTC you received.

It's no different to a share swap. If my highly attractive little software startup, whose shares are not listed and therefore do not have a quoted cash value, is acquired by Microsoft and I'm paid in Microsoft shares, well, the proceeds of the disposal are the euro value of the Microsoft shares that I have received.

If I dispose of BTC to buy another coin, I use the FIAT value of BTC to determine its worth. If I dispose of the other coin back to BTC, why would I use the FIAT value of BTC again since I'm not disposing of BTC? It doesn't tell me what the coin I'm disposing of is in FIAT, merely tells what the BTC I've received is worth in FIAT. This is what confuses me.

And even if I was, the way BTC is going, by the time I make the trade back to BTC it could be worth thousands less than it was when I first used it to by the other coin therefore no FIAT gain in BTC is made, but I have made a BTC gain. All through January as BTC slumped all my trades increased my BTC holdings but the value of that BTC was less than what it was when the trade was initiated.

I'm not interested in BTC's current value in FIAT, my whole aim in trading is to increase my holdings of certain coins in the hope that they'll be worth far more when I do actually convert to FIAT than they are right now. And that time is at least a year away, maybe even longer. I'll be trading all year but I won't be turning any of it into cash. Unless of course I have to to pay the tax man.

Cryptonovice · 12-02-2018 08:14PM

Did anyone here ever fill in a cg1 return form? A simple coin to coin exchange is my scenario...bought coin A (ETH) for €150..sent to binance and swapped for coin B (XRP-ripple) I got 126 XRP and the value of XRP was €1.21.(value got from coinmarketcap within 5 mins of the swap between coins) 126 x €1.21 = €152.46...a whooping €2.46 gain.
How would I translate this scenario onto the cg1 form..what would be the aggregate consideration in my case..any help would be greatly appreciated folks. Great forum thanks again

GreeBo · 12-02-2018 08:56PM

superg wrote: »

If I dispose of BTC to buy another coin, I use the FIAT value of BTC to determine its worth. If I dispose of the other coin back to BTC, why would I use the FIAT value of BTC again since I'm not disposing of BTC? It doesn't tell me what the coin I'm disposing of is in FIAT, merely tells what the BTC I've received is worth in FIAT. This is what confuses me.

And even if I was, the way BTC is going, by the time I make the trade back to BTC it could be worth thousands less than it was when I first used it to by the other coin therefore no FIAT gain in BTC is made, but I have made a BTC gain. All through January as BTC slumped all my trades increased my BTC holdings but the value of that BTC was less than what it was when the trade was initiated.

I'm not interested in BTC's current value in FIAT, my whole aim in trading is to increase my holdings of certain coins in the hope that they'll be worth far more when I do actually convert to FIAT than they are right now. And that time is at least a year away, maybe even longer. I'll be trading all year but I won't be turning any of it into cash. Unless of course I have to to pay the tax man.

You use the BTC to fiat value to determine your initial cost.
Then same again when you sell.
The difference is your gain for CGT purposes.

You are not paying tax on BTC profits, you pay on any fiat gains, after conversion.

E.g. buy 1 BTC at €10k.
Buy 10,000 alt coins for 1 BTC
Your initial value of alt coins is still €10k, a assuming you don't feck around for days in-between.

You then sell your alt for .8 BTC
Let's say that's worth €10,500

You have realised a gain of €500.

GreeBo · 12-02-2018 09:03PM

Cryptonovice wrote: »

Did anyone here ever fill in a cg1 return form? A simple coin to coin exchange is my scenario...bought coin A (ETH) for €150..sent to binance and swapped for coin B (XRP-ripple) I got 126 XRP and the value of XRP was €1.21.(value got from coinmarketcap within 5 mins of the swap between coins) 126 x €1.21 = €152.46...a whooping €2.46 gain.
How would I translate this scenario onto the cg1 form..what would be the aggregate consideration in my case..any help would be greatly appreciated folks. Great forum thanks again

Just the 2.46, they don't care about anything else unless you get audited.

Fakent.ie · 13-02-2018 01:29AM

Peregrinus wrote: »

But BTC is traded for fiat, isn't it? So when you sell one of these and get BTC in return, putting a fiat value on the proceeds of sale seems like a fairly straightforward exercise. It'll be the fiat value of whatever quantity of BTC you received.

It's no different to a share swap. If my highly attractive little software startup, whose shares are not listed and therefore do not have a quoted cash value, is acquired by Microsoft and I'm paid in Microsoft shares, well, the proceeds of the disposal are the euro value of the Microsoft shares that I have received.

Its possible to go euro/btc/Alt/alt/alt/alt/alt and so on

h0neybadger · 13-02-2018 01:34AM

Question.

If someone bought Crypto while living in Ireland, and then spent 3+ years travelling abroad, through several different countries, where would they be liable to pay CGT?

Peregrinus · 13-02-2018 02:19AM

h0neybadger wrote: »

Question.

If someone bought Crypto while living in Ireland, and then spent 3+ years travelling abroad, through several different countries, where would they be liable to pay CGT?

When do they dispose of the crypto, and where are they resident and ordinarily resident when they dispose of it?

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

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