Tax on Stocks + Cryptocurrency

masterboy123 · 05-01-2021 6:50am #1

Hello All,

I am new on investment using Revolut app.

I have invested in Apple, Nio, Ether and XRP.

Do I need to update revenue on any profits? And if yes, do you guys do this on a monthly basis?

Thanks.

Peregrinus · 05-01-2021 7:07am

Any dividends you receive on the Apple shares (or on any other shares that you may buy in the future) are income, and need to be included in an income tax return. The crypto investments, of course, will not pay dividends.

As for any gains you make as a result of price rises, there are a couple of points here.

First, you are not considered to make a gain until you dispose of the investment. So say you bought a holding of X crypto last month for €2,000; the price has risen and it's now worth €3,000; that's not a gain. But if you sell the crypto for €3,000 (or for a holding of a different crypto worth €3,000), now you have made a gain - a gain of €1,000 (the difference between what you paid for it and what you sold it for).

The gain is chargeable, not to income tax. but to capital gains tax. But you don't report the gains as they are made, or month-by-month; you make a return at the end of the year in which you tot up all your gains for the year (and subtract all your losses, if any) and then you calculate and pay capital gains tax on the net figure. The revenue website will guide you through the process involved and tell you the dates by which you need to do this, etc.

masterboy123 · 05-01-2021 9:57am

Thanks for the explanation, very helpful.

So am I right in saying that for profits from cryptocurrency I don't have to pay capital gain tax? Its only for shares that you pay CGT.

Also, it will be tough to check how much profit I have made. So far I have made 20 euro profit, but also lost 6 euro in Apple Shares. Revolut did ask my PPSN and I wonder if they will be able to provide statements at the end of the year?

Peregrinus wrote: »

Any dividends you receive on the Apple shares (or on any other shares that you may buy in the future) are income, and need to be included in an income tax return. The crypto investments, of course, will not pay dividends.

As for any gains you make as a result of price rises, there are a couple of points here.

First, you are not considered to make a gain until you dispose of the investment. So say you bought a holding of X crypto last month for €2,000; the price has risen and it's now worth €3,000; that's not a gain. But if you sell the crypto for €3,000 (or for a holding of a different crypto worth €3,000), now you have made a gain - a gain of €1,000 (the difference between what you paid for it and what you sold it for).

The gain is chargeable, not to income tax. but to capital gains tax. But you don't report the gains as they are made, or month-by-month; you make a return at the end of the year in which you tot up all your gains for the year (and subtract all your losses, if any) and then you calculate and pay capital gains tax on the net figure. The revenue website will guide you through the process involved and tell you the dates by which you need to do this, etc.

Peregrinus · 05-01-2021 10:11am

masterboy123 wrote: »

Thanks for the explanation, very helpful.

So am I right in saying that for profits from cryptocurrency I don't have to pay capital gain tax? Its only for shares that you pay CGT.

No, you're wrong. The same rules apply to shares and crypto, so far as tax is concerned. The only difference is that the rules that deal with the taxation of dividends aren't relevant to crypto, since crypto doesn't pay dividends.

If you buy crypto, and then sell it for more than you bought it for, you've made a gain and may be liable to CGT, exactly as if you bought shares, then then sold them for more than you paid for them.

masterboy123 wrote: »

Also, it will be tough to check how much profit I have made. So far I have made 20 euro profit, but also lost 6 euro in Apple Shares. Revolut did ask my PPSN and I wonder if they will be able to provide statements at the end of the year?

So far as tax is concerned, if you have bought investments are are still holding them, you haven't made any gain (or loss) yet. You don't make a gain or loss until you sell the investments. You may think to yourself that if the price is going up or down you are making a gain or a loss but, actually, you're not. The price you could sell the investment for on any particular day is irrelevant; all that matters is the price that you actually do sell the investment for.

For that reason it shouldn't be tough to calculate your gains; you'll have a record (from Revolut) of the price at which you bought each investment, and a record of the price at which you sold it, and that's all you need to calculate gain or loss. It may be tiresome and time-consuming to do the calculations if you have a lot of purchase and sale transactions, but it won't be difficult.

I've no idea whether Revolut will generate a tax statement for you each year, I'm afraid. You'll have to ask them if they provide this service.

Str8outtaWuhan · 05-01-2021 10:16am

interesting thread, If you buy crypto worth 1000, it appreciates to 2999 and give away the crypto keys, subject to revenues 3000 gift limit is there any liability on anyone in that transaction.

Browney7 · 05-01-2021 11:19am

Str8outtaWuhan wrote: »

interesting thread, If you buy crypto worth 1000, it appreciates to 2999 and give away the crypto keys, subject to revenues 3000 gift limit is there any liability on anyone in that transaction.

Yes on gifting the crypto it is deemed a disposal and thus a gain is realised on the 2999 versus the 1000 initial investment and so CGT on the 1999 gain is due

masterboy123 · 06-01-2021 4:03pm

Thanks so much, very helpful information.

So basically what percentage of my net profits will be going to Revenue?

Peregrinus wrote: »

No, you're wrong. The same rules apply to shares and crypto, so far as tax is concerned. The only difference is that the rules that deal with the taxation of dividends aren't relevant to crypto, since crypto doesn't pay dividends.

If you buy crypto, and then sell it for more than you bought it for, you've made a gain and may be liable to CGT, exactly as if you bought shares, then then sold them for more than you paid for them.

So far as tax is concerned, if you have bought investments are are still holding them, you haven't made any gain (or loss) yet. You don't make a gain or loss until you sell the investments. You may think to yourself that if the price is going up or down you are making a gain or a loss but, actually, you're not. The price you could sell the investment for on any particular day is irrelevant; all that matters is the price that you actually do sell the investment for.

For that reason it shouldn't be tough to calculate your gains; you'll have a record (from Revolut) of the price at which you bought each investment, and a record of the price at which you sold it, and that's all you need to calculate gain or loss. It may be tiresome and time-consuming to do the calculations if you have a lot of purchase and sale transactions, but it won't be difficult.

I've no idea whether Revolut will generate a tax statement for you each year, I'm afraid. You'll have to ask them if they provide this service.

Peregrinus · 07-01-2021 3:09am

Possibly none. You say you've made a gain of €20 on the crypto but lost €6 on the Apple shares. Assuming those gains and losses actually accrued last year, I make that net chargeable gains of €14, which is - ahem - well within the annual personal exemption of €1,270. So you have no CGT liablity.

But if your net chargeable gains are larger than that, then there may be a liability. You calcluate it it like this:

((aggregate gains - aggregate losses) - 1,270) x 33% = tax bill.

So, suppose you made gains totalling 2,000 and losses totalling 500, your calculation would be:

(€(2,000 - 500) - 1270) x 33% = €75.90

For each individual transaction, the gain/loss is calculated net of tranasction expenses. Suppose you bought a stock at a price of €100 but paid a 1% transaction fee; your acquisition cost is €101. Later you sell the same stock for €300, paying another 1% commission; your proceeds on disposal are €297. Even though the price of the stock rose by €200, your gain on disposal is only €(297-101) = €196.

masterboy123 · 07-01-2021 7:17am

Thank you. You have made it very clear with examples. I don't think I will ever cross 1270 range. I am investing 100s only in few stocks and crypto. So far profits only in range of 30s euro. I think I will have to invest over 5000 euros to make profit over 1270.

Once again thanks a million!

Peregrinus wrote: »

Possibly none. You say you've made a gain of €20 on the crypto but lost €6 on the Apple shares. Assuming those gains and losses actually accrued last year, I make that net chargeable gains of €14, which is - ahem - well within the annual personal exemption of €1,270. So you have no CGT liablity.

But if your net chargeable gains are larger than that, then there may be a liability. You calcluate it it like this:

((aggregate gains - aggregate losses) - 1,270) x 33% = tax bill.

So, suppose you made gains totalling 2,000 and losses totalling 500, your calculation would be:

(€(2,000 - 500) - 1270) x 33% = €75.90

For each individual transaction, the gain/loss is calculated net of tranasction expenses. Suppose you bought a stock at a price of €100 but paid a 1% transaction fee; your acquisition cost is €101. Later you sell the same stock for €300, paying another 1% commission; your proceeds on disposal are €297. Even though the price of the stock rose by €200, your gain on disposal is only €(297-101) = €196.

Tax on Stocks + Cryptocurrency

Comments