Crypto tax situation - Read post 1 for thread banned users

Peregrinus · 03-03-2021 6:43am

Hellotonever wrote: »

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.

They don't need to do any of that. They can just read all the details off the CGT return that you are obliged to file.

Or, they can find just one transaction that you were obliged to report and didn't, and then proceed against you for not filing a return/filing a false return, followed by an audit.

You may, of course, get away with tax evasion - people often do. But, if you do, it won't be in any way linked to your move to Portugal. If your strategy is to avoid paying CGT by simply not making returns, you can pursue that perfectly well from Ireland.

Hellotonever · 03-03-2021 6:53am

Peregrinus wrote: »

They don't need to do any of that. They can just read all the details off the CGT return that you are obliged to file.

Or, they can find just one transaction that you were obliged to report and didn't, and then proceed against you for not filing a return/filing a false return, followed by an audit.

You really have no idea how this works. As if some 50 year old accountant will just 'audit' the blockchain, crack privacy tokens and scrape information from unregulated exchanges. I think you're clueless or trolling.

This is the last block I was on. They can start with this:

https://etherscan.io/txs?block=11963475

Peregrinus · 03-03-2021 7:09am

Hellotonever wrote: »

You really have no idea how this works. As if some 50 year old accountant will just 'audit' the blockchain, crack privacy tokens and scrape information from unregulated exchanges. I think you're clueless or trolling.

This is the last block I was on. They can start with this:

https://etherscan.io/txs?block=11963475

When they audit your tax affairs they don't start with the blockchain, silly. They start with your bank accounts, and invite you to explain these impressively large credits which don't seem to tally with anything in your tax return. Or, these impressively large purchases you made, and how you financed them.

Hellotonever · 03-03-2021 7:17am

Peregrinus wrote: »

When they audit your tax affairs they don't start with the blockchain, silly. They start with your bank accounts, and invite you to explain these impressively large credits which don't seem to tally with anything in your tax return. Or, these impressively large purchases you made, and how you financed them.

What impressively large credits? What large purchases?

You seem to assume that:

1. I cashed out a large amount
2. I cashed out through a KYC exchange
3. I didn't tumble and mix the coins before turning them to fiat
4. That I can't explain where tens of thousands of euro came from

You don't know what you're talking about 'silly'.

Hellotonever · 03-03-2021 7:26am

The Irish government is incompetent. Revenue is full of old dinosaurs. They literally could not understand what Crypto is all about now. Doesn't matter if they start from the blockchain or my clean bank account. I know people here in Portugal who were not as careful as I was and actually did get audited by the government. And what happened? Nothing. Revenue could not understand what the hell they were looking at, so they capitulated and let him go.

Cryptocurrencies, particularly DeFi and smart contracts are made by literal mathematical geniuses. To threaten someone with an audit or whatever is laughable. If there was ever a way to avoid paying taxes, it is crypto.

Peregrinus · 03-03-2021 7:30am

Hellotonever wrote: »

What impressively large credits? What large purchases?

You seem to assume that:

1. I cashed out a large amount
2. I cashed out through a KYC exchange
3. I didn't tumble and mix the coins before turning them to fiat
4. That I can't explain where tens of thousands of euro came from

You don't know what you're talking about 'silly'.

When you cashed out, what did you do with the cash?

This is where tax evasion strategies commonly have their weak point. There's not much point in having large undeclared income/undeclared gains if you can't spend them on buying yourself nice things. Which usually means that your undeclared income/gains get credited to a bank account, and later debited to that account when they are spent buying your holiday home/Porsche/wine collection/settling your drug debts/whatever. That's the point at which they are most visible to investigators. Plus, acquisitions of holiday homes and Porsches are themselves events which can be detected even without examining your bank accounts (though, to be fair, the settling of your drug debt is more likely to fly under the radar).

The point is that how expertly you have concealed the earning of your income/gains usually makes little difference; it's the receipt of the income and gains, and the subsequent expenditure on shiny things, that Revenue investations will focus on. Once they have an apparent mismatch between your declared income and your receipts/expenditure, they'll simply send you a letter that says something like "We have reason to believe you have undeclared income. Please comment." And it's all downhill from there.

Hellotonever · 03-03-2021 7:33am

Peregrinus wrote: »

When you cashed out, what did you do with the cash?

This is where tax evasion strategies commonly have their weak point. There's not much point in having large undeclared income/undeclared gains if you can't spend them on buying yourself nice things. Which usually means that your undeclared income/gains get credited to a bank account, and later debited to that account when they are spent buying your holiday home/Porsche/wine collection/settling your drug debts/whatever. That's the point at which they are most visible to investigators. Plus, acquisitions of holiday homes and Porsches are themselves events which can be detected even without examining your bank accounts (though, to be fair, the settling of your drug debt is more likely to fly under the radar).

The point is that how expertly you have concealed the earning of your income/gains usually makes little difference; it's the receipt of the income and gains, and the subsequent expenditure on shiny things, that Revenue investations will focus on. Once they have an apparent mismatch between your declared income and your receipts/expenditure, they'll simply send you a letter that says something like "We have reason to believe you have undeclared income. Please comment." And it's all downhill from there.

Nah. It's all clean. The first thing I did was hire a tax solicitor.

Kinda weird that you fantasize about taxing people at 5 am in the morning though. Even those cringy comments at the end is a bit sus. Is the Revenue work from home now? Or do you have to go in because its an 'essential service?'

Peregrinus · 03-03-2021 7:35am

Hellotonever wrote: »

The Irish government is incompetent. Revenue is full of old dinosaurs. They literally could not understand what Crypto is all about now. Doesn't matter if they start from the blockchain or my clean bank account. I know people here in Portugal who were not as careful as I was and actually did get audited by the government. And what happened? Nothing. Revenue could not understand what the hell they were looking at, so they capitulated and let him go.

Cryptocurrencies, particularly DeFi and smart contracts are made by literal mathematical geniuses. To threaten someone with an audit or whatever is laughable. If there was ever a way to avoid paying taxes, it is crypto.

The utility of crypto in this regard is maximised if you don't cash out - you use your crypto to make purchases, buying the shiny things you want for yourself. Then all you have to do is successfully conceal your possession of shiny things.

Once you cash out, you've got fiat, which is detectable, and for which you can be asked to account. The fact that the Revenue "could not understand what crypto is all about", even if true, would be no help to you here. They can grasp that your activities in crypto led to you acquiring lots of fiat, which is all they need to understand.

There are lots of trade and investment activities that are hard to understand. Your tax liability doesn't depend, in even the smallest degree, on whether the Revenue understands how you earn your money. That literally is never mentioned anywhere in the Taxes Acts. Why would it be?

Peregrinus · 03-03-2021 7:36am

Hellotonever wrote: »

Nah. It's all clean. The first thing I did was hire a tax solicitor.

Kinda weird that you fantasize about taxing people at 5 am in the morning though. Even those cringy comments at the end is a bit sus. Is the Revenue work from home now? Or do you have to go in because its an 'essential service?'

It's not 5 a.m. where I am. Welcome to the globalised world!

Hellotonever · 03-03-2021 7:38am

Peregrinus wrote: »

The utility of crypto in this regard is maximised if you don't cash out - you use your crypto to make purchases, buying the shiny things you want for yourself. Then all you have to do is successfully conceal your possession of shiny things.

Once you cash out, you've got fiat, which is detectable, and for which you can be asked to account. The fact that the Revenue "could not understand what crypto is all about", even if true, would be no help to you here. They can grasp that your activities in crypto led to you acquiring lots of fiat, which is all they need to understand.

There are lots of trade and investment activities that are hard to understand. Your tax liability doesn't depend, in even the smallest degree, on whether the Revenue understands how you earn your money. That literally is never mentioned anywhere in the Taxes Acts. Why would it be?

You keep assuming that I can't explain where the money came from. I already have.

As far as they're concerned, I'm clean. None of what you say is relevant to my situation. Pure fantasy.

Peregrinus · 03-03-2021 7:47am

Hellotonever wrote: »

You keep assuming that I can't explain where the money came from. I already have.

As far as they're concerned, I'm clean. None of what you say is relevant to my situation. Pure fantasy.

The explanation you've given here suggests that you would have a CGT liablity, though. I'm not fantasising about that.

You have since said that you employed a tax solicitor at the outset and that your affairs are "all clean". Of course I accept that. But I can't avoid thinking that the strategies that the solicitor advised, and that you presumably implemented, differ somewhat from the ones you've outlined here, because it seems to me that the ones you've outlined here wouldn't produce the tax consequences that you want, and that you say you got.

Hellotonever · 03-03-2021 7:49am

Peregrinus wrote: »

The explanation you've given here suggests that you would have a CGT liablity, though. I'm not fantasising about that.

You have since said that you employed a tax solicitor at the outset and that your affairs are "all clean". Of course I accept that. But I can't avoid thinking that the strategies that the solicitor advised, and that you presumably implemented, differ somewhat from the ones you've outlined here, because it seems to me that the ones you've outlined here wouldn't produce the tax consequences that you want, and that you say you got.

Of course not. I'm just writing short fiction.

Peregrinus · 03-03-2021 8:06am

Hellotonever wrote: »

Of course not. I'm just writing short fiction.

Well, that would explain it, right enough.

Mellor · 03-03-2021 8:14am

Hellotonever wrote: »

You keep assuming that I can't explain where the money came from. I already have.

As far as they're concerned, I'm clean. None of what you say is relevant to my situation. Pure fantasy.

When did you move to Portugal, and when did you cash out?
Couldn't you have "lost" have crypto you even bought?

Bobeagleburger · 03-03-2021 8:37am

Hellotonever wrote: »

Of course not. I'm just writing short fiction.

Thanks for explaining. I did think you made it all up before admitting you did.

Hellotonever · 03-03-2021 8:40am

Mellor wrote: »

When did you move to Portugal, and when did you cash out?
Couldn't you have "lost" have crypto you even bought?

I cashed out before that. Paid my 33% then off I went.
What do you mean by losing crypto?

Del Griffith · 03-03-2021 8:51am

Hellotonever wrote: »

You really have no idea how this works. As if some 50 year old accountant will just 'audit' the blockchain, crack privacy tokens and scrape information from unregulated exchanges. I think you're clueless or trolling.

This is the last block I was on. They can start with this:

https://etherscan.io/txs?block=11963475

Hi.

It doesn't work like that. If they audit you you're dead right they won't bother their bollox doing any chainanalysis or requesting data from offshore exchanges.

What they do is just pick the highest number you could ever think realistic, then they will at least triple it, and that will be your tax assessment and bill. The number will be totally picked from the sky, but it will be extremely high.

When you appeal it, the onus is then on you to prove the real number, not them. You'll be the one studying old on chain transactions and trying to recover data from exchanges that in many cases don't even exist anymore. Can't prove it? It'll go to the tax appeals commissioner and good luck sending him your block there.

Take it from someone that's been in crypto since 2012 and has been the subject of a full audit by Irish revenue.

I've since left Ireland.

Hellotonever · 03-03-2021 9:02am

Del Griffith wrote: »

Hi.

It doesn't work like that. If they audit you you're dead right they won't bother their bollox doing any chainanalysis or requesting data from offshore exchanges.

What they do is just pick the highest number you could ever think realistic, then they will at least triple it, and that will be your tax assessment and bill. The number will be totally picked from the sky, but it will be extremely high.

When you appeal it, the onus is then on you to prove the real number, not them. You'll be the one studying old on chain transactions and trying to recover data from exchanges that in many cases don't even exist anymore. Can't prove it? It'll go to the tax appeals commissioner and good luck sending him your block there.

Take it from someone that's been in crypto since 2012 and has been the subject of a full audit by Irish revenue.

I've since left Ireland.

Yeah yeah thats all fine and dandy. What Im saying is this: There is nothing to audit.

Del Griffith · 03-03-2021 9:23am

Hellotonever wrote: »

Yeah yeah thats all fine and dandy. What Im saying is this: There is nothing to audit.

You don't seem to get it. They don't need to actually audit ****. If they want, they'll just take that year that you send in a return for already, and say you owe them triple what you paid.

Then you'll be doing the auditing for them, to prove them wrong.

I'm not saying that will happen in your case but if they want to do it, that's how they do it. They don't attempt chainanalysis and all that stuff you said they wouldn't have the skills to do. They don't need to.

Hellotonever · 03-03-2021 9:26am

Del Griffith wrote: »

You don't seem to get it. They don't need to actually audit ****. If they want, they'll just take that year that you send in a return for already, and say you owe them triple what you paid.

Then you'll be doing the auditing for them, to prove them wrong.

I'm not saying that will happen in your case but if they want to do it, that's how they do it. They don't attempt chainanalysis and all that stuff you said they wouldn't have the skills to do. They don't need to.

Meh. There's nothing shady going on in my bank account. Everything is in tip top clean shape.

What did you think I cashed out to a central exchange and not even run it through a mixer or used the myriad of other fiat offramps that doesnt involve cashing to a bank account or something?

Nah its all clean.

Del Griffith · 03-03-2021 9:33am

Hellotonever wrote: »

Meh. There's nothing shady going on in my bank account. Everything is in tip top clean shape.

What did you think I cashed out to a central exchange and not even run it through a mixer or used the myriad of other fiat offramps that doesnt involve cashing to a bank account or something?

Nah its all clean.

Yea, fine. But the fact remains they don't have to and won't even attempt to track transactions that way (yet anyway). That onus will be on you.

Hellotonever · 03-03-2021 9:35am

Del Griffith wrote: »

Yea, fine. But the fact remains they don't have to and won't even attempt to track transactions that way (yet anyway). That onus will be on you.

Well theres nothing to track. If you've been paying attention to what I've been saying.

olestoepoke · 03-03-2021 9:38am

Interesting that crypto and blockchain technology were introduced to the syllabus of Chartered Accountants Ireland for the first time last year.

Del Griffith · 03-03-2021 9:40am

Hellotonever wrote: »

Well theres nothing to track. If you've been paying attention to what I've been saying.

I keep saying the same thing, you'll either prove your side of the story (your number) to a reasonable degree or you'll be paying their number. You will need an accountant, it will be expensive.

For reference, I was asked for trading history from the likes of Mt Gox, Intersango and bitcoin-24.com. All are long gone bust. Records quite literally do not exist. The owner of Intersango went off to fight in the Syrian revolution or some **** in 2015.

Nothing to track doesn't cut it. I don't know what else to tell you, I wish you were right but I've literally got first hand experience of it and you are not. It doesn't just end there.

Note all of this is only if you do get selected for an audit, which is unlikely.

Hellotonever · 03-03-2021 9:42am

Del Griffith wrote: »

I keep saying the same thing, you'll either prove your side of the story (your number) to a reasonable degree or you'll be paying their number. You will need an accountant, it will be expensive.

For reference, I was asked for trading history from the likes of Mt Gox, Intersango and bitcoin-24.com. All are long gone bust. Records quite literally do not exist.

Nothing to track doesn't cut it. I don't know what else to tell you, I wish you were right but I've literally got first hand experience of it and you are not. It doesn't just end there.

Note all of this is only if you do get selected for an audit, which is unlikely.

I am saying there is nothing to track because its all a fictional story.

Del Griffith · 03-03-2021 9:45am

Hellotonever wrote: »

I am saying there is nothing to track because its all a fictional story.

Oh right, good.

Hellotonever · 03-03-2021 9:51am

Del Griffith wrote: »

Oh right, good.

But I'll tell you one thing.

Revenue tend to go for the absolute easiest targets. The more you try to be nice and cooperative, the more they'll pull you through the wringer. Tax returns for your crypto? Too bad.

In Belgium where my father lives, you can anonymously contact a tax auditor to get a "pre-ruling"; i.e. a pronouncement that the actual tax auditor has to follow.
My father explained to him (anonymously) my fictional situation, and he tried to twist every single thing my father said.

Never play nice with or volunteer information to these people, they are not your friends and will not treat you more kindly because you're willing to do the right thing. Quite the opposite.

If you go down that route, thinking "I'm being nice here, surely they'll reward my good behavior", you are dead wrong.
You're just an easy target for them now, thanks to the bull's eye you painted on your own back.

They're not going to go trawling through literally every citizen's bank transactions to see where what money is coming from to find crypto earnings, they just let the fish swim into their mouths.

Peregrinus · 03-03-2021 10:03am

Hellotonever wrote: »

In Belgium where my father lives, you can anonymously contact a tax auditor to get a "pre-ruling"; i.e. a pronouncement that the actual tax auditor has to follow.
My father explained to him (anonymously) my situation, and he tried to twist every single thing my father said.

Never play nice with or volunteer information to these people, they are not your friends and will not treat you more kindly because you're willing to do the right thing. Quite the opposite.

Nah, mate; think about it. This is exactly how the Revenue should handle this.

You've contacted them because you're contemplating something that you know is a bit marginal, a bit doubtful in terms of its tax consequences. Fair enough; they don't have a problem with that.

But they know you want a ruling that will be favourable to you. And they know you will be tempted, consciously or unconsciously, to present the hypothetical to them in a way that maximises the chance that you will get the ruling you want.

And of course once they give the ruling they are bound by it - not just in the applicants situation, but in similar situations involving any taxpayer.

So it's very important that they scrutinise very carefully the case you are putting to them. They probe it; they test it; they look for omitted details that might be relevant to the ruling they will give; they look for matters that are characterised in one way when they might also be characterised in a slightly different way. Etc, etc.

That's absolutely proper. A tax rulings process needs to be robust; otherwise it's not fit for purpose.

You're quite right that these people are not your friends. But why should they be? You and they have different interests. Your objective is to get a ruling which results in you paying the minimum tax; theirs is to give a ruling which results in you paying the correct tax. That's inevitably going to give rise to tensions; it would be unrealistic not to expect this, and childish to feel aggrieved about it.

Hellotonever · 03-03-2021 10:08am

Peregrinus wrote: »

Nah, mate; think about it. This is exactly how the Revenue should handle this.

You've contacted them because you're contemplating something that you know is a bit marginal, a bit doubtful in terms of its tax consequences. Fair enough; they don't have a problem with that.

But they know you want a ruling that will be favourable to you. And they know you will be tempted, consciously or unconsciously, to present the hypothetical to them in a way that maximises the chance that you will get the ruling you want.

And of course once they give the ruling they are bound by it - not just in the applicants situation, but in similar situations involving any taxpayer.

So it's very important that they scrutinise very carefully the case you are putting to them. They probe it; they test it; they look for omitted details that might be relevant to the ruling they will give; they look for matters that are characterised in one way when they might also be characterised in a slightly different way. Etc, etc.

That's absolutely proper. A tax rulings process needs to be robust; otherwise it's not fit for purpose.

You're quite right that these people are not your friends. But why should they be? You and they have different interests. Your objective is to get a ruling which results in you paying the minimum tax; theirs is to give a ruling which results in you paying the correct tax. That's inevitably going to give rise to tensions; it would be unrealistic not to expect this, and childish to feel aggrieved about it.

Nah. If Ireland had more logical crypto tax laws I would've gladly stayed and paid millions in taxes. But too much is too much.

Im simply pointing out that Ireland is not a place to be a self made crypto millionaire. The Government is quite literally out to get you.

Peregrinus · 03-03-2021 10:22am

Hellotonever wrote: »

Nah. If Ireland had more logical crypto tax laws I would've gladly stayed and paid millions in taxes. But too much is too much.

Im simply pointing out that Ireland is not a place to be a self made crypto millionaire. The Government is quite literally out to get you.

Gains on crypto are treated exactly the same as gains on any other assets, apart from privileged assets like your principal private residence. You haven't articulated any reason at all why crypto gains should get specially favourable treatment, and the notion that the government is "quite literally out to get you" if you're makign gains in crypto is difficult to reconcile with the fact that crypto investors are treated exactly the same as everyone else.

Crypto tax situation - Read post 1 for thread banned users

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