crypto holding question

JourneyMan8 · 20-01-2020 9:28pm #1

before i start i better state I'm a newbie to the crypto/investing stuff, always kept any eye on it but never really understood it but obviously there is no denying it now.

the main question i would have is if someone just wanted to hold long term, lets say bitcoin, where would you best be going to buy? and does holding a crypto mean you have to pay tax, or does tax only come into trading side of things(told you i was a newbie) - go easy on me.

Lex Luthor · 21-01-2020 10:15pm

you have got a good few options these days to buying bitcoin

Revolut even have the facility

There are many online exchanges that you can use to buy eg Binance, Kraken

I used Kraken to buy before. You basically fund the account by doing a bank transfer from your own account

If you are looking at it an investment long term rather than just trading, which it sounds like, then the sound advice is not to leave the bitcoin on the exchange once you bought it, but to store it on a hard wallet like a Ledger Nano
Plenty videos online about it. It basically means your bitcoin is in a safer place as you hold the keys to them rather than online where there is the slim potential of a hack

Hope this helps, if you have any more questions feel free to ask

Arrival · 22-01-2020 1:52am

Lex Luthor wrote: »

you have got a good few options these days to buying bitcoin

Revolut even have the facility

There are many online exchanges that you can use to buy eg Binance, Kraken

I used Kraken to buy before. You basically fund the account by doing a bank transfer from your own account

If you are looking at it an investment long term rather than just trading, which it sounds like, then the sound advice is not to leave the bitcoin on the exchange once you bought it, but to store it on a hard wallet like a Ledger Nano
Plenty videos online about it. It basically means your bitcoin is in a safer place as you hold the keys to them rather than online where there is the slim potential of a hack

Hope this helps, if you have any more questions feel free to ask

Do not buy any cryptocurrencies through Revolut, they're not a proper exchange, you can't move your coins to your own wallet

Lex Luthor · 22-01-2020 7:57am

Arrival wrote: »

Do not buy any cryptocurrencies through Revolut, they're not a proper exchange, you can't move your coins to your own wallet

Exactly

I should have clarified that in my post

Bob24 · 23-01-2020 12:04am

JourneyMan8 wrote: »

and does holding a crypto mean you have to pay tax, or does tax only come into trading side of things(told you i was a newbie) - go easy on me.

Tax is if you sell and make a profit (capital gain tax). CGT is punitive enough in this country - we don’t need another tax simply for holding it ;-)

I don’t believe Revenue has an official guideline on this, but I also assume that if you deposit your crypto on a service which pays interests on it, your are mean to convert the interests to their euro value at the day they were received and pay DIRT on them.

themossinator · 24-01-2020 4:21am

Lex Luthor wrote: »

you have got a good few options these days to buying bitcoin

Revolut even have the facility

There are many online exchanges that you can use to buy eg Binance, Kraken

I used Kraken to buy before. You basically fund the account by doing a bank transfer from your own account

If you are looking at it an investment long term rather than just trading, which it sounds like, then the sound advice is not to leave the bitcoin on the exchange once you bought it, but to store it on a hard wallet like a Ledger Nano
Plenty videos online about it. It basically means your bitcoin is in a safer place as you hold the keys to them rather than online where there is the slim potential of a hack

Hope this helps, if you have any more questions feel free to ask

Bitstamp also accept euro trades, interface may be a bit more user friendly for someone new

Imperative that you store your coins on your own personal device once you purchase them - "not your keys, not your coins" as the saying goes ... devices like trezor, ledger, coldcard etc will do the job

JourneyMan8 · 25-01-2020 4:23am

Bob24 wrote: »

Tax is if you sell and make a profit (capital gain tax). CGT is punitive enough in this country - we don’t need another tax simply for holding it ;-)

I don’t believe Revenue has an official guideline on this, but I also assume that if you deposit your crypto on a service which pays interests on it, your are mean to convert the interests to their euro value at the day they were received and pay DIRT on them.

my plan is/was/still may be is to buy crypto's this year and hold for a few years, and maybe convert back to euro if they ever hit big you know, so basically i would have to pay tax if and when i converted it back to euro.

and with trading i am assuming you only ever pay tax when you "withdraw"? as it's not really your money until it's in your bank account and able to be spent really is it, that's the gambler in me speaking, am i correct on my assumptions here?

JourneyMan8 · 25-01-2020 4:24am

themossinator wrote: »

Bitstamp also accept euro trades, interface may be a bit more user friendly for someone new

Imperative that you store your coins on your own personal device once you purchase them - "not your keys, not your coins" as the saying goes ... devices like trezor, ledger, coldcard etc will do the job

oh god. i have so much to learn before i even think about doing this. wish it was just as easy as changing euro to sterling and holding it.

Bob24 · 25-01-2020 11:16am

JourneyMan8 wrote: »

my plan is/was/still may be is to buy crypto's this year and hold for a few years, and maybe convert back to euro if they ever hit big you know, so basically i would have to pay tax if and when i converted it back to euro.

and with trading i am assuming you only ever pay tax when you "withdraw"? as it's not really your money until it's in your bank account and able to be spent really is it, that's the gambler in me speaking, am i correct on my assumptions here?

First paragraph is correct but second one isn’t.

When you are selling crypto for euros on an exchange the euros will be credited on some kind of fiat wallet/account under your name on the exchange; so your capital gain has been made and tax is due.

However this is not something you pay instantly after selling - gains and losses are all aggregated at the end of the year. So for exemple if you sell and make a capital gain of 10000 euros this month; and then use than money to buy and sell again later in the year and than time make a capital loss 6000. At the end of the year your total capital gain is 4000 (you made 10000 on a transaction and lost 6000 on another) and this is what you pay CGT on.

Bob24 · 25-01-2020 11:21am

JourneyMan8 wrote: »

oh god. i have so much to learn before i even think about doing this. wish it was just as easy as changing euro to sterling and holding it.

Also, don’t use a hardware wallet for serious money before you fully understand how it works and how to properly store you key or seed phrase (this is a piece of information which if anyone has access to it will unlock access to all your funds for them, and which you cannot afford to lose at it is required to recover access to the funds shall the hardware wallet break or be lost/stolen). Hardware wallets are removing any counter party risk which makes them very safe if used correctly (and eventually you do want at least part of your holdings to be stored in that way); but it means the responsibility for storing your coins safely is shifting from the exchange to you.

themossinator · 25-01-2020 11:57am

Bob24 wrote: »

Also, don’t use a hardware wallet for serious money before you fully understand how it works and how to properly store you key or seed phrase (this is a piece of information which if anyone has access to it will unlock access to all your funds for them, and which you cannot afford to lose at it is required to recover access to the funds shall the hardware wallet break or be lost/stolen). Hardware wallets are removing any counter party risk which makes them very safe if used correctly (and eventually you do want at least part of your holdings to be stored in that way); but it means the responsibility for storing your coins safely is shifting from the exchange to you.

I found the process pretty straight forward although you are correct, you will have full responsibility for your coins and misplacing the seed phrases could lead to coins being lost forever

plenty of guides on youtube on how to set them up, I wouldn't let a hardware wallet setup put me off storing my coins on one

Bob24 · 25-01-2020 1:48pm

themossinator wrote: »

I
I wouldn't let a hardware wallet setup put me off storing my coins on one

Agree and I’d even add that it is a good way to start understanding what cryptocurrency and blockchain really is (i.e. someone who does it right will understand what a blockchain/wallet/private key is and how to transact on the blockchain).

So no questioning that it is are good idea to understand/use hardware wallets - the OP should indeed look into it. Just saying that for someone who doesn’t clearly understand how it works and/or doesn’t have a good seed phrase storage policy, I am not convinced it is safer than a reputable exchange.

themossinator · 26-01-2020 12:22pm

Bob24 wrote: »

Agree and I’d even add that it is a good way to start understanding what cryptocurrency and blockchain really is (i.e. someone who does it right will understand what a blockchain/wallet/private key is and how to transact on the blockchain).

So no questioning that it is are good idea to understand/use hardware wallets - the OP should indeed look into it. Just saying that for someone who doesn’t clearly understand how it works and/or doesn’t have a good seed phrase storage policy, I am not convinced it is safer than a reputable exchange.

no comparison imo!

Lex Luthor · 18-02-2020 11:22am

I fully understand the concept of having to pay CGT on a profit when you sell a crypto back into FIAT, but what about a scenario like this

eg. Bought 50 ETH @ €120 and instead of selling them @ €240 into FIAT, you sell for Bitcoin on the exchange and you get say for example 1.3 BTC

How is CGT calculated on a transaction like this or is it not until the transaction of selling the 1.3 BTC is into FIAT?

grindle · 18-02-2020 11:49am

Lex Luthor wrote: »

How is CGT calculated on a transaction like this or is it not until the transaction of selling the 1.3 BTC is into FIAT?

It's calculated based on the fiat value at time of disposal.

Bob24 · 18-02-2020 11:49am

Lex Luthor wrote: »

eg. Bought 50 ETH @ €120 and instead of selling them @ €240 into FIAT, you sell for Bitcoin on the exchange and you get say for example 1.3 BTC

How is CGT calculated on a transaction like this or is it not until the transaction of selling the 1.3 BTC is into FIAT?

My understanding is that it would fall into the scenario of asset “exchange”, which triggers CGT as mentioned here: https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

Basically the tax would be calculated as if you had disposed of your ETH for euros and then used those euros to purchase BTC.

In your example no CGT is due on the first €1,270 of profit (yearly CGT exemption if this is your first disposal this year), and the rest of the profit would be taxed at 33%.

I am not a tax advisor and you should of course double-check with a professional, but I am pretty sure this is how it work.

What is a bit stupid is that if you crypto was in an investment fund managed for you by someone else, and the fund was doing the exact same thing, not CGT would be due. I mentioned this in another post, but we would really need fiscal policy in this country so that individual investors who want to make their investment decisions independently can do so without triggering tax every time they swap assets.

QFA17 · 01-05-2020 8:45pm

Please clarify if I understood this thread properly:

For example, I have invested €1000 in Bitcoin, the value goes up, my investment is now worth €1500 and I sell the bitcoin but i don't withdraw the money into my wallet rather I leave it on the Fiat and then I reinvest my 1500 into bitcoin. Do I pay CGT on 500 profit?

Lex Luthor · 01-05-2020 9:28pm

QFA17 wrote: »

Please clarify if I understood this thread properly:

For example, I have invested €1000 in Bitcoin, the value goes up, my investment is now worth €1500 and I sell the bitcoin but i don't withdraw the money into my wallet rather I leave it on the Fiat and then I reinvest my 1500 into bitcoin. Do I pay CGT on 500 profit?

technically yes

can I ask why you would invest 1000 and say sell at 1500, then buy again @ 1500?

QFA17 · 01-05-2020 11:18pm

reinvest the 1500 to grow it

Bob24 · 02-05-2020 7:54am

And just to add to the above, there is a CGT exemption for your first 1270 euros of profit each year. So you those 500 euros are your only profit for the year no CGT is due.

stockshares · 02-05-2020 11:39am

Lex Luthor wrote: »

technically yes

can I ask why you would invest 1000 and say sell at 1500, then buy again @ 1500?

I think he means buy again at a lower price.

cmzluna · 22-08-2020 4:15pm

I'm new to Ireland and to the taxes requirements as well. I'm planning to hold bitcoins in my ledger wallet. If doing so, should I ever file that I bought bitcoins even If I don't sell them ? Or this is done next year after the disposal only ?

CGT Payment Dates:
For Gains made in the period 01/12/2017 – 31/12/2017, Tax is payable 31/01/2017

CGT Filing Date:

For Gains made in the period 01/01/17 – 31/12/17, Tax return is due for submission 31/10/2018

grindle · 24-08-2020 8:12pm

If you haven't sold the asset, no taxable gain was made.

Bob24 · 24-08-2020 8:43pm

cmzluna wrote: »

I'm new to Ireland and to the taxes requirements as well. I'm planning to hold bitcoins in my ledger wallet. If doing so, should I ever file that I bought bitcoins even If I don't sell them ? Or this is done next year after the disposal only ?

I stand to be corrected, but to the best of my knowledge you don't have to do anything before you actually dispose of the assets.

cmzluna · 01-09-2020 11:08pm

So if I let's say buy cryptos in Coinbase through FIAT directly, that'll be (crypto name)-EUR.
This isn't considered a trade, but a hold (unless I dispose the bitcoins)....
But if I let's say exchange in the form (NAME OF ALTCOIN)-BTC then this would be taxable under the eyes of the Revenue ?

Thanks in advance.

Bob24 · 02-09-2020 8:11am

cmzluna wrote: »

But if I let's say exchange in the form (NAME OF ALTCOIN)-BTC then this would be taxable under the eyes of the Revenue ?

Yes CGT is due on the altcoin which you are disposing of to get bitcoin.

Irish_rat · 09-09-2020 9:26pm

What about staking? Probably nominal tax rate

crypto holding question

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