Foreign Exchange Gains/Losses

[nilbud]

Can anybody clarify the correct treatment of a foreign exchange gain/loss on a money transfer for tax purposes?

For example say:
Exchanged €30,000 to $42,000 (@ 1.40)
then a few months later.........
exchanged $42,000 to €28,000 (@ 1.50) = Loss €2,000
or alternatively:
exchanged $42,000 to €32,308 (@ 1.30) = Gain €2,308
Is the gain/loss liable for income tax or CGT or exempt?


Also, if you buy/sell equities in a foreign currency (i.e. buy/sell from a USD denominated bank account), what is the appropriate exchange rate to use for CGT calculation purposes, assuming you don't actually buy/sell EUR on the days in question? The current exchange rate volatility makes a big difference to calulations depending on whether an average or spot rate is used.

Thanks in advance

 

[MugsGame]

If you primary source of income was from FX trading then I think you would be liable to income tax on it. Assuming that's not the case, no income tax, but probably CGT (though I'm not sure!).

As for what rate to use, once you use a 'reasonable' rate the Revenue won't care - reasonable meaning that you have a justification for how you arrived at it, and you are consistent in applying the same methodology over time (i.e. if you use a spot rate now because it's more favourable for this transaction, you also use a spot rate for future transactions where it may not be as favourable.).