Are bitcoin buyers paying tax properly?

Hi all, sorry for rejoining this thread after I promised I finished my arguments on risks of crypto/bitcoins but I have one more query that puzzles me... When people buy fractions of bitcoins/cryptos either through exchange or directly and then they buy and sell or switch what is the EU doing in order to make sure CGT is paid like in the example of currency-transactions? In other words, while I am really worried on the psychological impact bitcoin and co is having especially on youngsters or savers with big percentage on bitcoins/crypto (all eggs into one basket) checking portfolio every few hours I also heard of people "playing deaf" to the rules of Bed and Breakfast for losses or to calculating CGT for switches of cryptos, etc... If that's the case then I feel too many people avoid paying that CGT that should be due because of a lowly regulated sector... Any reassurance is welcome...

I really hope competition between people investing in stocks (all my brokers have my PPS number and keep periodically checking it!) and people with bitcoins/crypto (do all suppliers request PPS number for example?) is relatively fair...

Thank you for reading my new post...

I have completed CGT returns and submitted payments to Revenue for a number of customers with realised bitcoin/crypto gains.
As @tecate notes, it's no different to any other capital gain in terms of tax obligations.

Thank you both very much!

LoveTrees said:

what is the EU doing in order to make sure CGT is paid like in the example of currency-transactions?

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I don't think the EU has any role in enforcing CGT.

In Ireland, at least, CGT is self-assessed, the obligation is on the taxpayer to work out their liablity

Here's an example from the IRS in the U.S. reported earlier today, demonstrating that taxes are being collected albeit that it is fine-tuning its approach to how it goes about collecting it. I'm pretty sure Revenue had gotten as far as publishing some guidelines as far as I can recall but I'm not up to speed on it as I haven't been living in Ireland in recent years.

Its quite easy to keep track of your taxes due.

I use a service called Koinly and it tracks all transactions of my digital assets by connecting to my exchange accounts via API. It calculates all tax due, and the report it generates is accepted by Revenue.

Its also free and then you just have to pay to get the tax report (€99)

Defi transactions are a bit trickier but I make sure to keep METICULOUS records of everything for when its time to pay my tax.

I know a lot of Irish people in real life who buy and sell crypto, and not a single one of them keep track of anything.

I think in time it will come back to bite them. If it was me i wouldn't be able to sleep at night but I guess ignorance is bliss.

jigsaw said:

I know a lot of Irish people in real life who buy and sell crypto, and not a single one of them keep track of anything.

I think in time it will come back to bite them. If it was me i wouldn't be able to sleep at night but I guess ignorance is bliss.

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Exactly my point! But when I started investing in shares my brokers sent me tax forms etc on a periodical basis to keep reminding me - and I pay all taxes up to the last cent - of being transparent with the local govt tax office. I doubt that in the crypto world there is such an advanced state of communications to the tax-payer...

...But I leave to Karma to define pathways in life... At least I diplomatically raised the flag on something I perceive around from some cryprosavers, cryptoinvestors and cryptospeculators...

LoveTrees said:

But when I started investing in shares my brokers sent me tax forms etc on a periodical basis to keep reminding me - and I pay all taxes up to the last cent - of being transparent with the local govt tax office. I doubt that in the crypto world there is such an advanced state of communications to the tax-payer...

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@jigsaw can confirm as I don't have a need to use apps like Koinly (I'm not a trader) but many of the large global crypto platforms now have API integration with those applications so the whole thing is seamless. As regards people not bothering to file, maybe they get away with it if the amounts are small but they'll all get the shakes when one of these days Revenue gets coverage on RTE some evening about someone or other they've decided to make an example out of. I'm surprised they haven't done so already.

LoveTrees said:

Exactly my point! But when I started investing in shares my brokers sent me tax forms etc on a periodical basis to keep reminding me - and I pay all taxes up to the last cent - of being transparent with the local govt tax office. I doubt that in the crypto world there is such an advanced state of communications to the tax-payer...

...But I leave to Karma to define pathways in life... At least I diplomatically raised the flag on something I perceive around from some cryprosavers, cryptoinvestors and cryptospeculators...

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Its really down to people to declare their gains and pay their tax.

Unfortunately a lot of people dont.

It wont end well for them IMO

LoveTrees said:

When people buy fractions of bitcoins/cryptos either through exchange or directly and then they buy and sell or switch what is the EU doing in order to make sure CGT is paid like in the example of currency-transactions? ... I also heard of people "playing deaf" to the rules of Bed and Breakfast for losses or to calculating CGT for switches of cryptos, etc... If that's the case then I feel too many people avoid paying that CGT that should be due because of a lowly regulated sector... Any reassurance is welcome...

I really hope competition between people investing in stocks (all my brokers have my PPS number and keep periodically checking it!) and people with bitcoins/crypto (do all suppliers request PPS number for example?) is relatively fair...

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I'll take a stab at re-writing this given my last response was taken down on the basis of it being "vulgar." The large global crypto exchanges are centralized businesses. They have to comply with tax authorities relative to the jurisdictions they extend their services to. On that basis, they're no different to banks from a tax monitoring point of view. In the U.S. the IRS has forced a number of exchanges to produce customer data. Not sure if that has happened in Ireland but I'm pretty sure if it does they have to comply.

With that, its no different than filing a return that reflects any other gain for any other item. Refuse to do so at your peril.

LoveTrees said:

In other words, while I am really worried on the psychological impact bitcoin and co is having especially on youngsters or savers with big percentage on bitcoins/crypto (all eggs into one basket) checking portfolio every few hours

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I think that its futile to try and dissuade that generation from participating in the digital assets space. They're doing so not just because they see the potential in it but also due to inequity in the existing system. It would be far more worthwhile encouraging folks to right size their exposure.

tecate said:

they'll all get the shakes when one of these days Revenue gets coverage on RTE some evening about someone or other they've decided to make an example out of. I'm surprised they haven't done so already.

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Did that happen in March when a "cryptocurrency trader" was hit with a bill of 200k in tax+penalties (unpaid)? The individual is now living in crypto friendly Portugal - I guess they could prove some were bought + sold while he was living in Ireland. https://www.revenue.ie/en/corporate...023/defaulters-list-part-2-december-2023.xlsx

It would be interesting to know more about the case, however a problem for Revenue is the tax defaulter's list isn't something non-high profile people really care about appearing on. The risk of appearing on the list was to suppose to help shame people into paying taxes.