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Capital Gains tax-Crypto?

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    #62
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    mcsean2163 wrote: »
    Someone told me I have to hold for 30 days in order to claim a loss.

    i.e. I sell from coinx to coiny realising €18,000 profit and now owe €6,000 to revenue but. I hold but coiny drops in value to €2,000. If I sell to fiat before 30 days I still owe €6,000 to revenue. Is that correct?

    There is a 4-weeks rule which is originally for shares but there has been legal advice that it also should apply to crypto, and koinly.io does that when calculating CGT liability for Irish residents.

    Basically what is says is that if your are selling an asset within four weeks of acquiring it, the usually FIFO rule doesn’t apply anymore and losses can’t be offset.

    See section 6A.3.1 here: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-04-06a.pdf

    Note that sometimes it can actually play to your advantage. For exemple let’s say you have an old reserve of BTC which you acquired at a very cheap price years ago. If you but some BTC today and sell it next week for a profit, instead of paying CGT based on your acquisition cost years ago you will pay it based on your acquisition cost today (ie your CGT liability will be lower). However if you wait more then 4 weeks to sell, then CGT will be based on your old acquisition cost from years ago.

    Thing is, even with all the good will in the world and for someone who wants to do things by the books, it makes it a pain to calculate CGT manually, and I doubt many people can consistently and correctly apply this rule without tax calculation software.


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    #63
    BizWiz66
    Registered Users Posts: 47 ✭BizWiz66


    relax carry on wrote: »
    Do you understand what the publication list is? It's not all Revenue interventions. It's just those who met the publication criteria which is a tiny fraction of all the cases worked. Go read one of the annual reports for the actual number of compliance interventions and the associated yields from them. Jesus, do you understand anything about a tax authority at all?

    No, I am totally ignorant when it comes to tax authority as I have always paid all my taxes and I would normally let my accountant deal with it, it is not my field of expertise and don't have time for it.
    This is the first time that I don't want to pay taxes in my life for the reasons I already explained previously.
    Do you have a link to the annual reports for the actual number of compliance interventions and the associated yields from them?


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    #64
    relax carry on
    Registered Users Posts: 4,072 ✭✭✭relax carry on


    BizWiz66 wrote: »
    No, I am totally ignorant when it comes to tax authority as I have always paid all my taxes and I would normally let my accountant deal with it, it is not my field of expertise and don't have time for it.
    This is the first time that I don't want to pay taxes in my life for the reasons I already explained previously.
    Do you have a link to the annual reports for the actual number of compliance interventions and the associated yields from them?

    https://www.revenue.ie/en/corporate/press-office/annual-report/index.aspx?year=2020

    The infographic might be easier to understand. 2018 or 2019 might be better to look at instead of 2020 because COVID 19 will have impacted on the numbers but 2020 was over 378000 interventions with €484 million yield.


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    #65
    mcsean2163
    Registered Users Posts: 1,839 ✭✭✭mcsean2163


    Bob24 wrote: »
    There is a 4-weeks rule which is originally for shares but there has been legal advice that it also should apply to crypto, and koinly.io does that when calculating CGT liability for Irish residents.

    Basically what is says is that if your are selling an asset within four weeks of acquiring it, the usually FIFO rule doesn’t apply anymore and losses can’t be offset.

    See section 6A.3.1 here: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-04-06a.pdf

    Note that sometimes it can actually play to your advantage. For exemple let’s say you have an old reserve of BTC which you acquired at a very cheap price years ago. If you but some BTC today and sell it next week for a profit, instead of paying CGT based on your acquisition cost years ago you will pay it based on your acquisition cost today (ie your CGT liability will be lower). However if you wait more then 4 weeks to sell, then CGT will be based on your old acquisition cost from years ago.

    Thing is, even with all the good will in the world and for someone who wants to do things by the books, it makes it a pain to calculate CGT manually, and I doubt many people can consistently and correctly apply this rule without tax calculation software.

    Disaster. That basically translates as day trading not allowed unless you never lose. Fingers crossed I don't owe more than I own.


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    #66
    dockysher
    Registered Users Posts: 360 ✭✭dockysher


    Me don't speak no england Mr tax me, me no understand


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    #67
    BizWiz66
    Registered Users Posts: 47 ✭BizWiz66


    relax carry on wrote: »
    https://www.revenue.ie/en/corporate/press-office/annual-report/index.aspx?year=2020

    The infographic might be easier to understand. 2018 or 2019 might be better to look at instead of 2020 because COVID 19 will have impacted on the numbers but 2020 was over 378000 interventions with €484 million yield.

    Thanks, this is interesting data.
    CGT collected in 2019 was 1.1bn, down to 0.95bn in 2020 which kind of makes sense considering that the market didn't grow as fast (S&P 500 was up 31.9% in 2019 vs 18.40% last year, still pretty ridiculous). I would have expected the crypto rally to balance that out though and bring the CGT collect to pretty much even. I guess it's very hard to say though without knowing exactly how much Irish money are invested in the financial markets and how much in crypto exactly, without considering other assets subject to CGT.


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    #68
    ZeroThreat
    Registered Users Posts: 2,181 ✭✭✭ZeroThreat


    BizWiz66 wrote: »
    No, I am totally ignorant when it comes to tax authority as I have always paid all my taxes and I would normally let my accountant deal with it, it is not my field of expertise and don't have time for it.
    This is the first time that I don't want to pay taxes in my life for the reasons I already explained previously.
    Do you have a link to the annual reports for the actual number of compliance interventions and the associated yields from them?

    Well from what Seurat said you'll be caught sooner or later no matter when you bought, from where you bought or what crypto you bought and no matter how big or small the amount. The Irish revenue is watching and has a long arm apparently so you can't escape it abroad.


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    #69
    duff_man14
    Registered Users Posts: 2 ✭duff_man14


    Just took a look at the website mentioned earlier - Koinly - as someone who has been sending transactions between multiple exchanges, looks like it will make any tax calculations quite straight forward once relevant wallets & exchanges are synced. Thanks for the recommendation on that site, serious timesaver !!


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    #70
    BizWiz66
    Registered Users Posts: 47 ✭BizWiz66


    duff_man14 wrote: »
    Just took a look at the website mentioned earlier - Koinly - as someone who has been sending transactions between multiple exchanges, looks like it will make any tax calculations quite straight forward once relevant wallets & exchanges are synced. Thanks for the recommendation on that site, serious timesaver !!

    Yep, I second that. I registered and connected my exchanges and wallets in about 15 minutes. Very straight forward, this video explains well how it works: https://youtu.be/vjpMwOPD0NM

    At least now I know how much I owe should I change my mind about getting ripped off by the tax man.


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    #71
    TheValeyard
    Registered Users Posts: 12,219 ✭✭✭✭TheValeyard


    I am now convinced that many people evaded paying tax not because they were greedy and wanted all the monies, but the whole tax thing is fcuktangular in its complexity.

    Fcuk Putin. Glory to Ukraine!



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    #72
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    TheValeyard wrote: »
    I am now convinced that many people evaded paying tax not because they were greedy and wanted all the monies, but the whole tax thing is fcuktangular in its complexity.

    While I agree it can be intimidating at first, I’d say the complexity is a good excuse for a number of people to rationalise their non-payment (it is human I behaviour guess, they are not so happy about paying tax in the first place* so they grab any opportunity to rationalise not doing it).

    But TBH while it can seem complicated at first, it isn’t rocket science. If someone looks into it seriously, it is very manageable even without an accountant (regular traders will likely need tax calculation software like Koinly though).

    I can fully understand why people who just traded a few hundred euros on Revolut for the laugh would think it is too much trouble (and if the amounts are that low they probably don’t have any tax liability anyway).

    But if someone grew substantial wealth through crypto, they need to get on with it and realise they are now part of the subset of the population which needs to file tax returns (no different from what property investors, stock investors, or self-employed people have always been doing - crypto investors aren’t been treated any worse or better than those other groups).


    * I would also agree our CGT system is confiscatory and be vehemently opposed to its current implementation, but failing to comply with it is taking things to a different level.


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    #73
    BizWiz66
    Registered Users Posts: 47 ✭BizWiz66


    I see Crypto as something in between "gambling" and "investing". While gambling is not taxed (correctly so), I am ok with investing being taxed (although 33% is still pretty ridiculous). I find ludicrous however that crypto gains are charged at the same rate - if a more reasonable 20% rate was applied I would have no problems paying taxes on it.


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    #74
    mcriot29
    Registered Users Posts: 386 ✭✭mcriot29


    So is it only capital gains tax at 33 percent you pay or is it prsi I think you also have to pay prsi and maybe even income tax


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    #75
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    mcriot29 wrote: »
    So is it only capital gains tax at 33 percent you pay or is it prsi I think you also have to pay prsi and maybe even income tax

    CGT on capital gains.

    Income tax on the income received from mining, staking, and crypto-lending.


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    #76
    Chris_5339762
    Registered Users Posts: 5,855 ✭✭✭Chris_5339762


    How much detail do they want? Thats also an interesting though. Like, would they be happy if you declared the amount based on some Excel calcs done purely off say, the Kraken ledger?


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    #77
    ZeroThreat
    Registered Users Posts: 2,181 ✭✭✭ZeroThreat


    BizWiz66 wrote: »
    I see Crypto as something in between "gambling" and "investing". While gambling is not taxed (correctly so), I am ok with investing being taxed (although 33% is still pretty ridiculous). I find ludicrous however that crypto gains are charged at the same rate - if a more reasonable 20% rate was applied I would have no problems paying taxes on it.

    The amount of staking/farming, liquidity pool & airdrops etc. going on in crypto these days throws even more complexity into the calculations.


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    #78
    ronan123
    Registered Users Posts: 19 ✭ronan123


    If you withdraw 20k from Binance to your bank account how does the tax man come looking for his piece of the pie?


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    #79
    relax carry on
    Registered Users Posts: 4,072 ✭✭✭relax carry on


    ronan123 wrote: »
    If you withdraw 20k from Binance to your bank account how does the tax man come looking for his piece of the pie?

    Just like income tax, it's a self assessed system. You declare it or not. If you declare it then you pay the tax due and it's done. If you don't and Revenue subsequently uncover it themselves, then it's tax, interest, surcharges and/or tax geared penalties. Totally up to you what to do however it's always good to know the consequences of your actions.


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    #80
    ronan123
    Registered Users Posts: 19 ✭ronan123


    I was assuming it was a self declaring system like any other extra form income but crypto is unseen from a public point of view as in nobody can see this form shadow trading so you cant report it if you were aware of it nor would the government have the resources to sieve through the thousands of transactions they might be notified every day from the financial regulator so i would guess anything under 50k probably wont hit any radar. Or am i missing something here in terms of how it works or how much the revenue can see.


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    #81
    dougal0691
    Registered Users Posts: 92 ✭✭dougal0691


    ronan123 wrote: »
    I was assuming it was a self declaring system like any other extra form income but crypto is unseen from a public point of view as in nobody can see this form shadow trading so you cant report it if you were aware of it nor would the government have the resources to sieve through the thousands of transactions they might be notified every day from the financial regulator so i would guess anything under 50k probably wont hit any radar. Or am i missing something here in terms of how it works or how much the revenue can see.

    50k hitting your bank account from a crypto exchange might raise some eyebrows. I'd imagine most people here aren't going to help you justify not paying tax.


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    #82
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    dougal0691 wrote: »
    50k hitting your bank account from a crypto exchange might raise some eyebrows. I'd imagine most people here aren't going to help you justify not paying tax.

    Totally agree.

    And while I doubt Revenue has access to transaction history from crypto platforms at this stage, I think it will come eventually (at least for for large platforms), and sooner than people might think. The reality is that 1) no government will let the crypto ecosystem go mainstream if it doesn’t have a reliable way to identify tax defaulters 2) no legit crypto platform has any interest in being seen as a facilitator for tax defaulters so they won’t resist very long if governments ask for cooperation (even a small country like ours).

    The way of thinking of *some* people related to crypto taxation today kind of reminds me of AirBNB rental income a few years ago. Some people were rationalising not paying tax by the fact that it was supposedly too complicated to file a tax return or that Revenue wouldn’t know anyway … until Revenue and the government requested from AirBNB to cooperate and share information (which they did).


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    #83
    ronan123
    Registered Users Posts: 19 ✭ronan123


    dougal0691 wrote: »
    50k hitting your bank account from a crypto exchange might raise some eyebrows. I'd imagine most people here aren't going to help you justify not paying tax.

    Absolutely nothing to do with me trying to not pay tax on crypto, truth be told i wish i had gains enough for that to be a problem, and i mentioned under 50k simply because i know 3 very close friends who have withdrawn amounts between 20k to nearly 50K and have completely zero interest in declaring this income as CGT.

    I have suggested that this will likely be a noose around their neck for at least 6 years, as far im aware that is the record they keep on general tax returns, open to correction on this etc But i see 18 months later absolutely nothing from revenue etc so im assuming these amounts are to low for them to spend the resources chasing it up


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    #84
    Pique
    Registered Users Posts: 3,044 ✭✭✭Pique


    What if you did a job and got paid in crypto directly to your wallet? Presumably that's income tax at the point of converting into fiat.

    As opposed to investing your own money which (once converted) is then subject to cgt if profits are made.


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    #85
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    Pique wrote: »
    What if you did a job and got paid in crypto directly to your wallet? Presumably that's income tax at the point of converting into fiat.

    As opposed to investing your own money which (once converted) is then subject to cgt if profits are made.

    Income tax is due on the payment based on the fair market value of the crypto in euros on the day it was received (usual timelines for income tax return and payment), regardless of converting to fiat or not.

    Then, if/when the crypto is being disposed of for euros, CGT is calculated based on the acquisition cost being the same fair market value (with the FIFO rule and 4 weeks exception if the person already owned some of that crypto before the payment). So if the crypto is disposed of for cash as soon as it is received, there will be no CGT.


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    #86
    iAcesHigh
    Registered Users Posts: 447 ✭✭iAcesHigh


    They are already cracking on non-payers in States https://www.zerohedge.com/crypto/irs-launches-crackdown-ensure-crypto-investors-pay-their-taxes


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    #87
    ZeroThreat
    Registered Users Posts: 2,181 ✭✭✭ZeroThreat


    ronan123 wrote: »
    Absolutely nothing to do with me trying to not pay tax on crypto, truth be told i wish i had gains enough for that to be a problem, and i mentioned under 50k simply because i know 3 very close friends who have withdrawn amounts between 20k to nearly 50K and have completely zero interest in declaring this income as CGT.

    I have suggested that this will likely be a noose around their neck for at least 6 years, as far im aware that is the record they keep on general tax returns, open to correction on this etc But i see 18 months later absolutely nothing from revenue etc so im assuming these amounts are to low for them to spend the resources chasing it up

    But its like those people with offshore accounts in the past. The state only came after many of them decades later.

    Could be 5,10,20,30 years, but they'll be held accountable before society for their actions at some point. No one escapes the power of the state in the end.


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    #88
    meanpeoplesuck
    Registered Users Posts: 165 ✭✭meanpeoplesuck


    Does the 8 year rule ("deemed exit") apply to crypto in Ireland?

    Eg. If you bought BTC in 2013, you'd have to pay CGT of 33% on all of it in 2021 even if you only want to sell a tiny amount?


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    #89
    Bob24
    Registered Users Posts: 10,905 ✭✭✭✭Bob24


    meanpeoplesuck wrote: »
    Does the 8 year rule ("deemed exit") apply to crypto in Ireland?

    Eg. If you bought BTC in 2013, you'd have to pay CGT of 33% on all of it in 2021 even if you only want to sell a tiny amount?

    See reply here on the other thread where you asked the question: https://www.boards.ie/vbulletin/showthread.php?p=117193926#post117193926


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    #90
    Donegal1234
    Registered Users Posts: 522 ✭✭✭Donegal1234


    How much would you need to be cashing out to be flagged by revenue ?


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    #91
    grindle
    Registered Users Posts: 6,026 ✭✭✭grindle


    Donegal1234 wrote: »
    How much would you need to be cashing out to be flagged by revenue ?

    The bank will ping them at €10k (doesn't have to be in one go, consistent €1k deposits every month of the year could be enough to be labelled suspicious by the bank). Whether or not they get to you depends on their workload but apparently €50k with no disclosure by year's end is a big alarm bell to Revenue.

    On the one hand you have a largely incompetent team of workers (the type who barely know how to open Excel and once open they send screenshots of Excel files instead of the actual file when asked) muddling their way through people avoiding millions in tax, on the other there are a few able-brained bright sparks who get a week's worth of those done in a day and you might be on their list.


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