Crypto tax situation - Read post 1 for thread banned users

kippy wrote: »

No idea but I'd assume the tax comes into it on disposal of the asset.

Let me give a real-life scenario some people in Ireland will be facing.

Someone owns whatever amount of XRP tokens (yes, I know I picked a controversial one :-)

This year they will be receiving airdrops of Spark tokens (I believe the airdrops will happen gradually across several months, but say when it they are all completed the person is in possession of Spark tokens which as a whole were valued 2000 euros *at the time they received them*).

Then next year they dispose of those tokens, selling them for 5000 euros (because the price has appreciated).

What is very clear to me is that they have made 3000 euros worth of capital gains (they are selling for 5000 euros something which was worth 2000 euros at the time it came into their possession). And CGT is due on these 3000 euros (minus their yearly CGT allowance of course).

But they probably also need to pay a tax on the fact that they received 2000 euros worth of token in the first place, just because they were XRP holders. And clearly this is not capital gains tax (they didn't make money from the asset appreciating in value: the asset was just given to them). Is it considered interest because they received it in exchange for holding XRP, is it considered an income? Or something else? Frankly I doubt your average tax accountant is able to answer that question as it is very much open for interpretation (and I am not even sure Revenue knows). Which is why I think more guidance is required.

Seve OB wrote: »

I’m not a tax accountant and am not familiar enough to guide you, nor do I wish to spend ages doing your research. I suggest if you or anyone else cannot complete their own tax return correctly, then you should seek professional guidance from a tax accountant.

This was might point: neither you nor I know what existing tax rule applies to airdrops, if any. And none of the documentation I have seen online or from Revenue addresses that point. This needs to be clarified because it is not clear if it even fits an existing tax rule.

If you expect your average tax advisor to be able to answer this question I think you are very optimistic, they also rely on guidance from Revenue and I am not sure Revenue knows themselves (as it is very much open for interpretation).

kippy

Bob24 wrote: »

If there is a general rule covering this situation, would you have a reference on the Revenue website? Where does it go in a tax return and what tax does apply?

For exemple, for purchases and disposals of crypto, it is clear the generic CGT rules apply which are documented here: https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

What generic rules could be mapped to receiving an airdrop on the Revenue website?

No idea but I'd assume the tax comes into it on disposal of the asset.

Bob24 wrote: »

If there is a general rule covering this situation, would you have a reference on the Revenue website? Where does it go in a tax return and what tax does apply?

For exemple, for purchases and disposals of crypto, it is clear the generic CGT rules apply which are documented here: https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

What generic rules could be mapped to receiving an airdrop on the Revenue website?

I’m not a tax accountant and am not familiar enough to guide you, nor do I wish to spend ages doing your research. I suggest if you or anyone else cannot complete their own tax return correctly, then you should seek professional guidance from a tax accountant.

Seve OB wrote: »

Disagree. Take airdrops for example. No different to getting free shares in a company.

Revenue can’t make everything micro specific.

If there is a general rule covering this situation, would you have a reference on the Revenue website? Where does it go in a tax return and what tax does apply?

For exemple, for purchases and disposals of crypto, it is clear the generic CGT rules apply which are documented here: https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

What generic rules could be mapped to receiving an airdrop on the Revenue website?

Seve OB wrote: »

I don’t know enough about mining so forgive me if I’m wrong but if you mine, do you have no capital outlay?

CGT is on your gain & your gain would be 50k

You have mining costs yes which can probably be offset against the value of the coin you have received.

But when you are receiving the coin as a mining reward it is not a capital gain. It is a payment for a service you have delivered.

A capital gain is when you acquire an asset at a certain price, and then dispose of that same asset at a higher price.

Bob24 wrote: »

Basically all the above documentation can be summarised in one sentance: crypto is no different from any other financial asset as far as CGT is concerned.

But the big shame is they don't cover all the things which are specific to crypto (i.e. for which there are genuine questions to be asked): staking rewards, airdrops, crypto interest payments and DeFi rewards, etc ...

Revenue really needs to catch-up with these and update their documents. Today I think even the most honest and well documented taxpayer has no way to find clear directions on if and how they are supposed to declare an airdrop on their tax return.

Disagree. Take airdrops for example. No different to getting free shares in a company.

Revenue can’t make everything micro specific.

Bob24 wrote: »

CGT is only on the price difference between the time you received the mined coin and the time you are disposing of it (i.e. if you minded a BTC when it was worth 10000 and are selling it for 50000, you owe 33% CGT on the 40000 euros worth of capital gain).

But most likely you are also meant to pay a tax on receiving the coin itself (i.e. a fraction of the original 10000 in my previous exemple).

In the case of a business, this is most likely just profit which will be built-into their corporate tax. But for an individual I don't quite know ... it could be considered income and taxed at your marginal rate (same as receiving dividends on company shares), but that is just me guessing and I do't think Revenue's documentation clarifies this.

I don’t know enough about mining so forgive me if I’m wrong but if you mine, do you have no capital outlay?

CGT is on your gain & your gain would be 50k

Seve OB wrote: »

Still CGT I would imagine
Not declaring it is tax fraud/ evasion

CGT is only on the price difference between the time you received the mined coin and the time you are disposing of it (i.e. if you minded a BTC when it was worth 10000 and are selling it for 50000, you owe 33% CGT on the 40000 euros worth of capital gain).

But most likely you are also meant to pay a tax on receiving the coin itself (i.e. a fraction of the original 10000 in my previous exemple).

In the case of a business, this is most likely just profit which will be built-into their corporate tax. But for an individual I don't quite know ... it could be considered income and taxed at your marginal rate (same as receiving dividends on company shares), but that is just me guessing and I do't think Revenue's documentation clarifies this.

Rob2D wrote: »

Let's change the topic a bit for fun.

How would crypto mining be taxed??

Not that anyone would ever declare it anyway since it's impossible to prove almost. But if they did? Was wondering about it the other day.

Still CGT I would imagine
Not declaring it is tax fraud/ evasion

kippy wrote: »

The thing is, most of the things people ask on here are fairly easily "googleable" already in generally more up to date than having to rely on a somewhat static post (that someone needs to update)
What people need to know is pretty much in here:
https://www.revenue.ie/en/companies-and-charities/financial-services/cryptocurrencies/index.aspx
Any posts really are most likely looking for a clarification of what is there or how best to minimise what they pay - , the answers to which vary depending on some variable.

Some more stuff here:
https://www.mooreireland.ie/MediaLibsAndFiles/media/nathansweb.moorestephens.com/Publications/Tax-Treatment-of-Cryptocurrency-Brochure-Web-Final.pdf
https://irishtechnews.ie/crypto-taxes-in-ireland-how-to-prepare/
Maybe stil that link to these three in the OP?

I am always concerned when I see certain questions being asked in here, when there is a lot of information already around the topic out on the net, information that needs to be understood and particulaily if you are serious (about investing in general, not just crypto)

Basically all the above documentation can be summarised in one sentance: crypto is no different from any other financial asset as far as CGT is concerned.

But the big shame is they don't cover all the things which are specific to crypto (i.e. for which there are genuine questions to be asked): staking rewards, airdrops, crypto interest payments and DeFi rewards, etc ...

Revenue really needs to catch-up with these and update their documents. Today I think even the most honest and well documented taxpayer has no way to find clear directions on if and how they are supposed to declare an airdrop on their tax return.

Rob2D

Let's change the topic a bit for fun.

How would crypto mining be taxed??

Not that anyone would ever declare it anyway since it's impossible to prove almost. But if they did? Was wondering about it the other day.

kippy

donnaille wrote: »

I wonder if there is also a way to combine all of the useful tax information that gets shared over and over again into the first post.

New questions on things like staking, NFTs etc. then become the topic of the discussion rather than taxation policies that are well understood by the posters here - who I must add still happily - and helpfully - respond to the same questions over and over again.

The thing is, most of the things people ask on here are fairly easily "googleable" already in generally more up to date than having to rely on a somewhat static post (that someone needs to update)
What people need to know is pretty much in here:
https://www.revenue.ie/en/companies-and-charities/financial-services/cryptocurrencies/index.aspx
Any posts really are most likely looking for a clarification of what is there or how best to minimise what they pay - , the answers to which vary depending on some variable.

Some more stuff here:
https://www.mooreireland.ie/MediaLibsAndFiles/media/nathansweb.moorestephens.com/Publications/Tax-Treatment-of-Cryptocurrency-Brochure-Web-Final.pdf
https://irishtechnews.ie/crypto-taxes-in-ireland-how-to-prepare/
Maybe stil that link to these three in the OP?

I am always concerned when I see certain questions being asked in here, when there is a lot of information already around the topic out on the net, information that needs to be understood and particulaily if you are serious (about investing in general, not just crypto)

donnaille

I wonder if there is also a way to combine all of the useful tax information that gets shared over and over again into the first post.

New questions on things like staking, NFTs etc. then become the topic of the discussion rather than taxation policies that are well understood by the posters here - who I must add still happily - and helpfully - respond to the same questions over and over again.

Nody

Mod:
We thank Hellotonever for their contributions to this thread and wishes them all the best in their future endeavors.

Hellotonever threadbanned and any further replies to or discussion of their posts to accordingly.

chalky_ie

I hope Portugal has good mental health services anyway.

barneystinson

The only thing I've learned as a result of this thread is what a midwit is. I thought the Hellotonever was having an autocorrect mare but turns out not.

grindle

relax carry on wrote: »

Are there any moderators in this forum? The thread could do with a clean up of the Walter Mitty posts.

They react to what's reported, so if you haven't they won't react.

Mellor wrote: »

Nope. you claimed been a millionaire. There was no hypothetical in the original post.
You rolled out the "I'm writing fiction" in an pretend "if revenue ask" context.
But really it was to deflect from your lack of understanding of tax laws.

I mean you literally said;

Which was a very odd challenge to issue if t was openly hypothetical.
The embarrassed backpedaling is glorious.

Uh yeah. Cringe conversation. Just pay your taxes and feel good about it.

Mellor

Hellotonever wrote: »

So let me get this straight. I started a discussion about crypto taxes, which I stated to be fictional for the purposes of educating people how and what they can do, and some midwit started going through my post history to 'prove' that what I stated to be a fictional story is indeed fictional.

Nope. you claimed been a millionaire. There was no hypothetical in the original post.
You rolled out the "I'm writing fiction" in an pretend "if revenue ask" context.
But really it was to deflect from your lack of understanding of tax laws.

I mean you literally said;

Hellotonever wrote:

OK prove it.

Which was a very odd challenge to issue if t was openly hypothetical.
The embarrassed backpedaling is glorious.

So let me get this straight. I started a discussion about crypto taxes, which I stated to be fictional for the purposes of educating people how and what they can do, and some midwit started going through my post history to 'prove' that what I stated to be a fictional story is indeed fictional. And now the other midwits are applauding him because he 'proved' (?) that I was writing a fictional story?

Tell you what lads. There's a reason why midwits are focusing on me and not whats happening. This is what's happening:

https://www.independent.ie/business/finance-minister-donohoe-warns-taxes-will-rise-after-covid-40160291.html

Keep your head down and pay your taxes. Im off to Cabo when lockdown ends.

relax carry on

Are there any moderators in this forum? The thread could do with a clean up of the Walter Mitty posts.

Mellor

Hellotonever wrote: »

Yes. It is an absolute midwit thing to do. I am actually cringing imagining someone in real life being sad enough to do that.

You understand what "other than" means?

The only thing to be cringing at here is somebody boasting online about a made up fantasy world they live in. That's not normal behaviour dude. Suggest you are really unhappy with something in real life. Are you ok?

Mellor wrote: »

Literally took a few mouse clicks. Zero effort for anyone other a midwit.

So it was all lies except for the millionaire part. :pac::pac::pac:

Yes. It is an absolute midwit thing to do. I am actually cringing imagining someone in real life being sad enough to do that.

kippy

Irish_rat wrote: »

Why are people obsessed about others not claiming tax

Not claiming tax or not paying tax?

I think it's nice that posters are concerned about their fellow posters potential tax liabilities and are trying to warn/keep them out of trouble.

Mellor

Hellotonever wrote: »

Man I am cringing so much... Imagine doing all this. I pity you bro. Cannot imagine someone doing all this who actually values their time lol

Literally took a few mouse clicks. Zero effort for anyone other a midwit.

Btw. As stated im writing fiction for the purposes of discussing tax laws. But one thing that isnt a lie is that I am indeed retired at 25 and a millionaire. Which is more than anyone here will ever achieve through crypto

So it was all lies except for the millionaire part. :pac::pac::pac:

Irish_rat wrote: »

Why are people obsessed about others not claiming tax

Sadistic fetish.

They themselves pay taxes. They know its sh*t and its a big reason for why their life is sh*t.

But hearing about other people getting whipped makes them feel better.

Irish_rat

Seve OB wrote: »

Thing is, I don’t believe you because I don’t believe you understand the tax laws.

Why are people obsessed about others not claiming tax

Seve OB wrote: »

You don’t know the people on this thread so you can’t comment on their levels of intelligence.

Some would probably say the same about you.

If you’ve done it all above board then fair play to you.

But your moaning about the tax laws is silly. The thing is, you now have enough money that you could run for government and have your say in the dail to make the changes

Nah it takes more than money to change anything. Im not someones nephew. I dont have access to cronyist privileges.