Cryptocurrency (taxation etc)

S

settlement

Registered User
Messages
275
Hi all,

I know cryptocurrency has been debated to death.

If I choose to invest in crypto, how does it fare taxation wise in Ireland?

Eg: cash is subject to DIRT, UCITS etfs suffer deemed disposal, housing is subject to capital gains

How is crypto taxed? If you 'own' bitcoin itself, how can you be taxed on it? Eg its not a share or money so surely not subject to capital gains. i mean bitcoin in a wallet, or ethereum, not shares in these stocks
 
Like any other asset, you are liable for CGT on Bitcoin upon disposal, i.e. whenever you convert it back into euro. You pay CGT on gains on all assets, except where there is a different specific provision in legislation:

"All forms of property, wherever situated, are assets for the purposes of Capital Gains Tax. Assets include ... incorporeal property (for example, goodwill or an option) ... but do not include Irish currency". ([broken link removed]).

Currencies, other than the euro are counted as assets:

"Under Section 28 capital gains tax is charged in respect of chargeable gains accruing to a person on the disposal of assets. Under Section 532 any
currency other than the euro is an asset for the purposes of capital gains tax. Accordingly, a chargeable gain/allowable loss can arise to a person buying and selling foreign currency otherwise than in the course of trade. That gain/loss is computed by reference to the corresponding euro value of the purchase price and the sale proceeds." (Revenue Tax and Duty Manual Part 19-01-14A )
 
Would 'bitcoin' really qualify under the Revenue criteria of 'currency' though? It's not a foreign currency, that implies that it is the official legal tender of a nation state recognised by the Republic of Ireland.

It has a notional value only in the Bitcoin world. It is probably more like the value of a football player, "other asset"?
 
odyssey06 said:
...that implies that it is the official legal tender of a nation state recognised by the Republic of Ireland
Click to expand...
I haven't seen that in any definition, but it's a moot point anyway. It's an asset whether or not it's a currency. It would be a brave person who would argue the point with Revenue. I imagine you'd lose that one faster than you could say "tax evasion".
 
There's no tax point while the crypto currency sits in a wallet, but as soon as you conduct a transaction using it, you are making a disposal of an asset for CGT purposes.

So let's say you had bought 50 coins a couple of years ago for a couple of thousand, and tomorrow you pay those 50 bitcoins to a Maserati dealer to buy a 400k supercar, you've realised a gain on disposal of an asset (bitcoins) in the amount of 398k... you'll owe about 132k in CGT.
 
Brendan Burgess said:
.....Will Revenue accept Bitcoin in settlement of this liability?
Click to expand...

I very much doubt they would ever accept bitcoin as payment Mr. Burgess, no more than they would not accept gold bullion, or USD$ for example ;)

As an aside, it's interesting to see some of the businesses that will now accept Bitcoin as payment (including: Microsoft, Expedia, Lot (Polish Airline), Dominos etc. - click here :)
 
Last edited:
To further add to this topic, I asked accountant for advice on tax liability for crypto. He thinks that if the number of trades is sufficient to meet “badges of trade” criteria, that any income from crypto trading is liable for income tax. This was despite my protests that number of trades was pitiful, and that each different cryptocurrency (BTC, ETH, LTC etc.) should be treated as different assets, and that the only sales I made were in order to purchase other cryptos where a euro purchase wasn't possible.

I think some urgent clarification is needed on this. CGT is one thing, but treating this as income tax is a whole other!
Any thoughts here?
 
Aha, great minds and all that ...I just read the very same article. (Gotta love the case of the guy who bought the million toilet rolls). Plus here are the Revenue guidelines that are based on those same HMRC cases:

https://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/tb/sec0021-1-tb.html

I'd be very surprised if personal investing in cryptocurrencies would be construed as carrying on a trade. On the other hand I've never heard of this "badges of trade" stuff before 20 minutes ago and haven't a scintilla of expertise in it. Needless to say, that hasn't stopped me from expressing an opinion. :p
 
I'm not an accountant. What is the usual way the industry gets consensus on this? Do they approach Revenue directly for clarification? Are there usually a few court challenges by early adopters etc?

I hate this not knowing - CGT is bad enough already (33%? get out of here!), but income tax at 52%?!
 
So far today, I have discovered (mostly from Reddit) that in Netherlands and Germany the tax on crypto is almost negligible, which makes me pretty unhappy about the Irish situation! Apart from that, this post from a US tax attorney raises the concept of "like-kind exchanges", which he says (in the US at least) are tax-free. See section #4 of his comment:
https://www.reddit.com/r/Bitcoin/comments/1uccfz/i_am_a_tax_attorney_here_are_my_answers_to_the/

Is anyone aware of a similar concept in Irish tax law?
 
The Badges of Trade point is a complete red herring...they’re a number of points to consider when deciding whether a trade is being carried on. If I invest in Bitcoin for a bit of craic or even with a view to making a few bob, that would not constitute a trade. But if I jacked in my day job and spent the whole time making a living from trading bitcoin, income tax treatment probably would apply. One looks at a number of factors, such as motive, frequency of transactions, length of period of enhancement, etc.

My advice is to never ask Revenue for advice on anything. It’s akin to asking Fergie whether Liverpool should get a penalty at Old Trafford.
 
Gordon Gekko said:
The Badges of Trade point is a complete red herring...they’re a number of points to consider when deciding whether a trade is being carried on. If I invest in Bitcoin for a bit of craic or even with a view to making a few bob, that would not constitute a trade. But if I jacked in my day job and spent the whole time making a living from trading bitcoin, income tax treatment probably would apply. One looks at a number of factors, such as motive, frequency of transactions, length of period of enhancement, etc.

My advice is to never ask Revenue for advice on anything. It’s akin to asking Fergie whether Liverpool should get a penalty at Old Trafford.
Click to expand...

Thanks for this. But I'm still confused how the industry reaches consensus on questions like these? If accountant A says Badges of Trade and accountant B says "like-kind exchanges" are not taxable, that's quite a diversity of opinion. What to do?
 
Doctors differ and patients die...then perhaps one must look at the credentials of the respective advisors.

If KPMG are telling me one thing and Joey Murphy ACCA from Ballgobackwards is telling me another, I’m unlikely to listen to the latter.
 
What if someone has a CFD on crypto currency and when they close the trade they have made some money.

Is this taxable?
 
You must log in or register to reply here.
Back
Top