Can we pool our knowledge regarding TAX and crypto and make some kind of FAQ/sticky?

GreeBo · 09-01-2018 1:57pm

sublime1 wrote: »

This thread is turning out to be what I feared - total speculation. And by people who write with a tone of authority.

The reality is that NOBODY KNOWS how Revenue will treat crypto. As I mentioned right back in the first post that kicked off the thread, there are lots of opinions, and you only have to look at other countries to see the variety of opinions out there. What people here have been proposing is reasonable and probable, but we shouldn't take it as a fait accompli. For example, I still think there is a strong argument to be made for like-for-like exchanges when using e.g. BTC to buy ADA (as you can't buy ADA with EUR yet, as far as I know).

Add to that the complexity of ICOs, gift coins and forks (not to mention mining and the madness of leveraged trading), and I just can't accept the way some people here speak with such authority. Just be honest: you don't actually know. This stuff is up for debate, and if enough people put their heads together, arguments can be put together for taking a different approach to tax. Not just "crypto is the same as shares" or "crypto is the same as property" (a claim I've seen elsewhere).

Why do you think basic crypto trading will be treated any differently than any other currency trading?
If you have something from revenue.ie that implies this then please share.
Otherwise I cant see any logic reason why you are refusing to follow the rules that have been explained countless times here already AND on the revenue.ie site.

jobless wrote: »

how can that make sense though if i bought the second coin directly to buy ripple/other alt coin...

Because thats how it works.
In any case, as above, it usually ends up pretty much in the same place.
You are going to have to dispose of that first coin eventually, right?-

Fakent.ie wrote: »

Ye really annoys me when i get them stale old replies, like we've all heard it before think of something else to tell me please...........

You are getting the same answers because you are asking the same question.

It feels like a lot of posters are waiting to be told "Good news, its all free, no tax to pay, hurray!"

Seriously, I'd absolutely *LOVE* to not have to pay CGT on my gains, but no one here seems to be able to give a single reason as to why that would be the case.

jobless · 09-01-2018 2:09pm

GreeBo wrote: »

Because thats how it works.
In any case, as above, it usually ends up pretty much in the same place.
You are going to have to dispose of that first coin eventually, right?-

FIFO doesnt make any sense in cryptos because BTC is usually the on ramp to buy other alts....

If i want to buy 100ks worth of alt coin i shouldnt be penalised on cgt for a coin i bought 2 years ago at 1k.... when i can show i deposited 100k worth of btc just before my alt coin trade....

can you tell me for sure thats how its going to be interpreted by revenue?...

also you aint been in cryto long if you think it usually all end ups in the same place

GreeBo · 09-01-2018 2:15pm

jobless wrote: »

FIFO doesnt make any sense in cryptos because BTC is usually the on ramp to buy other alts....

If i want to buy 100ks worth of alt coin i shouldnt be penalised on cgt for a coin i bought 2 years ago at 1k.... when i can show i deposited 100k worth of btc just before my alt coin trade....

Thats no different than having to buy USD before you can buy Pesos for example.

How are you being "penalized" exactly?

jobless wrote: »

can you tell me for sure thats how its going to be interpreted by revenue?...

I can tell you whats published on revenue.ie and what the last Minister for Finance who commented on the matter said.

jobless wrote: »

also you aint been in cryto long if you think it usually all end ups in the same place

You have on idea how long I have been in crytpo, but in any case, I have no idea what that point means. I suspect you dont understand my point.

The coin you believe you are being "punished" for selling will have to be disposed of at some stage, right? Would you prefer a LIFO situation where you dispose of that first coin in 5 years time but for whatever reason CGT on crypto is 50%?
I'm sure you'd complain about that too.

Make your declaration using LIFO all you want, but once you pick LIFO you are LIFO for life.

lifeandtimes · 09-01-2018 2:21pm

GreeBo wrote: »

Why do you think basic crypto trading will be treated any differently than any other currency trading?
If you have something from revenue.ie that implies this then please share.
Otherwise I cant see any logic reason why you are refusing to follow the rules that have been explained countless times here already AND on the revenue.ie site.

well to be fair, the stock exchange has been around for 100s of years and the legislation drafted by the government back then and implamented by revenue would certianly predate anything that is happening right with the cryptocurrency world. Its certianly an argument for revenue to clearly define how and what they wish for tax to be paid on and what is required of the traders.

New legislation or at least amendments may be on the cards possibly based off previous stock trading revenue information

There are many ways to skin a cat but not all cats are the same

Also sorry OP, i know you wanted this to be an actual matter of fact sticky but the truth is not one person here can with certanty clarify this matter

jobless · 09-01-2018 2:22pm

GreeBo wrote: »

How are you being "penalized" exactly?

Im being penalised because i'm liable for cgt 'at the time' i make the trade... This means i need to include it at the end of that years taxes... If its LIFO i only worry about that if i sell the alts (that could be in two years time)

GreeBo wrote: »

I can tell you whats published on revenue.ie and what the last Minister for Finance who commented on the matter said.

Has he been quoted FIFO ?... if so can you link me to where he says it as id like it verified (better if Revenue could actually state this)

GreeBo wrote: »

You have on idea how long I have been in crytpo, but in any case, I have no idea what that point means. I suspect you dont understand my point.

The coin you believe you are being "punished" for selling will have to be disposed of at some stage, right? Would you prefer a LIFO situation where you dispose of that first coin in 5 years time but for whatever reason CGT on crypto is 50%?
I'm sure you'd complain about that too.

Make your declaration using LIFO all you want, but once you pick LIFO you are LIFO for life.

Yes it will be disposed of eventually and what ever the rate is, it is..... but it will be my choice to dispose of it when i want.... not have it automatically disposed of by another trade

Peregrinus · 09-01-2018 2:24pm

ZeroThreat wrote: »

Edit : I guess cryptocurrencies have really opened a can of worms in relation to taxation. The problem is that the barriers to (potential) high yield investments have been lowered, so the common man is now getting in on the game, and unlike the educated upper class middle professionals of the past who had a stockbroking account, solicitor and personal accountant these upstarts are clueless about their duties to the state and ignorant of the basic laws of the land.

The distribution of money in society may be shifting which is destabilising and unwelcome to the people who run the country.

So far, the only people who seem to find anything "destablising" or "unwelcome" are those investors in crypto who are horrified to find that the same rules apply to the taxation of gains arising on the disposal of cryptocurrencies as apply to gains arising on the disposal of other assets, and that record-keeping and compliance can be a pain.

I have news for you, people. Tax compliance is always a pain. Deal with it.

GreeBo · 09-01-2018 2:28pm

jobless wrote: »

Im being penalised because i'm liable for cgt 'at the time' i make the trade... This means i need to include it at the end of that years taxes... If its LIFO i only worry about that if i sell the alts (that could be in two years time)

I still dont see how its you being "punished" tbh.
Even with LIFO, you are going to dispose of that first BTC at some stage, whether to buy ALT or back to FIAT.

jobless wrote: »

Has he been quoted FIFO ?... if so can you link me to where he says it as id like it verified (better if Revenue could actually state this)

https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspx

FIFO for shares, nothing specific for crypto.

jobless wrote: »

Yes it will be disposed of eventually and what ever the rate is, it is..... but it will be my choice to dispose of it when i want.... not have it automatically disposed of by another trade

So earlier simply keeping track of trades was a problem, now you want to uniquely identify coins or portions of coins? Best of luck tracking that tbh!

Either way, declare via LIFO or FIFO, the fact that you have to declare doesnt go away.

GreeBo · 09-01-2018 2:29pm

Peregrinus wrote: »

So far, the only people who seem to find anything "destablising" or "unwelcome" are those investors in crypto who are horrified to find that the same rules apply to the taxation of gains arising on the disposal of cryptocurrencies as apply to gains arising on the disposal of other assets, and that record-keeping and compliance can be a pain.

I have news for you, people. Tax compliance is always a pain. Deal with it.

+1
Why do posters here think people pay millions to accountants every year?

Peregrinus · 09-01-2018 2:33pm

sublime1 wrote: »

This thread is turning out to be what I feared - total speculation. And by people who write with a tone of authority.

The reality is that NOBODY KNOWS how Revenue will treat crypto. As I mentioned right back in the first post that kicked off the thread, there are lots of opinions, and you only have to look at other countries to see the variety of opinions out there. What people here have been proposing is reasonable and probable, but we shouldn't take it as a fait accompli. For example, I still think there is a strong argument to be made for like-for-like exchanges when using e.g. BTC to buy ADA (as you can't buy ADA with EUR yet, as far as I know).

Unless you can point to some provision in the Capital Gains Tax Act to support the view that exchanges of these two assets are treated differently from exchanges of other assets, I don't think you have a strong argument. I don't think you have any argument at all, to be honest.

The advice that's being given "with a tone of authority" in this thread is basically this; gains arising on the disposal of cryptocurrency holdings will be taxed in exactly the same way as gains arising on the disposal of other assets, because there is nothing in the CGT Act to say otherwise.

That advice could be wrong, but anyone actually having a gain arising on disposal and wishing to address the tax consequences of that would be wise to treat the advice as correct. Revenue will not penalise you for doing so. If you really, really want the advice to be wrong (e.g. if that would produce a significantly better tax outcome for you) well, fine; calculate and pay your tax on the basis that you think is correct, assemble your arguments, advise the Revenue of the basis on which you have calculated, paid and reported your tax, and prepare for a hearing before the Appeal Commissioners.

jobless · 09-01-2018 2:37pm

GreeBo wrote: »

I still dont see how its you being "punished" tbh.
Even with LIFO, you are going to dispose of that first BTC at some stage, whether to buy ALT or back to FIAT.

Never said i was being punished.... i guess i meant penalised time wise as FIFO means that i need to file a tax return this year instead of when the actual trade is cashed in....

also consider the 100k purchase is now 60k..... a loss of 40k on my trade... FIFO would still see this as a 59 profit if my first coin was 1k.... how is that fair?

GreeBo wrote: »

https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspx

FIFO for shares, nothing specific for crypto.

will take a read

GreeBo wrote: »

So earlier simply keeping track of trades was a problem, now you want to uniquely identify coins or portions of coins? Best of luck tracking that tbh!

Either way, declare via LIFO or FIFO, the fact that you have to declare doesnt go away.

i never said keeping track of trades was a problem for me.
btw...im glad there is good debate on this...

GreeBo · 09-01-2018 2:54pm

jobless wrote: »

Never said i was being punished.... i guess i meant penalised time wise as FIFO means that i need to file a tax return this year instead of when the actual trade is cashed in....

You would need to file this year anyway.
You went EUR - BTC - ALT

Hence you disposed of BTC, hence you need to file CGT.

jobless wrote: »

also consider the 100k purchase is now 60k..... a loss of 40k on my trade... FIFO would still see this as a 59 profit if my first coin was 1k.... how is that fair?

You realised a gain when you dispose of BTC #1 to buy 100k worth of ALTS.

If they are now worth 60K and you dispose of them you have realized a capital loss of 40K which you can use to write off against any capital gains.

If your 100K portfolio is worth 60K, it doesnt matter what currency or which individual coins you used to make the purchase, its a loss.

What if your first BTC was bought at 10K and now BTC is 1K per coin and you want to buy some ALTS?
If you use the first coin then you can offset any gains from the alts against your 9K BTC loss....using your method you cant.

jobless · 09-01-2018 3:01pm

GreeBo wrote: »

You would need to file this year anyway.
You went EUR - BTC - ALT

Hence you disposed of BTC, hence you need to file CGT.

You realised a gain when you dispose of BTC #1 to buy 100k worth of ALTS.

If they are now worth 60K and you dispose of them you have realized a capital loss of 40K which you can use to write off against any capital gains.

If your 100K portfolio is worth 60K, it doesnt matter what currency or which individual coins you used to make the purchase, its a loss.

What if your first BTC was bought at 10K and now BTC is 1K per coin and you want to buy some ALTS?
If you use the first coin then you can offset any gains from the alts against your 9K BTC loss....using your method you cant.

good point.... i guess until there's a firm detail on cryptos from Revenue people are going to be using all sorts of calculations to come up with what the owe....

Fakent.ie · 09-01-2018 3:09pm

What if you don't ever look at the fiat value then you really don't have any idea how much your crypto is worth so how can they tax you

Peregrinus · 09-01-2018 3:11pm

I may be misunderstanding you, jobless, or you may be misunderstanding how this works.

Suppose, in Year 1, you buy a holding of Crypto A for 5 k.

By year 2 the price has doubled, so your holding is now worth 10K. Your reckon you're on to a good thing, so you buy the same amount again, so you now have 20K worth.

In year 3, the price has doubled again, so you are holding 40k worth of Crypto A.

UP to this point, you have never disposed of anything, so you have never incurred a liablity to CGT.

You now wish to buy 25k of Crypto B. How are you going to finance this purchase?

If you finance it with 25k cash that you happen to have, there is still no disposal, and therefore no CGT.

However, if you sell 25k worth of Crypto A, that's a disposal, and there'll be a CGT liability.

The FIFO rule comes in at this point, since we need to identify the acquisition cost of the Crypto A you dispose of.

Basically, the FIFO rule applies whenever you dispose part of a holding of "fungible" assets. Fungibles assets are assets where nobody cares about the identity of the individual asset. If I lend you ten euros till Saturday, I don't expect the same euro banknote back; I'll be quite happy with a different 10-euro note. Similarly if I lend you a cup of sugar. Foreign currency holdings, tradable securities, grain, potatoes, gold - they're all fungbles. Cryptocurrencies are also fungibles. (They wouldn't be of much use or credibility as currencies if they weren't).

And the FIFO rule says, basically, if you dispose of some but not all of a holding of fungible assets that you acquired at different times, you are deemed to dispose first of all of the ones you acquired first. So in this case, of the 25k worth of Crypto A that you dispose of, 20k will be taken to represent the Crypto A that you acquired in Year 1, and the remaining 5k will come from the Crypto you acquired in Year 2, and your CGT will be calculated on that basis.

This gives you a higher gain (and therefore a higher tax bill) than a LIFO rule would, but this is only so because the price went up between Year 1 and Year 2. If the price had gone down between Year 1 and Year 2, the FIFO rule would work to your advantage. For obvious reasons, it would not be good tax policy to let you choose whichever treatment is most advantageous to you in relation to any disposal, so the system insists on a uniform rule being applied, regardless of whether it works well or badly for you in any particular instance. That rule happens to be FIFO. And note that you would have to file a return in any year in which you made a disposal, regardless of whether FIFO or LIFO applied.

Peregrinus · 09-01-2018 3:14pm

Fakent.ie wrote: »

What if you don't ever look at the fiat value then you really don't have any idea how much your crypto is worth so how can they tax you

"Well, if you never look at your payslip you really don't have any idea how much you earn, so how can they tax you?"

Fakent.ie · 09-01-2018 3:15pm

Peregrinus wrote: »

"Well, if you never look at your payslip you really don't have any idea how much you earn, so how can they tax you?"

Your playslip is in fiat not crypto...

Peregrinus · 09-01-2018 3:23pm

Yes, but whether you look at the value of crypto or not doesn't change the fact that they have a value, and your CGT liablity is based on that value. Your liablity to CGT is unaffected by your decision not to look at the value of your crypto.

Fakent.ie · 09-01-2018 3:27pm

Peregrinus wrote: »

Yes, but whether you look at the value of crypto or not doesn't change the fact that they have a value, and your CGT liablity is based on that value. Your liablity to CGT is unaffected by your decision not to look at the value of your crypto.

Whats there wallet ill send them it in doge...
It doesn't make sense that you pay the taxes on that at the end of the year what if January 1st it drops to 0 and you've never actually witnessed a gain in euros..

jobless · 09-01-2018 3:36pm

Peregrinus wrote: »

I may be misunderstanding you, jobless, or you may be misunderstanding how this works.

Suppose, in Year 1, you buy a holding of Crypto A for 5 k.

By year 2 the price has doubled, so your holding is now worth 10K. Your reckon you're on to a good thing, so you buy the same amount again, so you now have 20K worth.

In year 3, the price has doubled again, so you are holding 40k worth of Crypto A.

UP to this point, you have never disposed of anything, so you have never incurred a liablity to CGT.

You now wish to buy 25k of Crypto B. How are you going to finance this purchase?

If you finance it with 25k cash that you happen to have, there is still no disposal, and therefore no CGT.

However, if you sell 25k worth of Crypto A, that's a disposal, and there'll be a CGT liability.

The FIFO rule comes in at this point, since we need to identify the acquisition cost of the Crypto A you dispose of.

Basically, the FIFO rule applies whenever you dispose part of a holding of "fungible" assets. Fungibles assets are assets where nobody cares about the identity of the individual asset. If I lend you ten euros till Saturday, I don't expect the same euro banknote back; I'll be quite happy with a different 10-euro note. Similarly if I lend you a cup of sugar. Foreign currency holdings, tradable securities, grain, potatoes, gold - they're all fungbles. Cryptocurrencies are also fungibles. (They wouldn't be of much use or credibility as currencies if they weren't).

And the FIFO rule says, basically, if you dispose of some but not all of a holding of fungible assets that you acquired at different times, you are deemed to dispose first of all of the ones you acquired first. So in this case, of the 25k worth of Crypto A that you dispose of, 20k will be taken to represent the Crypto A that you acquired in Year 1, and the remaining 5k will come from the Crypto you acquired in Year 2, and your CGT will be calculated on that basis.

This gives you a higher gain (and therefore a higher tax bill) than a LIFO rule would, but this is only so because the price went up between Year 1 and Year 2. If the price had gone down between Year 1 and Year 2, the FIFO rule would work to your advantage. For obvious reasons, it would not be good tax policy to let you choose whichever treatment is most advantageous to you in relation to any disposal, so the system insists on a uniform rule being applied, regardless of whether it works well or badly for you in any particular instance. That rule happens to be FIFO. And note that you would have to file a return in any year in which you made a disposal, regardless of whether FIFO or LIFO applied.

thanks for the explanation.....

I guess my issue is with the part where you say

You now wish to buy 25k of Crypto B. How are you going to finance this purchase?

with cryptos at the moment, the only one ramp to do the trade is through Bitcoin, Litecoin or Ethereum really.... i dont have the option to buy the Crypto B with cash....

so if i wish to but Crypto B and already have some btc its forcing the cgt event on you....
the only other option is to buy ETH, or Litecoin if you dont have any and buy them through that but similarly if you have any of this bought from a long time ago the cgt event arises

GreeBo · 09-01-2018 3:38pm

Fakent.ie wrote: »

Whats there wallet ill send them it in doge...
It doesn't make sense that you pay the taxes on that at the end of the year what if January 1st it drops to 0 and you've never actually witnessed a gain in euros..

You only pay taxes at the end of the year for coins you have disposed of.

What if you buy shares and the company tanks a year later?
What it you convert it to USD and the USD EUR rate tanks?
What if you move it all to your bank and withdraw it but get mugged outside the bank without ever getting a chance to spend it?

Welcome to the big bad world!;)

09-01-2018 3:38pm

Dades wrote: »

That's been the disconnect on this thread, alright (I probably haven't helped...)

The numbers Cybil Servant is hoping to see on your form 12, and all the data you should hang on to just in case are a little different.

Is it form 12 or a CG1 Return? As I see both being mentioned.

ZeroThreat · 09-01-2018 3:39pm

Peregrinus wrote: »

So far, the only people who seem to find anything "destablising" or "unwelcome" are those investors in crypto who are horrified to find that the same rules apply to the taxation of gains arising on the disposal of cryptocurrencies as apply to gains arising on the disposal of other assets, and that record-keeping and compliance can be a pain.

I have news for you, people. Tax compliance is always a pain. Deal with it.

'you people'?

you sound like a complete self-righteous knobhead, a socialist pinko (profit is evil) Joe Higgins type standing over his keyboard trembling with rage pointing your accusing finger at the screen in his faux outrage at the evil capitalists

In all your anger you obviously couldn't see I posted the above in a tongue and cheek manner, from the p.o.v. of the few 'libertarian' types on this thread who didn't want to pay any tax and were yapping on about moving abroad to cash in their vast (alleged) fortunes.

The vast majority on this thread weren't arguing against the 33% CGT rate, merely debating or questioning the manner in which it is calculated.

Think about it, some short statement on cyrptocurrency by ex-minister Noonan, a man who has probably never even used internet banking in his life is supposed to be sufficient to cover an area which has exploded in very recent times. (I guess at least he had a bank account unlike previous finance ministers)

I doubt he had the vaguest idea of what bitcoins even were.

The best thing the finance department can do now is appoint a few specialists in the revenue who actually can review the current rules as they pertain to cryptos and update the information on their website. If it was as clear as 'you people' (trembling finger pointing hand at screen) make out it is, I doubt there'd be as many posts on this thread right now.

GreeBo · 09-01-2018 3:40pm

jobless wrote: »

thanks for the explanation.....

I guess my issue is with the part where you say

You now wish to buy 25k of Crypto B. How are you going to finance this purchase?

with cryptos at the moment, the only one ramp to do the trade is through Bitcoin, Litecoin or Ethereum really.... i dont have the option to buy the Crypto B with cash....

so if i wish to but Crypto B and already have some btc its forcing the cgt event on you....
the only other option is to buy ETH, or Litecoin if you dont have any and buy them through that but similarly if you have any of this bought from a long time ago the cgt event arises

It arises no matter what you do.

EUR to BTC/LTC/ETH
then
BTC/LTC/ETH to your ALT

What if the value of your BTC/LTC/ETH rose by 200% between you buying it and buying your ALT?

Unless you are buying in EUR you are disposing an assert and hence CGT is liable.

GreeBo · 09-01-2018 3:41pm

ZeroThreat wrote: »

'you people'?

No
he clearly said
"you, people"

completely different.

GreeBo · 09-01-2018 3:43pm

ZeroThreat wrote: »

The best thing the finance department can do now is appoint a few specialists in the revenue who actually can review the current rules as they pertain to cryptos and update the information on their website. If it was as clear as 'you people' (trembling finger pointing hand at screen) make out it is, I doubt there'd be as many posts on this thread right now.

Update them to say what exactly?
"Yep, its the same as it always was"

The posts on this thread are mainly people trying to figure out a way of avoiding tax. Calculation isnt the issue, its declaring at all tbh.

Peregrinus · 09-01-2018 3:44pm

jobless wrote: »

thanks for the explanation.....

I guess my issue is with the part where you say

You now wish to buy 25k of Crypto B. How are you going to finance this purchase?

with cryptos at the moment, the only one ramp to do the trade is through Bitcoin, Litecoin or Ethereum really.... i dont have the option to buy the Crypto B with cash....

so if i wish to but Crypto B and already have some btc its forcing the cgt event on you....
the only other option is to buy ETH, or Litecoin if you dont have any and buy them through that but similarly if you have any of this bought from a long time ago the cgt event arises

Well, if you have the cash, could you buy some Crypto C and then immediately use it to buy the Crypto B?

If Crypto B can only be bought with Crypto A then, yes, if you are deterrmined to invest in Crypto A the only way you can do that is by disposing of some Crypto A, which will crystallise a gain (or a loss, of course, if the price has fallen). That's unfortunate, and it might affect your decision to invest in Crypto B in the first place. But it's not really the tax system penalising you; if there's a "penalty", it's a product of the bizarre restriction attached to investing in Crypto B.

jobless · 09-01-2018 3:49pm

GreeBo wrote: »

It arises no matter what you do.

EUR to BTC/LTC/ETH
then
BTC/LTC/ETH to your ALT

What if the value of your BTC/LTC/ETH rose by 200% between you buying it and buying your ALT?

Unless you are buying in EUR you are disposing an assert and hence CGT is liable.

whats ifs arent the argument here

my point is exactly that you cant buy these alts with EUR.... at least not yet...
so in this instance its not like shares.... I can buy most types of shares with cash...

ZeroThreat · 09-01-2018 3:50pm

GreeBo wrote: »

Update them to say what exactly?
"Yep, its the same as it always was"

The posts on this thread are mainly people trying to figure out a way of avoiding tax. Calculation isnt the issue, its declaring at all tbh.

I don't agree, before x-mas there were more of the 'taxation is theft' types on here tbh, seems to be more questions lately from people with a lot of trades and swaps and how to track them, or FIFO/LIFO etc.

Maybe you're just assuming the worst of people here? (as officialdom in this country tends to do)

I have no problem paying a third of my gains at the end of the day. (obviously I wish we were still with the pre-crash 20% rate but that can't be helped)

Peregrinus · 09-01-2018 3:51pm

There are lots of securities that you can only buy with, e.g, USD, because they are quoted on a US exchange. I don't see how this is any different.

jobless · 09-01-2018 3:51pm

Peregrinus wrote: »

Well, if you have the cash, could you buy some Crypto C and then immediately use it to buy the Crypto B?

If Crypto B can only be bought with Crypto A then, yes, if you are deterrmined to invest in Crypto A the only way you can do that is by disposing of some Crypto A, which will crystallise a gain (or a loss, of course, if the price has fallen). That's unfortunate, and it might affect your decision to invest in Crypto B in the first place. But it's not really the tax system penalising you; if there's a "penalty", it's a product of the bizarre restriction attached to investing in Crypto B.

the bizarre restriction is unfortunately the way things work in crypto world until it matures...... thats why we need proper rules for the space from Revenue

GreeBo · 09-01-2018 3:52pm

jobless wrote: »

my point is exactly that you cant buy these alts with EUR.... at least not yet...
so in this instance its not like shares.... I can buy most types of shares with cash...

But what exactly has that got to do with revenue?

How do you suggest they distinguish between you buying and disposing of BTC purely to buy ALT1 versus you buying BTC, hodling to make a profit and then using that profit to buy ALT1?

There is no difference other than in your head I'm afraid!

Some exchanges only trade via BTC, some trade via BTC, ETH & LTC, are you suggesting that revenue.ie treats people differently based on what exchange they purchased their coins on?

jobless · 09-01-2018 3:56pm

GreeBo wrote: »

But what exactly has that got to do with revenue?

How do you suggest they distinguish between you buying and disposing of BTC purely to buy ALT1 versus you buying BTC, hodling to make a profit and then using that profit to buy ALT1?

There is no difference other than in your head I'm afraid!

Some exchanges only trade via BTC, some trade via BTC, ETH & LTC, are you suggesting that revenue.ie treats people differently based on what exchange they purchased their coins on?

if i have a transaction for 100 btc one day before to buy 10000k alt the next surely they would have the cop on to know thats what i intended

anyway its all guess work until there are proper rules given

GreeBo · 09-01-2018 4:07pm

jobless wrote: »

if i have a transaction for 100 btc one day before to buy 10000k alt the next surely they would have the cop on to know thats what i intended

How do you figure they would know?
If the price of your ALT rose or dropped by 200% within those 24 hours would you do the same thing? Should they think the same thing? Should they penalise you for hanging onto the BTC in the event the ALT market crashed before you could invest?

All the subjectivity is exactly why the process is not subjective.

What if you could only buy any crypto coins via EUR.
Anytime you wanted to buy a coin you had to dispose of another coin into EUR, would you be ok paying it then?
If so, why? EUR is just another currency.

jobless wrote: »

anyway its all guess work until there are proper rules given

There are proper rules given, you just dont like them!

jobless · 09-01-2018 4:21pm

GreeBo wrote: »

How do you figure they would know?
If the price of your ALT rose or dropped by 200% within those 24 hours would you do the same thing? Should they think the same thing? Should they penalise you for hanging onto the BTC in the event the ALT market crashed before you could invest?

All the subjectivity is where the process is not subjective.

What if you could only buy any crypto coins via EUR.
Anytime you wanted to buy a coin you had to dispose of another coin into EUR, would you be ok paying it then?
If so, why? EUR is just another currency.

There are proper rules given, you just dont like them!

So your are telling me there is progress since this? ....
the word 'likely' isnt really hard and fast

"Originally Posted by Minister Noonan 2014
Crypto-currencies, such as Bitcoin, are not legal tender in the Euro area. E-commerce, including the use of virtual currencies, presents a challenge to tax administrations throughout the world. The Revenue Commissioners and tax administrations in other countries are actively monitoring developments. From the information provided, it is not clear how Bitcoin would be treated for CGT purposes.

However, it is likely that gains accruing from speculation on Bitcoin would be liable for CGT in the normal way."

GreeBo · 09-01-2018 4:27pm

jobless wrote: »

So your are telling me there is progress since this? ....
the word 'likely' isnt really hard and fast

"Originally Posted by Minister Noonan 2014
Crypto-currencies, such as Bitcoin, are not legal tender in the Euro area. E-commerce, including the use of virtual currencies, presents a challenge to tax administrations throughout the world. The Revenue Commissioners and tax administrations in other countries are actively monitoring developments. From the information provided, it is not clear how Bitcoin would be treated for CGT purposes.

However, it is likely that gains accruing from speculation on Bitcoin would be liable for CGT in the normal way."

Let me rephrase your question.
Have you seen anything that would lead you to believe that gains for Bitcoin would *not* be liable in the normal way?

sublime1 · 09-01-2018 4:31pm

GreeBo wrote: »

You are getting the same answers because you are asking the same question.

It feels like a lot of posters are waiting to be told "Good news, its all free, no tax to pay, hurray!"

Seriously, I'd absolutely *LOVE* to not have to pay CGT on my gains, but no one here seems to be able to give a single reason as to why that would be the case.

I suggest that if you're tired of repeating that you consider abstaining from the discussion, because although I realise that you are trying to be helpful, repeating yourself is only shedding more heat rather than light on the subject.

You seem to inhabit a black-and-white world, where we are faced with 2 stark choices:

Either, treat crypto exactly the same in every way as fiat currencies (even though that is impossible due to things I already mentioned such as mining, forks, gift coins, ICOs, but you've conveniently ignored those)... OR
"Good news, its all free, no tax to pay, hurray!"

Can you, even for a second, recognise that there may be shades of grey here, and that crypto is actually something new and different from fiat currencies, and that maybe new rules are needed, and that maybe a case could be made to the Revenue Commissioners for a new model of taxation for these complex financial instruments?
If you can't, I suggest that you close your browser, because with all the goodwill in the world, you're really not helping.

GreeBo · 09-01-2018 4:36pm

sublime1 wrote: »

I suggest that if you're tired of repeating that you consider abstaining from the discussion, because although I realise that you are trying to be helpful, repeating yourself is only shedding more heat rather than light on the subject.

You seem to inhabit a black-and-white world, where we are faced with 2 stark choices:
Either, treat crypto exactly the same in every way as fiat currencies (even though that is impossible due to things I already mentioned such as mining, forks, gift coins, ICOs, but you've conveniently ignored those)... OR

"Good news, its all free, no tax to pay, hurray!"

Can you, even for a second, recognise that there may be shades of grey here, and that crypto is actually something new and different from fiat currencies, and that maybe new rules are needed, and that maybe a case could be made to the Revenue Commissioners for a new model of taxation for these complex financial instruments?
If you can't, I suggest that you close your browser, because with all the goodwill in the world, you're really not helping.

Why would you not treat all of those things as "gifts" for tax purposes?

The have a value when they are given to you, if you dispose of them for more than that initial value you made a gain, otherwise you made a loss?
How would you suggest they are treated? Have you spoken to an accountant and if so, have they suggested contrary advice?

I still havent heard an argument that says why a new model would be needed when its covered under the existing model?

By all means try to get a more favourable model agreed by revenue, but until then your CGT obligation is just that, your obligation.

A new(er) comment on the issue.
http://www.thejournal.ie/readme/cryptocurrencies-lack-of-regulation-means-investors-can-make-a-lot-of-money-fast-3470179-Jul2017/

jimmycrackcorm · 09-01-2018 4:40pm

What devices a crypto as something that is a taxable asset for disposable tax gains?

If a new crypto pops up tomorrow and you exchange, say btc, for it. How is the brain or loss determined on that?

GreeBo · 09-01-2018 4:42pm

jimmycrackcorm wrote: »

What devices a crypto as something that is a taxable asset for disposable tax gains?

If a new crypto pops up tomorrow and you exchange, say btc, for it. How is the brain or loss determined on that?

You decide as you are assessing yourself.

When you sell/exchange/gift the BTC you are either realising a gain or a loss based on the difference between the initial and current value.

09-01-2018 5:43pm

I have a lot of writing and recording to do

Whatever about certain specifics which remain vague to crypto profits and tax, there is some information coming through in this useful thread which is factual: As someone who is self-employed/declaring, we the individual are fully responsible for the recording and reporting of our activities to Revenue.

As a self-employed worker, I've known this for years. However, as someone new to cryptos and trading, and who started quite bullish, I didn't know the extent to which that recording was necessary.

Simply, I assumed without much research that I could just pay the CGT on what I cash-out on, and that's it. However, I really don't think it will be that simple of a process. Certainly not in the case of an audit.

Hey Mr Revenue, John Lambo here.

I put €1000 into cryptocurrency at the start of the year. By the end of the year that €1000 was worth €4000 to me through various trades. I cashed out that €3,000 profit. Deducting the €1270 annual CGT allowance from that, here is a cheque for 33% of €1730.

You're welcome, bye now.

Yeah, maybe that will suffice for the short-term, but not if John Lambo gets audited anytime in the next decade or so.

Thankfully, in a court of law, the accused is assumed innocent until proven guilty. If Revenue come looking for you though, it is more a case of the opposite: Guilty until proven innocent.

Sure, you can point to the fact that you reported to Revenue each year with your overall profit. However, they can easily decide in an audit that this is not good enough, and require you to provide the finer details of your trading. "Ah sure there's loads of them, I don't know where to start looking for all my trade history over the last year, it would take me ages" would unfortunately not be a sufficient excuse.

So, with all that in mind and having just realised its importance after reading through this thread, I scrolled through my trade history on Binance.

*Gulp*

I'm barely on Planet Cryptos 4 weeks, but jeez. I traded like an absolute dickhead in those first 7-10 days. Granted, a few weeks later I'm not Obi Wan Cryptobi yet, but I was absolutely clueless and a pure bull in those earlier days. Thankfully I'm reading this thread before I do another 150+ trades which will require retro-documenting.

Copying all of my trades from Binance into a more readable history won't be too much of a problem, it'll just take some time. However, the thoughts of having to find the dollar value specific to that moment in time of each trade, it's near enough to bring on a mild panic attack here.

TL:DR - Record your trades. Be it by typing them into a notepad document, or penning them by ink and quill on aged parchment under the pale moonlight. Whatever your method of 'writing' in this day and age, record your trades. If Revenue have you by the balls, you have to go into extreme detail of why they should let go. Better be safe now, than sorry and inundated with work later.

Great thread, keep it rolling.

Matt Simis · 09-01-2018 5:49pm

Whats the actual penalty for not doing your CGT correctly (which I would want Revenue to make a clear statement on, not us picking random articles in papers)? Obviously the 33% tax is a given if this is what they decide.. but a fine too? How much?

GreeBo · 09-01-2018 6:03pm

Matt Simis wrote: »

Whats the actual penalty for not doing your CGT correctly (which I would want Revenue to make a clear statement on, not us picking random articles in papers)? Obviously the 33% tax is a given if this is what they decide.. but a fine too? How much?

revenue.ie clearly covers CGT liabilties.

Revenue fines are *very* hefty, you could easily be looking at 100% or more of the tax due in fines.

machiavellianme · 09-01-2018 6:08pm

GreeBo wrote: »

You would need to file this year anyway.
You went EUR - BTC - ALT

Hence you disposed of BTC, hence you need to file CGT.

You realised a gain when you dispose of BTC #1 to buy 100k worth of ALTS.

If they are now worth 60K and you dispose of them you have realized a capital loss of 40K which you can use to write off against any capital gains.

If your 100K portfolio is worth 60K, it doesnt matter what currency or which individual coins you used to make the purchase, its a loss.

What if your first BTC was bought at 10K and now BTC is 1K per coin and you want to buy some ALTS?
If you use the first coin then you can offset any gains from the alts against your 9K BTC loss....using your method you cant.

What if you bought BTC #1 on Mt Gox and it's now safely in your paper wallet and bought the new BTC on Gdax to transfer to bittrex and convert to NEO.

GreeBo · 09-01-2018 6:27pm

machiavellianme wrote: »

What if you bought BTC #1 on Mt Gox and it's now safely in your paper wallet and bought the new BTC on Gdax to transfer to bittrex and convert to NEO.

No difference from revenues point of view, gain is based on whatever percentage of the MtGox BTC you disposed of to purchase the NEO.

sublime1 · 09-01-2018 8:02pm

(This is a reply to Greebo;105783938 - I can't seem to get the quoting to work correctly - apologies)

How do you even know that Revenue will consider CGT as the appropriate type of taxation for crypto? If you recall my initial post at the start of this thread, I mentioned that I have spoken to an accountant, and that it was he who suggested that gains from crypto trading may even be considered as income tax. Which is obviously even more onerous for many people than CGT. You sound very authoritative and confident in your replies to everyone here, but do you know any more than my accountant? He at least admits that he doesn't actually know, and he's still looking into it. Unfortunately there's a lot to learn and it's easy to make a rushed judgement ("oh, it's just another type of currency", or "oh, it's trading so you have to pay income tax").

One of the reasons I'm reluctant to go along with the "crypto should be taxed the same as regular currency or stocks" is the examples from other countries. We've already heard from our friends in Germany, Austria and Panama in this very thread. Ireland is so-called high-tech flyer, so wouldn't we expect some more enlightened thinking from our pro-business minister? Indeed, I did see an article quoting one of the Irish blockchain tech companies asking for favourable taxation for bitcoiners, so who knows what may come of that. The point again (and I repeat myself) is that we don't know.
It's very clear to me that the vast majority of people believe (as I did) that only selling for fiat is a taxable event. As everyone knows, crypto traders are not a particularly sophisticated bunch, so Revenue's silence is most unhelpful.
For example, the vast majority of debate is obviously from the US. While you can say it's not relevant to Irish tax payers, the fact that, at one stage in the US, crypto to crypto trades were considered "like-kind exchanges" and therefore not taxable, has lead to an lot of confusion for people. I believe that that is now a minority opinion in the US, but it's still an opinion and not a hard fact.
Regarding some of the issues I listed (mining, forks, ICOs etc) I have seen arguments for and against different approaches for all of them. Most people would consider a fork to be a gift (i.e. with a zero cost basis), but I've seen the argument made (by a CPA nonetheless) that the fork coin should have a basis cost equal to its initial sale price on exchanges. So again, it's not clear and these things need to be hashed out.

Regarding the hazards of trying to tax serious trading, this comment on Reddit does it better than I can. Again you'll notice the lack of sophistication in the replies to the first post. Most people are willing to pay their taxation dues, but Revenue and the tax authorities in other countries should really have stepped and clarified the issues by now. For unsophisticated traders and hodlers, given the ease of which trades can be made, and give the frantic bubble we have been in, with easy money to be made (supposedly), a sort of guiding hand from the powers that would have been very welcome.

One thing I would like to see is sort of comment from the more visible national blockchain presences e.g. https://twitter.com/irl_blockchain https://twitter.com/ReubenGodfrey or https://twitter.com/BTCBehaviour
I don't personally use Twitter - could somebody here reach out to these guys for a comment?

sublime1 · 09-01-2018 8:05pm

Sorry everyone for the repetition in my last comment - the forum software is mangling my replies when I try to quote someone.

Fakent.ie · 09-01-2018 8:17pm

sublime1 wrote: »

(This is a reply to Greebo;105783938 - I can't seem to get the quoting to work correctly - apologies)

How do you even know that Revenue will consider CGT as the appropriate type of taxation for crypto? If you recall my initial post at the start of this thread, I mentioned that I have spoken to an accountant, and that it was he who suggested that gains from crypto trading may even be considered as income tax. Which is obviously even more onerous for many people than CGT. You sound very authoritative and confident in your replies to everyone here, but do you know any more than my accountant? He at least admits that he doesn't actually know, and he's still looking into it. Unfortunately there's a lot to learn and it's easy to make a rushed judgement ("oh, it's just another type of currency", or "oh, it's trading so you have to pay income tax").

One of the reasons I'm reluctant to go along with the "crypto should be taxed the same as regular currency or stocks" is the examples from other countries. We've already heard from our friends in Germany, Austria and Panama in this very thread. Ireland is so-called high-tech flyer, so wouldn't we expect some more enlightened thinking from our pro-business minister? Indeed, I did see an article quoting one of the Irish blockchain tech companies asking for favourable taxation for bitcoiners, so who knows what may come of that. The point again (and I repeat myself) is that we don't know.
It's very clear to me that the vast majority of people believe (as I did) that only selling for fiat is a taxable event. As everyone knows, crypto traders are not a particularly sophisticated bunch, so Revenue's silence is most unhelpful.
For example, the vast majority of debate is obviously from the US. While you can say it's not relevant to Irish tax payers, the fact that, at one stage in the US, crypto to crypto trades were considered "like-kind exchanges" and therefore not taxable, has lead to an lot of confusion for people. I believe that that is now a minority opinion in the US, but it's still an opinion and not a hard fact.
Regarding some of the issues I listed (mining, forks, ICOs etc) I have seen arguments for and against different approaches for all of them. Most people would consider a fork to be a gift (i.e. with a zero cost basis), but I've seen the argument made (by a CPA nonetheless) that the fork coin should have a basis cost equal to its initial sale price on exchanges. So again, it's not clear and these things need to be hashed out.

Regarding the hazards of trying to tax serious trading, this comment on Reddit does it better than I can. Again you'll notice the lack of sophistication in the replies to the first post. Most people are willing to pay their taxation dues, but Revenue and the tax authorities in other countries should really have stepped and clarified the issues by now. For unsophisticated traders and hodlers, given the ease of which trades can be made, and give the frantic bubble we have been in, with easy money to be made (supposedly), a sort of guiding hand from the powers that would have been very welcome.

One thing I would like to see is sort of comment from the more visible national blockchain presences e.g. https://twitter.com/irl_blockchain https://twitter.com/ReubenGodfrey or https://twitter.com/BTCBehaviour
I don't personally use Twitter - could somebody here reach out to these guys for a comment?

literally only comment on this entire thread that makes sense, good job mate

NewApproach · 09-01-2018 9:57pm

sublime1 wrote: »

This is exactly the low-effort kind of contribution I was trying to avoid in this discussion.

Another suggestion that someone pointed out to me is the idea of doing trades through a company structure. Seeing the low rates of corporate tax, this could be worth looking into. Has anyone any thoughts?

Bananas idea

NewApproach · 09-01-2018 10:03pm

jobless wrote: »

if i have a transaction for 100 btc one day before to buy 10000k alt the next surely they would have the cop on to know thats what i intended

anyway its all guess work until there are proper rules given

The rules are quite clear.

Dades · 09-01-2018 10:21pm

sublime1 wrote: »

Another suggestion that someone pointed out to me is the idea of doing trades through a company structure. Seeing the low rates of corporate tax, this could be worth looking into. Has anyone any thoughts?

As well as CT, you'd have to pay income tax on any profits taken from the company. Not to mention the added pain in the hoop of annual returns, filings etc.

Can we pool our knowledge regarding TAX and crypto and make some kind of FAQ/sticky?

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