Mining crypto how to deal with the tax

From Revenue.ie: "There are no special tax rules for cryptocurrencies."

McGaggs wrote: »

The burden of proof should fall on those trying to dispute the accepted facts. But anyway, proof is here https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-02/02-01-03.pdf

Your (and Mellor's) opinion is not "accepted facts".

That ebrief, which I've seen before, does not confirm your position, the part on "income tax" is specifically for a business that derives some income from cryptocurrency, be it trading or mining. It just stipulates that any income from crypto should be clearly identified and recorded.

The tax levied on an individual who derives some income from crypto is CGT, which is 33%.
You do not derive any income until you trade the crypto, be it to cash or another crypto.

JibJabWibWab wrote: »

Your (and Mellor's) opinion is not "accepted facts".

That ebrief, which I've seen before, does not confirm your position, the part on "income tax" is specifically for a business that derives some income from cryptocurrency, be it trading or mining. It just stipulates that any income from crypto should be clearly identified and recorded.

The tax levied on an individual who derives some income from crypto is CGT, which is 33%.
You do not derive any income until you trade the crypto, be it to cash or another crypto.

From that pdf:

"Therefore no special tax rules for cryptocurrency transactions are required. "

"The profits and losses of a non-incorporated business on cryptocurrency transactions must
be reflected in their accounts and will be taxable on normal IT rules."

JibJabWibWab wrote: »

You are suggesting that I should pay income tax on that ETH as I mine it and that I will also be liable for CGT on any appreciation on the ETH. That is incorrect.

You are wrong.

JibJabWibWab wrote: »

I am only liable to CGT when I trade the ETH.

Nobody has claimed any differently.
And that doesn’t exclude the existence of income tax. You’re just highlighting that you don’t understand the difference.

JibJabWibWab wrote: »

That ebrief, which I've seen before, does not confirm your position, the part on "income tax" is specifically for a business that derives some income from cryptocurrency, be it trading or mining. It just stipulates that any income from crypto should be clearly identified and recorded

You may have seen it before, but you didn’t understand it.
A self employed sole trader is a business for tax purposes. Mining crypto is earning income.
Income tax should be paid on all of your income.

JibJabWibWab wrote: »

The tax levied on an individual who derives some income from crypto is CGT, which is 33%.
You do not derive any income until you trade the crypto, be it to cash or another crypto.

Capital Gains Tax is paid on capital gains, never on income.
Income tax is paid on income.
I mean, there’s a clue is in the names. :rolleyes:

Trading an asset for a profit is not income. It’s capital gains. You seem to misunderstand what capital gains actually is.

Somebody asked for a source. The document is provided above. The relevant section is “income tax” (shocking).

Income tax
The profits and losses of a non-incorporated business on cryptocurrency transactions must be reflected in their accounts and will be taxable on normal income tax rules.

McGaggs wrote: »

From that pdf:

"Therefore no special tax rules for cryptocurrency transactions are required. "

"The profits and losses of a non-incorporated business on cryptocurrency transactions must
be reflected in their accounts and will be taxable on normal IT rules."

Yes, and you clearly don't have a clue what any of those words mean.

JibJabWibWab wrote: »

Your (and Mellor's) opinion is not "accepted facts".

That ebrief, which I've seen before, does not confirm your position, the part on "income tax" is specifically for a business that derives some income from cryptocurrency, be it trading or mining. It just stipulates that any income from crypto should be clearly identified and recorded.

The tax levied on an individual who derives some income from crypto is CGT, which is 33%.
You do not derive any income until you trade the crypto, be it to cash or another crypto.

This might not be what suits you, but what others have said is correct.

Practical exemple

You mine 100 euros worth of BTC: this is 100 euros worth of income on which you pay income tax.

You are free to sell these for euros immediately after mining them and if you do so you won't be paying any CGT.

Now if you decide to keep the BTC to bet on capital appreciation, the price doubles, and subsequently you sell them for 200 euros. Then you are making 100 euros worth of capital gains, and you are paying CGT on those 100 euros*.

You were not taxed twice on anything: you paid income tax on the 100 euros you mined, and you paid CGT on your other 100 euros of capital gains.

More here: https://doylekeaney.ie/news/crypto-assets-high-level-irish-tax-considerations/

* of course if this is your only gain of the year, CGT exemption applies as you are below the threshold.

Bob24 wrote: »

This might not be what suits you, but what others have said is correct.

Practical exemple

You mine 100 euros worth of BTC: this is 100 euros worth of income on which you pay income tax.

You are free to sell these for euros immediately after mining them and if you do so you won't be paying any CGT.

Now if you decide to keep the BTC to bet on capital appreciation, the price doubles, and subsequently you sell them for 200 euros. Then you are making 100 euros worth of capital gains, and you are paying CGT on those 100 euros*.

You were not taxed twice on anything: you paid income tax on the 100 euros you mined, and you CGT on your other 100 euros of capital gains.

More here: https://doylekeaney.ie/news/crypto-assets-high-level-irish-tax-considerations/

* of course if this is you only gain of the year, the CGT exemption applies.

The key line in your link;

If the crypto asset transactions are regarded as being a trading activity the profits would be subject to income tax/corporation tax, CGT would apply to transactions in crypto-assets that are held as investments.

It's either or, not both.

JibJabWibWab wrote: »

The key line in your link;

It's either or, not both.

This sentence relates to trading. Not to mining.

Bob24 wrote: »

This sentence relates to trading. Not to mining.

Incorrect. Read it again. The line is in the Income Tax / Corporation Tax section.

Income Tax / Corporation Tax

The profits and losses arising to individuals and companies on crypto-asset transactions are taxable under normal income tax and corporation tax rules.

One of the common questions arising is whether the profits or losses arising from crypto-asset transactions are subject to income tax/corporation tax or subject to capital gains tax (“CGT”). If the crypto asset transactions are regarded as being a trading activity the profits would be subject to income tax/corporation tax, CGT would apply to transactions in crypto-assets that are held as investments.

Mellor wrote: »

A self employed sole trader is a business for tax purposes. Mining crypto is earning income.

Who is the self employed sole trader in this thread? The OP? I don't believe OP has said that...

JibJabWibWab wrote: »

Incorrect. Read it again. The line is in the Income Tax / Corporation Tax section.

What it says is that if you are a professional trader, then CGT doesn't apply to gain you make on trading (i.e. buying and selling crypto). Income tax applies instead.

Mining is not trading.

JibJabWibWab wrote: »

Yes, and you clearly don't have a clue what any of those words mean.

Point out which ones, and I'll put you right

Bob24 wrote: »

What it says is that if you are a professional trader, then CGT doesn't apply to gain you make on trading (i.e. buying and selling crypto). Income tax applies instead.

Mining is not trading.

Have you read your own link at all?

It is likely that profits derived from crypto mining activities, whether carried on by an individual or a company, would be regarded as trading profits subject to income tax/corporation tax rather than CGT

If you pay income tax on it then you don't pay CGT.

JibJabWibWab wrote: »

The key line in your link;

It's either or, not both.

It's both, with one happening after the other. Getting the coin in exchange for mining is income. Holding the coin for appreciation in value is a capital gain. Two separate things, both of which are taxed.

McGaggs wrote: »

It's both, with one happening after the other. Getting the coin in exchange for mining is income. Holding the coin for appreciation in value is a capital gain. Two separate things, both of which are taxed.

You cannot be taxed twice on the same asset.

JibJabWibWab wrote: »

Who is the self employed sole trader in this thread? The OP? I don't believe OP has said that...

Someone who is mining and isn't a limited company is a self employed sole trader.

JibJabWibWab wrote: »

If you pay income tax on it then you don't pay CGT.

That's right, you don't pay CGT on the transaction which provided you with the coin. You lay income tax on that transaxtion. You pay CGT when you dispose of the coin.

JibJabWibWab wrote: »

Have you read your own link at all?

If you pay income tax on it then you don't pay CGT.

Yeah it says income tax.

I gave a very clear example showing that nothing is being taxed twice.

[Deleted User]

You are mixing terms.
Carrying on a trade in Revenue terminology = doing some activity for profit broadly = subject to income tax if unincorporated, subject to corporate income tax if incorporated.
Eg being a self employed electrician, greengrocer, farmer

JibJabWibWab wrote: »

You cannot be taxed twice on the same asset.

You aren't being taxed twice on the asset. You are being taxed once on the income (which could be euro, cabbage, gold, revenue don't care, it's all taxable), and then again on the increase in value of the asset when you dispose of it.

Bob24 wrote: »

Yeah it says income tax.

I gave a very clear example showing that nothing is being taxed twice.

Your example was incorrect. You do not pay income tax on mined crypto that you hold.

You pay income tax if it's considered trading by revenue and you cash out promptly and regularly.

If you hold the crypto you are only liable for CGT when you eventually dispose of the crypto.

JibJabWibWab wrote: »

Who is the self employed sole trader in this thread? The OP? I don't believe OP has said that...

The OP is mining, he is earning self employed income. As as I. And you are also earning self employed income.

JibJabWibWab wrote: »

If you pay income tax on it then you don't pay CGT.

Nobody has said you pay both income and CGT on same capital.

If you earn €100 worth of BTC, you pay income tax on €100 value, but not CGT at all.
If it appreciates by €100 to €200 and you dispose. You pay CGT only on the €100 gain, no income tax is paid on this portion.
You have paid tax on €200.

If somebody gifts you €100, you owe CGT on it.
If it appreciates by €100 to €200 and you dispose. You pay CGT only on the €100 gain.
You have paid tax on €200.

JibJabWibWab wrote: »

Your example was incorrect. You do not pay income tax on mined crypto that you hold.

Nobody has said you pay income on holdings.
I think at this point you are trolling rather than admit you are wrong.

You pay income tax on income.
You pay capital gains on help capital that has made a gain.

You pay income tax if it's considered trading by revenue and you cash out promptly and regularly.

No aspect of income tax requires earnings to be regular. Do a job once a year and get paid, you owe income tax.

Mellor wrote: »

Nobody has said you pay both income and CGT on same capital.

If you earn €100 worth of BTC, you pay income tax on €100 value, but not CGT at all.
If it appreciates by €100 to €200 and you dispose. You pay CGT only on the €100 gain, no income tax is paid on this portion.
You have paid tax on €200.

If you mine €100 worth of BTC, and simply hold the BTC, you do not pay income tax.

If it appreciates by €100 to €200 and you dispose. You pay CGT on the €200. That is all the tax you pay.

Mellor wrote: »

No aspect of income tax requires earnings to be regular. Do a job once a year and get paid, you owe income tax.

When it comes to crypto, if it's not regular then it's not trading. If it's not trading then it's subject to CGT.

relax carry on

So this thread has taken off at a pace. Several posters have already pointed out to the one confused poster the correct position. But I'll try as well.

So my quick googling of Cryptocurrency mining seems to be service you provide where you are rewarded/remunerated with some Cryptocurrency. That part seems straight forward to me. You provided a service of some kind and were "paid" for it. Your reward/pay/asset acquired is the Cryptocurrency. You are liable to Income tax on the Euro value of the Cryptocurrency at the time you acquired it. If you hold onto the Cryptocurrency after you have received it and later dispose of it for gain then you have CGT event. The gain is on the difference between whatever the Euro value was when you acquired it by mining and when you sold/gifted/exchanged the asset. You aren't being taxed twice on the same event. They are two different transactions. In one you were providing a service and the other you were disposing of an asset.

[Deleted User]

JibJabWibWab wrote: »

If you mine €100 worth of BTC, and simply hold the BTC, you do not pay income tax.

If it appreciates by €100 to €200 and you dispose. You pay CGT on the €200. That is all the tax you pay.

When it comes to crypto, if it's not regular then it's not trading. If it's not trading then it's subject to CGT.

Again you are conflating terms.
Trading (as a plumber say) vs Trading financial instruments (shares, crypto currencies)

One thing is true however.
None of us can be definitive, not even the revenue commissioners - only the courts.

Deleted User wrote: »

Again you are conflating terms.
Trading (as a plumber say) vs Trading financial instruments (shares, crypto currencies)

One thing is true however.
None of us can be definitive, not even the revenue commissioners - only the courts.

I'm not conflating anything, I'm choosing my words carefully.

JibJabWibWab wrote: »

You cannot be taxed twice on the same asset.

Actually, while we’re on the subject, the bit is completely wrong too.

Say you earn €100k in a year.
You’ll be taxed a fair whack in income tax.
Your 100k earnings will also be hit up for PRSI.
Then there’s the USC charge on that same 100k.
Maybe you use that to keep the car on the road. Out comes the Motor tax.
Haven’t bought yourself anything yet your out 40+k on tax so far.

Invest 10k in crypto. And the bulk of the rest on clothes, groceries.. You’re paying VAT. A few beers? Paying Excise now too. We’re over 50k on tax now.

End of the year, and that crypto is worth 100k. Cash it in. Revenue wants 30k.
You have the rest, but you a new car. Import a car you’ve always wanted €52k. You need to pay VAT, and VRT. That’s 18k for the tax man, all you have left.

€100k earnings. And in total, you paid €100k tax.

You can’t be taxed twice. :pac: :pac:

JibJabWibWab wrote: »

If you mine €100 worth of BTC, and simply hold the BTC, you do not pay income tax.

If that were true, everyone would get paid in crypto and collect and reduce their income tax bill to zero.

When it comes to crypto, if it's not regular then it's not trading. If it's not trading then it's subject to CGT.

Can you point to anything that says out that income has to be regular to tax liable?

Maybe I said ask to be paid at irregular intervals too.

Mellor wrote: »

If that were true, everyone would get paid in crypto and collect and reduce their income tax bill to zero.

Can you point to anything that says out that income has to be regular to tax liable?

Maybe I said ask to be paid at irregular intervals too.

Dear job, please pay me at random intervals, in various cryptocurrencies. No, need to do it through payroll, it's not taxable.