Crypto tax situation - Read post 1 for thread banned users

kevinbad2010 wrote: »

No tax so until you change it into fiat and have surpassed the 1.3k per year exception,

Not quite. If you convert from one crypto to another, that's a disposal and if you realise a gain at that point you have to account for CGT. If you sell your crypto at all that's a disposal; it doesn't matter whether you are selling it for fiat or not.

But if you just buy a holding of crypto and sit on it while it (hopefully!) appreciates, there's no liablity to income tax or CGT.

If you have a signficant accrued gain, it might be worth realising up to 1,300 of it each year to "use up' your annual small gainst exemption and reduce the chargeable gain when you finally sell out.

Gooey Looey wrote: »

How about buying crypto.com coin and earning on it? Is this liable for CGT? I'm considering throwing a few grand at it

If you are referring to their “Crypto Earn” service, what they are paying you is technically interest.

So IMO the interests should be subject to DIRT, but I would seek advice from a tax advisor to confirm (although I’d say both tax advisors and Revenue might not be 100% clear on this).

And of course if you sell the principal back for euros then it is subject to CGT.

Lex Luthor wrote: »

ok so you pay CGT on gains made in currency

so lets say for example hypothetically and asking for a friend, you plan to buy a car in UK for 30k GBP

You buy the sterling well in advance for a really good rate of €1 - €0.94

Many months later you buy the car when the rate for the £ has strengthened to £1 - €0.83

DO you pay on that?

Also, what happens in another hypothetical scenario you lose your job and decide you need your euros back and cash in the GBP for Euros
You get more euros back, are you liable?

It says here that “any currency other than the euro is an asset for the purposes of capital gains tax. Accordingly, a chargeable gain/allowable loss can arise to a person buying and selling foreign currency otherwise than in the course of trade”.

I honestly have no clue, but the last bit might provide an exemption for the car purchase if it is considered a trade for the purpose of this legislation.

If you are selling back to euros though, the wording seems pretty clear to me in saying CGT would be due (but I’d say for most people the 1270 euros CGT exemption will cover most if not all currency exchange operations they will ever do).

Waternotsoda wrote: »

What type of financial records should be kept? The only paper record I have is my payment from my debit card to Coinbase which will appear on my Credit Card Statement.

I don’t use Coinbase, but I assume there is a way to export your transactions history? (for each purchase/sale: the date, the quantity and the price)

griffdaddy wrote: »

If you have a debit card with coinbase and use it to purchase things either in euro or another currency, with the conversion happening at the coinbase side, is that liable for cgt?

Yes it is, although I suspect many people either don’t know or are ignoring it (and many are also within their rights not to pay as they fall within the €1270 CGT exemption).

I believe that technically, even if let’s set someone swaps 1 Bitcoin for 5 gold ounces with someone else, both of these people are potentially liable for CGT (as per the CGT legislation, swapping an asset for another one is the same as disposing of the asset for cash).

unkel wrote: »

Yes the government will bail you out on that. You will be able to offset your capital loss against future capital gains forever, until you are back in the black. Not until then will you have to start paying CGT

So what you are saying is: buy something that Justin Sun is involved in, and use your bags to offset CGT gains? Big if true.

Lex Luthor wrote: »

how traceable is this?

I guess everyone has their own personal and ethical views on CGT

if you bought 2BTC in the first week of march when they were about €9000ea and then 2 weeks later after the crash they were worth €4k and decided to sell, you are at a loss of 10k, I dont see the govt bailing you out in this instance but if you did the reverse 2 weeks later and bought at 4k and sold now for that 10k profit they would want your profits tax

when using a debit card, lets say you buy 1 BTC and then some day you decide to spend it on goods using that 1 BTC, it should be treated the same

Yes, if you take 100% of the risk and make some profit, they want 33% (the 2nd highest rate in the whole world, with lowest threshold in the world).

If you take 100% of the risk and lose it all, you're on your own.

Grumpypants wrote: »

What happens if say Tesla start accepting butcoin and instead of cashing out you just buy a Tesla.

You are disposing of the bitcoin that you use to purchase the car and, if any gain has accrued in euro terms it is chargeable. (Similarly, if any loss has accrued it is deductible.)

If you're carrying on a trade or business which involves making purchases or sales in foreign currencies, and you are buying and temporarily holding foreign currencies for this business, I think Revenue will usually ignore incidental gains and losses due to to currency price movements. (And, even if they didn't, over time the gains and losses would tend to offset each other anyway.) But if you are buying and holding foreign currency as an investment, speculating that the price of the currency (in euro terms) will rise, then when you dispose of the foreign currency that's a chargeable disposal. It makes no difference whether you dispose of it for euro, for a different foreign currency or for any other asset (like a car).

Lex Luthor wrote: »

so if you make a capital loss eg 10yrs ago after selling a house to the tune of €90k, this gets carried on indefinetly until you may need it in the future?

who tracks this?

I thought the gain had to be made first and then if you get a loss in subsequent years, you get a rebate

As far as I know, any year you make a loss you can file it in your tax return. And then it gets carried over and can be deduced from any future gain (I think you have to keep track yourself and calculate manually).

Better have someone less confirm this though as to be honest I’ve never done it myself.

Lex Luthor wrote: »

. . . if you bought 2BTC in the first week of march when they were about €9000ea and then 2 weeks later after the crash they were worth €4k and decided to sell, you are at a loss of 10k, I dont see the govt bailing you out in this instance but if you did the reverse 2 weeks later and bought at 4k and sold now for that 10k profit they would want your profits tax

The loss on the first disposal can be offset against the gain on the second, so you'd pay no CGT in that instance.

Lex Luthor wrote: »

when using a debit card, lets say you buy 1 BTC and then some day you decide to spend it on goods using that 1 BTC, it should be treated the same

If you buy foreign currency and then the same day use it to purchase goods, (a) there is generally no signficant gain or loss, because currency prices don't usually move that fast, and (b) if you bought the currency for the purpose of buying the goods, that's not a capital transaction and doesn't attract CGT anyway. You do this every time you charge a purchase to your card in a currency other than euros, if you think about it.

If you buy currency as an investment, and hold it in the hope that it appreciates in value, and then later dispose of it, that's a capital transaction and on disposal the gain (or loss, if you have been unlucky) is chargeable. Losses can be offset against gains arising in the same year and, if your losses for the year exceed your gains, you can carry forward the excess losses and set them off against gains arising in future years.