Crypto tax situation - Read post 1 for thread banned users

makeorbrake · 27-02-2021 12:43pm

NoviGlitzko wrote: »

Hey guys. I use Binance and was thinking of setting up a bot for my crypto, but worried about how the constant buying and selling will be traceable for CGT. I can't find much info about this online. Can anyone help me?

For anyone that's going to be trading rather than investing, then the likelihood is that you're going to have an unreasonable amount of transactions to track for tax purposes. There are a number of crypto tax software services out there which can help with this -> LINK.

Hellotonever · 28-02-2021 6:17am

bosco12345 wrote: »

Surely there will have to be some sort of compromise in regards CGT for crypto trading. 33% is a complete scam for the level of risk you take trading alt coins.

The metagame of Ireland is to dissuade you from using any other investment vehicle unless its property. Legislations are tough on anything other than property because the government wants you to keep solvency only in property.

Why, you ask?

Ask yourself this: How many TD's are landlords. Is it in their best interest to change the system?

I myself have moved to Portugal after making 8 figures in crypto. I would've gladly paid 20% but 33% is an utter joke. 1270eu exemption is deranged. Crypto to crypto tax is an insult. Once you realize that Ireland is a country run by scammers and every law exists to gouge you out of money you will realize why its a terrible place. From time to time I still visit and its the same old story.

Bob24 · 28-02-2021 10:54am

Hellotonever wrote: »

The metagame of Ireland is to dissuade you from using any other investment vehicle unless its property. Legislations are tough on anything other than property because the government wants you to keep solvency only in property.

I honestly don’t see property as an attractive investment from a tax perspective for an individual landlord (REITs are another story). IMO individual investors in general are being discouraged, regardless of the investment vehicle.

Plus the problem with property is that it can’t be moved. So it is the easiest asset to tax as the owner can’t transfer their tax liabilities to a different jurisdiction if/when they have enough.

Hellotonever · 28-02-2021 11:37am

Bob24 wrote: »

I honestly don’t see property as an attractive investment from a tax perspective for an individual landlord (REITs are another story). IMO individual investors in general are being discouraged, regardless of the investment vehicle.

Plus the problem with property is that it can’t be moved. So it is the easiest asset to tax as the owner can’t transfer their tax liabilities to a different jurisdiction if/when they have enough.

Its definitely the most enticing long term hold here. ETFs get taxed 41% after 8 years on unrealized gains. With 1270eu tax exemption. Its a joke.

You're right, its definitely harder for smaller retail investors to get anywhere, but its easier for the big boys like the Healy-Raes, and any other public official with vested interest.

https://www.irishtimes.com/news/politics/michael-healy-rae-is-d%C3%A1il-s-biggest-landlord-and-declares-nyt-shares-1.4496338

Bob24 · 28-02-2021 12:06pm

Hellotonever wrote: »

Its definitely the most enticing long term hold here. ETFs get taxed 41% after 8 years on unrealized gains. With 1270eu tax exemption. Its a joke.

Actually the exemption doesn’t apply to ETFs because it relates to CGT and the tax you are paying on ETFs technically isn’t CGT. For sure this taxation method is a joke (the very idea of taxing unrealised gains makes no sense) but this only applies to ETFs and Irish mutual funds.

Any other shares are taxed at you marginal tax rate for dividends and CGT in the gains you make. I don’t see rental property as being more attractive from a tax perspective for an individual investor.

And thus for an individual holder I’d definitely favour a couple of well managed UK investment trusts (or REITs if someone likes property). Compared to property there is no bother with maintenance, unpaid rents and so forth, no LPT, it is a lot more liquid if you want to redeploy capital, and makes it easy to take your tax liabilities to another country if you have enough of the Irish tax system (whereas property will be taxed here regardless of where you live). And as far as I understand taxation on property rental income and company shares dividends are the same, and both asset classes are subject to CGT.

Rob2D · 28-02-2021 2:41pm

Hellotonever wrote: »

I myself have moved to Portugal after making 8 figures in crypto. I would've gladly paid 20% but 33% is an utter joke. 1270eu exemption is deranged. Crypto to crypto tax is an insult. Once you realize that Ireland is a country run by scammers and every law exists to gouge you out of money you will realize why its a terrible place. From time to time I still visit and its the same old story.

Great stuff! Good to finally see someone taking a stand. I doubt I'll ever be making 8 figures at this stage but if I did, I wouldn't be far behind you.

As you say if it were like the UK, with a 20% tax and much higher exemption, it would be sufferable. Especially if we thought the funds would be put to good use. But with the clowns we have running this place at the moment, the thought of giving 33% of my gains to them makes my blood boil.

Bob24 · 28-02-2021 4:50pm

Rob2D wrote: »

Great stuff! Good to finally see someone taking a stand. I doubt I'll ever be making 8 figures at this stage but if I did, I wouldn't be far behind you.

Yeah TBH with such amount I think pretty much anyone would make the move. Even the most moralising people who criticise others who are doing it would leave - once they realise they literally have to pay millions in taxes if they stay and want to dispose of their assets.

bosco12345 · 28-02-2021 11:02pm

Hellotonever wrote: »

The metagame of Ireland is to dissuade you from using any other investment vehicle unless its property. Legislations are tough on anything other than property because the government wants you to keep solvency only in property.

Why, you ask?

Ask yourself this: How many TD's are landlords. Is it in their best interest to change the system?

I myself have moved to Portugal after making 8 figures in crypto. I would've gladly paid 20% but 33% is an utter joke. 1270eu exemption is deranged. Crypto to crypto tax is an insult. Once you realize that Ireland is a country run by scammers and every law exists to gouge you out of money you will realize why its a terrible place. From time to time I still visit and its the same old story.

That's unbelievable, fair play to you. Do you mind me asking how you made that? What's the secret ðŸ˜‚

el diablo · 01-03-2021 5:13am

bosco12345 wrote: »

That's unbelievable, fair play to you. Do you mind me asking how you made that? What's the secret &#55357;&#56834;

There's no secret. He got in early. :pac:

Bob24 · 01-03-2021 9:32am

el diablo wrote: »

There's no secret. He got in early. :pac:

Exactly! This kind of figure ... either you were pretty wealthy in the first place or you have been holding for at least 5 or 6 years.

Peregrinus · 02-03-2021 8:31am

Bob24 wrote: »

Yeah TBH with such amount I think pretty much anyone would make the move. Even the most moralising people who criticise others who are doing it would leave - once they realise they literally have to pay millions in taxes if they stay and want to dispose of their assets.

Has anybody "moralising person" in this thread cricitised Hellotonever for leaving? I don't think so, but I may have missed it.

Regardless, if Hellotonever has "made 8 figures in crypto", that means he has realised gains of between €10 million and €100 million. I get why he would relocate to Portugal to avoid paying 33% in CGT. On the other hand, whether he pays 33% in CGT or not, he has so much money that neither he nor anyone belonging to him need ever work again if they don't care to, so I struggle to say that paying CGT would involve him in any particular hardship, or would constitute any terrible injustice. It's not as though he had done anything socially useful to generate his €10-100 million, or as though his moving to Portugal to avoid the tax is going to involve any hardship for him or - no offence - any loss to the rest of us.

I'm puzzled at his suggestion that "the metagame of Ireland is to dissuade you from using any other investment vehicle unless it's property". Gains you make on the sale of your principal private residence are exempt from CGT, but the number of people who realise gains €10-100 million on the sale of their home is, ahem, not large. If Hellotonever had generated a gain of this size on investment in commercial property, or development land, or indeed in any property other than his own home, he would have exactly the same 33% CGT liability as he does for his gains on Crypto - plus (if the land was in Ireland) he couldn't have avoided it by relocating to Portugal. So I don't think the system creates the incentives that he thinks it does.

Rob2D · 02-03-2021 9:25am

Peregrinus wrote: »

Has anybody "moralising person" in this thread cricitised Hellotonever for leaving? I don't think so, but I may have missed it.

Regardless, if Hellotonever has "made 8 figures in crypto", that means he has realised gains of between €10 million and €100 million. I get why he would relocate to Portugal to avoid paying 33% in CGT. On the other hand, whether he pays 33% in CGT or not, he has so much money that neither he nor anyone belonging to him need ever work again if they don't care to, so I struggle to say that paying CGT would involve him in any particular hardship, or would constitute any terrible injustice. It's not as though he had done anything socially useful to generate his €10-100 million, or as though his moving to Portugal to avoid the tax is going to involve any hardship for him or - no offence - any loss to the rest of us.

I'm puzzled at his suggestion that "the metagame of Ireland is to dissuade you from using any other investment vehicle unless it's property". Gains you make on the sale of your principal private residence are exempt from CGT, but the number of people who realise gains €10-100 million on the sale of their home is, ahem, not large. If Hellotonever had generated a gain of this size on investment in commercial property, or development land, or indeed in any property other than his own home, he would have exactly the same 33% CGT liability as he does for his gains on Crypto - plus (if the land was in Ireland) he couldn't have avoided it by relocating to Portugal. So I don't think the system creates the incentives that he thinks it does.

You must be a real hoot at parties.

kippy · 02-03-2021 9:29am

Peregrinus wrote: »

Has anybody "moralising person" in this thread cricitised Hellotonever for leaving? I don't think so, but I may have missed it.

Regardless, if Hellotonever has "made 8 figures in crypto", that means he has realised gains of between €10 million and €100 million. I get why he would relocate to Portugal to avoid paying 33% in CGT. On the other hand, whether he pays 33% in CGT or not, he has so much money that neither he nor anyone belonging to him need ever work again if they don't care to, so I struggle to say that paying CGT would involve him in any particular hardship, or would constitute any terrible injustice. It's not as though he had done anything socially useful to generate his €10-100 million, or as though his moving to Portugal to avoid the tax is going to involve any hardship for him or - no offence - any loss to the rest of us.

I'm puzzled at his suggestion that "the metagame of Ireland is to dissuade you from using any other investment vehicle unless it's property". Gains you make on the sale of your principal private residence are exempt from CGT, but the number of people who realise gains €10-100 million on the sale of their home is, ahem, not large. If Hellotonever had generated a gain of this size on investment in commercial property, or development land, or indeed in any property other than his own home, he would have exactly the same 33% CGT liability as he does for his gains on Crypto - plus (if the land was in Ireland) he couldn't have avoided it by relocating to Portugal. So I don't think the system creates the incentives that he thinks it does.

Fair play to the poster, able to retire/move to sunnier climes on their investment choices and in fairness anyone making that much money has the ability to make decisions and changes to their lifestyle based on how best to make and protect that money - which I think all of us would do.

But I do disagree with their statement about property in this country tbh. There are plenty disencentives for the individual to invest in property here and as you rightly point out, very similiar taxes in place.

Peregrinus · 02-03-2021 9:41am

kippy wrote: »

Fair play to the poster, able to retire/move to sunnier climes on their investment choices and in fairness anyone making that much money has the ability to make decisions and changes to their lifestyle based on how best to make and protect that money - which I think all of us would do.

Each to their own. As far as I'm concerned, the point of making money is to enable you to live the kind of life you want to live, not the other way around.

So, earning lots of money so you can move to Portugal because you like sunshine and vinho verde — great.

But moving to Portugal when you wouldn't otherwise in order to save tax — well, you better have a clear understanding of what you are going to do with the extra money you have, and be satisfied that the social and family disruption of emigrating is worth it to you. And this is doubly true when you are so wealthy that the extra money you save really makes no difference to your lifestyle. By his own account, Hellotonever would be in that bracket, I think.

None of which is to criticise Hellotonever or the choice he has made. Perhaps it was the vino verde that clinched it for him. Or, perhaps his personal or family circumstances are such, or he has some project he wishes to advance, that the tax saving really is going to make an important difference to him. Or whatever. His reasons for moving to Portugal will have seemed good enough to him which, really, is all that matters.

But it's not a given that everybody who has large capital gains will be better off if they move to Portugal and waith three years before realising their gains. There's more at stake in a decision like than than the money.

Peregrinus · 02-03-2021 3:12pm

Rob2D wrote: »

You must be a real hoot at parties.

We are in a thread about the tax treatment of gains from speculating in crytpocurrency. Did you think it was going to be all music, dancing and young wans giving you the eye?

Bob24 · 02-03-2021 4:33pm

Peregrinus wrote: »

Has anybody "moralising person" in this thread cricitised Hellotonever for leaving? I don't think so, but I may have missed it.

No. Nor did I say anyone did that.

But I have certainly seen such posts on boards and heard people saying this kind of stuff in the media/politics/social media as some kind of virtue signalling. Talk is cheap but when face wit the same situation I'd say quite many of them would change their mind (at least when it comes to their own personal case).

kippy · 02-03-2021 4:37pm

Peregrinus wrote: »

Each to their own. As far as I'm concerned, the point of making money is to enable you to live the kind of life you want to live, not the other way around.

So, earning lots of money so you can move to Portugal because you like sunshine and vinho verde — great.

But moving to Portugal when you wouldn't otherwise in order to save tax — well, you better have a clear understanding of what you are going to do with the extra money you have, and be satisfied that the social and family disruption of emigrating is worth it to you. And this is doubly true when you are so wealthy that the extra money you save really makes no difference to your lifestyle. By his own account, Hellotonever would be in that bracket, I think.

None of which is to criticise Hellotonever or the choice he has made. Perhaps it was the vino verde that clinched it for him. Or, perhaps his personal or family circumstances are such, or he has some project he wishes to advance, that the tax saving really is going to make an important difference to him. Or whatever. His reasons for moving to Portugal will have seemed good enough to him which, really, is all that matters.

But it's not a given that everybody who has large capital gains will be better off if they move to Portugal and waith three years before realising their gains. There's more at stake in a decision like than than the money.

In fairness, I'd say there were a few more considerations the poster made - not just the tax situation.

Bob24 · 02-03-2021 6:09pm

kippy wrote: »

In fairness, I'd say there were a few more considerations the poster made - not just the tax situation.

For sure.

But any "average" person who quickly achieves a lot of potential wealth and is presented with the eventuality of a multi-million euros tax bill to realise their gains will consider the tax implications *very* carefully.

IMO this is especially true with crypto whereby those newly-wealthy people will tend to be in younger demographics which are willing to explore the world anyway. The 8 digits euro amount we are talking about here is very high and the number of impacted individuals is rather small. But I genuinely think that with this type of figure a majority of people will chose to leave and see if the grass is greener elsewhere (they can also come back after 3+ years once they have made their disposals).

Plus there is a whole catalogue of territories with 0 or very low CGT on most continents, so it doesn't have to be Portugal (my thing would rather be Singapore or Hong Kong, but if someone really wanted to stay close to Ireland if I am not mistaken the Isle of Man does the no-CGT trick). And if needs be, spending a few months a year in Ireland without being a tax resident here is a possibility.

Now obviously if we are talking 50000 euros worth of capital gains it is a different story ...

kippy · 02-03-2021 7:26pm

Bob24 wrote: »

For sure.

But any "average" person who quickly achieves a lot of potential wealth and is presented with the eventuality of a multi-million euros tax bill to realise their gains will consider the tax implications *very* carefully.

IMO this is especially true with crypto whereby those newly-wealthy people will tend to be in younger demographics which are willing to explore the world anyway. The 8 digits euro amount we are talking about here is very high and the number of impacted individuals is rather small. But I genuinely think that with this type of figure a majority of people will chose to leave and see if the grass is Greene elsewhere (they can also come back after 3+ years once they have made their disposals).

Plus there is a whole catalogue of territories with 0 or very low CGT on most continents, so it doesn't have to be Portugal (my thing would rather be Singapore or Hong Kong, but if someone really wanted to stay close to Ireland if I am not mistaken the Isle of Man does the no-CGT trick). And if needs be, spending a few months a year in Ireland without being a tax resident here is a possibility.

Now obviously if we are talking 50000 euros worth of capital gains it is a different story ...

Well, this is what I was hinting at above.
Those who make massive money, have the means, ability and motivation to best "protect it". These are few and far between as you say.
Those that make the "smaller" amounts don't generally have as many options available to them to protect their profits and just end up paying the taxes etc.
This is the way of the world - no matter what the industry and/or investment.

I'd love to have the "problem" of facing into a 33 percent tax bill of a few hundred K or a few million to be honest no matter what original investment or windfall were!

kippy · 02-03-2021 8:53pm

bosco12345 wrote: »

Any person with an ounce of common sense would move to Portugal or Singapore etc to cash out if they came into a substantial amount of money, let's say +250k. The thoughts of giving the state 33% of X amount of money makes me sick, especially after investing your savings (which is already heavily taxed money), and spending all that time researching and taking on significant risk. Ye F that lol

Well, some would argue that it's the state that provided you with the education, accomodation, and general framework to have the ability to walk away with that kind of profit. Sot the state should have some payback from you to help the next person pull them up by their own bootstraps etc etc.

scwazrh · 02-03-2021 10:46pm

In what way are gains through crypto on Revolut subject to CGT ? With Revolut you don’t acquire any crypto ,only exposure to crypto .so you never actually acquire or dispose of an asset.
Would income tax apply here instead of CGT ?

Bobeagleburger · 02-03-2021 10:51pm

scwazrh wrote: »

In what way are gains through crypto on Revolut subject to CGT ? With Revolut you don’t acquire any crypto ,only exposure to crypto .so you never actually acquire or dispose of an asset.
Would income tax apply here instead of CGT ?

I would have thought it's CGT on gains.

Bob24 · 02-03-2021 11:25pm

scwazrh wrote: »

In what way are gains through crypto on Revolut subject to CGT ? With Revolut you don’t acquire any crypto ,only exposure to crypto .so you never actually acquire or dispose of an asset.
Would income tax apply here instead of CGT ?

CGT

Even if what you have is not actual crypto but rather an IOU indexed on crypto prices, that IOU still is an asset you are purchasing and then disposing of.

scwazrh · 03-03-2021 12:08am

Bob24 wrote: »

CGT

Even if what you have is not actual crypto but rather an IOU indexed on crypto prices, that IOU still is an asset you are purchasing and then disposing of.

Was hoping that’s the answer , cheaper than income tax

kippy · 03-03-2021 12:09am

scwazrh wrote: »

Was hoping that’s the answer , cheaper than income tax

That depends on your income surely?

Peregrinus · 03-03-2021 2:44am

kippy wrote: »

That depends on your income surely?

CGT is generally cheaper than income tax, since anyone who has the disposable income to be more than a very modest sum is likely to be in the higher tax bracket.

For what it's worth, in 99% of the rows between taxpayers and Revenue over whether a particular activity is subject to income tax or CGT:

(a) the Revenue are arguing that it's subject to CGT and the taxpayer is saying no, it's subject to income tax; and

(b) the reason for this is that the activity has generated large losses, and the taxpayer would like to be able to set them off against his other income. If the activity is subject to CGT then the losses can only be set off against other capital gains, and the taxpayer typically doesn't have any.

Hellotonever · 03-03-2021 4:40am

bosco12345 wrote: »

That's unbelievable, fair play to you. Do you mind me asking how you made that? What's the secret ��

There's no big secret. I just did high frequency trading for years while getting my bachelors degree. I accumulated and traded cryptocurrencies in unregulated exchanges like Uniswap and traded between 6-12 tokens per day. The high volatility make it easy to just swap in and out every day for profit.

The one thing I want to tell everyone is to forget the traditional notions of trading. Long term holds, fundamentals, use-case, etc. None of this mattered. The token didn't matter. What mattered was getting in very early and selling before the token dips. So many years in the scene and having traded probably tens of thousands of tokens, I realize that all of this is a pump and dump/pyramid scheme. And thats fine by me. All of the big tech gimmicks and marketing was just window dressing for virtual horse gambling. Some people fall for it, the same way some people fall for pyramid schemes, but coming from a poor family and seeing what a scam does to a household, none of the shilling worked on me. I saw the scams for what they are. Not to badmouth cryptocurrency though, I am a big supporter of anything blockchain.

I accumulated mainly Ethereum, not Bitcoin. The DeFi space is where the easy money is right now. Anyone can buy (or even make) their own token. Its very easy to just sit at home all day and buy in the latest altcoin shilled on 4chan - and they usually go up to (bout 90% of the time). I don't trade in binance or any central exchange, I dont trade bitcoin, I dont do market analysis or any work whatsoever. All I do is wait for someone to shill their project on unregulated forums (like 4chan) which gets listed on unregulated exchanges (like Uniswap) and by the time the general market hears of it and buys, I sell my bags.

If you knew how much you could make just gambling on Uniswap you will be disgusted with yourself, and maybe develop a slight disdain for your current job which doesn't pay nearly as much as an hour f*cking with altcoins.

I cashed out enough to move out to Portugal. Actually had to cash out more than that because 33% is the CGT rate.

So all of this got me to 7 figures last november. Then the bullrun bumped me to 8 figures. Right now I'm staking on AAVE and Compound.Finance for about 0.7 mil annually in passive income. I still get taxed in Portugal because I'm a registered trader, but their NHR scheme is fair. That's all I wanted really - fair. I don't mind paying taxes since I have more than enough. But I am not going to pay 33%.

I would have preferred to stay in Ireland. I wouldn't mind getting a house in Dalkey. I would've liked to keep my head down, pay taxes, contribute, and be merry in the island. But the government wants too much for having done nothing and risking nothing. So I moved to somewhere that's a little more free. Its not so bad. Ireland is a 3 hour flight.

Peregrinus · 03-03-2021 4:55am

Note that you remain liable to Irish CGT on any disposals you make until you cease to be ordinarily resident in Ireland, which happens three years after you cease to be resident. So whatever crypto holdings you had when you lost Irish tax-residence you need to hang on to for another three years. Same goes for any crypto holdings you aquired during that 3-year period - if you dispose of them while still ordinarily resident in Ireland, there's an Irish CGT liablity.

Hellotonever · 03-03-2021 5:07am

Peregrinus wrote: »

Note that you remain liable to Irish CGT on any disposals you make until you cease to be ordinarily resident in Ireland, which happens three years after you cease to be resident. So whatever crypto holdings you had when you lost Irish tax-residence you need to hang on to for another three years. Same goes for any crypto holdings you aquired during that 3-year period - if you dispose of them while still ordinarily resident in Ireland, there's an Irish CGT liablity.

I would certainly like to see government workers trawl through unregulated, non-record keeping exchanges, decrypt monero and follow internal blockchain-jumps in order to prove that I owe them anything.

In other words, crack cryptocurrency once and for all.

Mellor · 03-03-2021 5:43am

Bob24 wrote: »

Exactly! This kind of figure ... either you were pretty wealthy in the first place or you have been holding for at least 5 or 6 years.

Or they're making it up. Which is the most likely scenario on the internet when somebody aftertimes multimillion dollar earnings.
Just the reality of the internet.

Crypto tax situation - Read post 1 for thread banned users

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