Tax on Bitcoin Profits

Peregrinus

Well, if somebody who wasn't an art gallery, gold bullion dealer, UCITs fund, life assurance company or the like - someone who, so far as the bank was aware, didn't run a cash business at all - was making a cash deposit in excess of 10k, how likely is it that that would trigger a report?

joeguevara

Peregrinus wrote: »

Well, if somebody who wasn't an art gallery, gold bullion dealer, UCITs fund, life assurance company or the like - someone who, so far as the bank was aware, didn't run a cash business at all - was making a cash deposit in excess of 10k, how likely is it that that would trigger a report?

They would have more cop on than to listen to someone that tells people that every transaction over a certain amount would be reported to revenue.....I will go back to the statistic that there was only circa 24,000 reports made to revenue and Financial Intelligence Unit last year...of which 90% were close immediately.

AndrewJRenko

Peregrinus wrote: »

Well, if somebody who wasn't an art gallery, gold bullion dealer, UCITs fund, life assurance company or the like - someone who, so far as the bank was aware, didn't run a cash business at all - was making a cash deposit in excess of 10k, how likely is it that that would trigger a report?

You should try asking the question to the Hutch or Kinahan gangs, they would have good experience in this area.

barneystinson

joeguevara wrote: »

Absolutely not....as a money laundering reporting officer (MLRO) of about 20 designated persons (from 3 art galleries, 2 second car dealerships, 1 gold bullion dealer, 2 bureau de change, 6 alternative investmestment funds, 4 UCITS funds, 1 life assurance company and 1 MiFD firm) and as one of Ireland's leading experts in anti-money laundering legislation who trains the Criminal Assets Bureau, the Revenue Commissioners, the Finanial Intelligence Unit as well as the Central Bank of Ireland, I reckon I have a pretty good understanding of what or would not trigger a report.

Ahhhhhh now I get it, thanks, I couldn't understand what was with your attitude, but you're just anxious to show off online... jolly good.

But since the person you describe above is just you, my point still stands; anyone who isn't an expert on money laundering reporting requirements would be prudent to assume that Revenue will become aware of any large cash transactions they execute. Do you disagree? Please note, I'm not for a moment suggesting this is actually the case; I'm simply saying that a person who doesn't know what exactly will trigger a report should behave accordingly, and you know, NOT launder money...

(PS. I'd be really surprised if a person in the position you describe yourself as being in, was going to go into an anonymous online forum to effectively advise people who are expressly espousing a desire to evade tax, on how to execute transactions in such a way as to avoid falling foul of money laundering reporting requirements. Surely the various organisations such a person works for would also be concerned about the person engaging in that kind of thing too... but I'm sure you're not going to do that!)

nate.drake

daveharnett wrote: »

I expect the darkweb markets that sell drugs/counterfeits/botnets for bitcoin would sell cash too?

Dave,

You can usually find money changers on the dark net who can offer to cash out Bitcoins in exchange for a commission as bullion or a Western Union payment. Some apparently offer cash, although I haven't seen any in a while.

This doesn't strike to the heart of the issue however as if you cash out 20,000 Euro worth of Bitcoins, then head on down to your bank to pay it over the counter without raising some eyebrows. Given how easy it is to avoid CGT lawfully, why make trouble for yourself needlessly?

nate.drake

barneystinson wrote: »

Since one has no way of knowing which transaction(s) might or might not trigger a report, shouldn't a person operate on the basis that every transaction in their account is one that Revenue is / will be aware of...

Agreed. Even if only one transaction raises suspicion, presumably they'd request access to all your bank records in any case, so every deposit/withdrawal would be up for scrutiny? Best stay on the right side of the law.

barneystinson

nate.drake wrote: »

Dave,

You can usually find money changers on the dark net who can offer to cash out Bitcoins in exchange for a commission as bullion or a Western Union payment. Some apparently offer cash, although I haven't seen any in a while.

This doesn't strike to the heart of the issue however as if you cash out 20,000 Euro worth of Bitcoins, then head on down to your bank to pay it over the counter without raising some eyebrows. Given how easy it is to avoid CGT lawfully, why make trouble for yourself needlessly?

How exactly do you easily lawfully avoid CGT?

nate.drake

barneystinson wrote: »

How exactly do you easily lawfully avoid CGT?

You could start by reading through this thread where this question has been answered around four times now to my count! :-D

barneystinson

nate.drake wrote: »

You could start by reading through this thread where this question has been answered around four times now to my count! :-D

The only solution I saw mentioned was making yourself non resident for a sufficient period of time.

If you are Irish domiciled (as the vast majority of all Irish people are), then you will remain liable to Irish CGT on your worldwide gains until you are no longer ordinarily resident in Ireland.

You'd want to be talking about some whopper of a gain for you to be moving abroad for 4 years to avoid Irish CGT.

Maybe your definition of easy differs fundamentally from mine...!

nate.drake

barneystinson wrote: »

The only solution I saw mentioned was making yourself non resident for a sufficient period of time.

If you are Irish domiciled (as the vast majority of all Irish people are), then you will remain liable to Irish CGT on your worldwide gains until you are no longer ordinarily resident in Ireland.

You'd want to be talking about some whopper of a gain for you to be moving abroad for 4 years to avoid Irish CGT.

Maybe your definition of easy differs fundamentally from mine...!

We also touched on setting up a self-administered pension scheme, which while a little pricy is doable. One of my fellow Freelancers is helping me set one up.

With regard to moving abroad, if you're investing for the long haul, which I would say you certainly should when it comes to cryptocurrencies, don't forget you can simply move elsewhere when you retire, you don't have to keep hopping back and forth between countries. It's also definitely far easier than walking around with a briefcase of cash!

pro_gnostic_8

So, I've come across bitcoin debit cards ............ Xapo and Bitpay.
Both denominated in euro and linked to VISA.. You deposit with bitcoin and spend with a merchant or withdraw from ATM in fiat (euro).

Xapo is headquartered in Switzerland; Bitpay in Atlanta, USA.
It is unlikely that either would inform Irish Revenue of a customer's deposit. Or is it?

Any opinion would be welcome.

relax carry on

Mr.S wrote: »

Looking at Xapo, as you need to verify your ID and residency + proof of address, I would imagine large deposits would get reported. Swiss bank accounts of Irish residents are already reported to Revenue to make sure the right tax is being paid in Ireland. But Xapo isn't exactly a bank so...who knows really! Wouldn't risk it though.

Taxation authorities and financial institutions around the world are increasing their level of cooperation every year. So if they don't have the information now, they will have in the future.

http://www.revenue.ie/en/companies-and-charities/international-tax/aeoi/index.aspx

pro_gnostic_8

Thank you both for that !
Think I'll swerve the debit card idea now. (Could be a nasty sting-in-the-tail sometime down the road).

HcksawJimDuggan

Slightly off topic but just wondering if the profit from trading in stock options would be liable to IT or CGT?

barneystinson

pro_gnostic_8 wrote: »

So, I've come across bitcoin debit cards ............ Xapo and Bitpay.
Both denominated in euro and linked to VISA.. You deposit with bitcoin and spend with a merchant or withdraw from ATM in fiat (euro).

Xapo is headquartered in Switzerland; Bitpay in Atlanta, USA.
It is unlikely that either would inform Irish Revenue of a customer's deposit. Or is it?

Any opinion would be welcome.

And just to be crystal clear, you're asking this question because you explicitly want to evade your legally due Irish tax liability, is it?

thegolfer

HcksawJimDuggan wrote: »

Slightly off topic but just wondering if the profit from trading in stock options would be liable to IT or CGT?

CGT, options in part treated as assets.

However again, depending on the frequency quantity etc of trades it could be seen as income tax, ie trading income.

pro_gnostic_8

barneystinson wrote: »

And just to be crystal clear, you're asking this question because you explicitly want to evade your legally due Irish tax liability, is it?

I'll let you draw your own conclusion, as I suspect any denial from me is unlikely to sway your pre-determined mindset.

barneystinson

pro_gnostic_8 wrote: »

I'll let you draw your own conclusion, as I suspect any denial from me is unlikely to sway your pre-determined mindset.

Hmmm, not sure why you're, ehhhh, evading even answering a simple question...!

I'm not predetermining anything, your post implied that you don't want Irish revenue to know about your transactions, the only logical reason I can think of for that is because you don't intend to declare and pay the appropriate tax.

I'm just asking you to confirm whether that's the case, or otherwise enlighten me, because the alternative reason would no doubt also be interesting to know...

pro_gnostic_8

barneystinson wrote: »

Hmmm, not sure why you're, ehhhh, evading even answering a simple question...!

No, it's an impolite question ........... too personal and intrusive. A question which I wouldn't dare ask of you or any person on here. I have no intention of disclosing my personal financial details or practices on a public forum.

I'm not predetermining anything, your post implied that you don't want Irish revenue to know about your transactions, the only logical reason I can think of for that is because you don't intend to declare and pay the appropriate tax.

As I said earlier, you can draw any implications you so desire.
I made a straightforward query if Xapo would inform Irish Revenue of a customer's transactions. Two replies were helpful; your's, on-the-other-hand, seems to invite me down a dark alley of self-incrimination and censure which I don't wish to traverse. I have no more to say on the topic.

joeguevara

barneystinson wrote: »

Ahhhhhh now I get it, thanks, I couldn't understand what was with your attitude, but you're just anxious to show off online... jolly good.

But since the person you describe above is just you, my point still stands; anyone who isn't an expert on money laundering reporting requirements would be prudent to assume that Revenue will become aware of any large cash transactions they execute. Do you disagree? Please note, I'm not for a moment suggesting this is actually the case; I'm simply saying that a person who doesn't know what exactly will trigger a report should behave accordingly, and you know, NOT launder money...

(PS. I'd be really surprised if a person in the position you describe yourself as being in, was going to go into an anonymous online forum to effectively advise people who are expressly espousing a desire to evade tax, on how to execute transactions in such a way as to avoid falling foul of money laundering reporting requirements. Surely the various organisations such a person works for would also be concerned about the person engaging in that kind of thing too... but I'm sure you're not going to do that!)

It is quite the opposite....I only want to say that the false information that every transaction over 10k goes to the revenue. Also to say that every large transaction isn't deemed suspicious.

We all know that criminals who launder money are not going to do it through normal channels hence the low number of people prosecuted for money laundering. But fair play, you got your dig in and expressed surprise and questioned my motives/posts....but I'm sure you didn't mean that.

dxhound2005

joeguevara wrote: »

We all know that criminals who launder money are not going to do it through normal channels hence the low number of people prosecuted for money laundering.

There is no need for prosecutions in every case because the CAB can seize the proceeds of suspected money laundering, as well as requesting prosecutions.

And the legislation can levy penalties on designated persons including Banks who fail to fulfill their legal obligations, without the need for prosecutions.

There is no such thing as a normal channel for money laundering, only illegal ones. I know very little about Bitcoin. Is Bitcon used for money laundering?

http://www.independent.ie/irish-news/money-laundered-in-highend-horse-sales-35587690.html

http://www.irishexaminer.com/ireland/cab-files-money-laundering-suspicions-against-kinahans-with-dpp-448106.html

http://www.thejournal.ie/criminal-assets-bureau-dublin-raid-3441658-Jun2017/

http://www.antimoneylaundering.gov.ie/website/aml/amlcuweb.nsf/page/legislation-en

http://www.irishtimes.com/business/financial-services/bank-of-ireland-fined-3-15m-for-breaches-of-laundering-law-1.3100696

Peregrinus

dxhound2005 wrote: »

Is Bitcon used for money laundering?

It can be. But, then, so can conventional currency (which is why we have the obligations we have with regard to large unexplained cash transactions).

I very much doubt that the Revenue are going to approach every bitcoin transaction with the mindset of assuming that there's something hokey about it - that if it's not money laundering then it's at least tax evasion. While this is a new area and norms are still developing and there's a lack of explicit legislation, the growing view is that it's appropriate to treat cryptocurrencies for tax purposes as being exactly what they are supposed to be, which is currencies. So trading in bitcoins, exchange gains and losses on bitcoins, etc, would be treated exactly the same as trading in, or exchange gains and losses on, sterling or US dollars or yen or yuan or any other currency that isn't the euro.

barneystinson

pro_gnostic_8 wrote: »

No, it's an impolite question ........... too personal and intrusive. A question which I wouldn't dare ask of you or any person on here. I have no intention of disclosing my personal financial details or practices on a public forum.


As I said earlier, you can draw any implications you so desire.
I made a straightforward query if Xapo would inform Irish Revenue of a customer's transactions. Two replies were helpful; your's, on-the-other-hand, seems to invite me down a dark alley of self-incrimination and censure which I don't wish to traverse. I have no more to say on the topic.

Ah ok I see, that's a faux offended No Comment.

I'm going to go from implications to conclusions so!

de internet king

For those of you not trying to avoid CGT, if you are holding multiple cryptos and have made a number of exchanges/trades, are you as concerned as me about how you're going to calculate how much to pay in CGT?

What I'm particularly unsure about is how to calculate CGT when I only want to withdraw a fraction of my crypto holdings. Lets say I wanted to withdraw only 10%. Would that mean that I should subtract 10% of the amount of initial investment as exempt from taxation? And, as according to Citizens Information, "The first €1,270 of taxable gains in a tax year are exempt from CGT." Does this mean that if I exchange just €1,270 worth of Bitcoin into euro that I don't have to pay any tax? Could I just keep converting this much each year and pay nothing?

Final question: Does anyone know of any accountant who deals with cryptocurrency issues?

AndrewJRenko

de internet king wrote: »

For those of you not trying to avoid CGT, if you are holding multiple cryptos and have made a number of exchanges/trades, are you as concerned as me about how you're going to calculate how much to pay in CGT?

What I'm particularly unsure about is how to calculate CGT when I only want to withdraw a fraction of my crypto holdings. Lets say I wanted to withdraw only 10%. Would that mean that I should subtract 10% of the amount of initial investment as exempt from taxation? And, as according to Citizens Information, "The first €1,270 of taxable gains in a tax year are exempt from CGT." Does this mean that if I exchange just €1,270 worth of Bitcoin into euro that I don't have to pay any tax? Could I just keep converting this much each year and pay nothing?

Final question: Does anyone know of any accountant who deals with cryptocurrency issues?

I don't know anything about currency dealings, but with share trading, Revenue had a rule that if you are doing a partial sale of a share holding, they assume that you sold shares in the order that you bought them, so you sold the oldest holdings first.

It might be the same for currency, but you probably do need a good tax advisor.

de internet king

AndrewJRenko wrote: »

I don't know anything about currency dealings, but with share trading, Revenue had a rule that if you are doing a partial sale of a share holding, they assume that you sold shares in the order that you bought them, so you sold the oldest holdings first.

It might be the same for currency, but you probably do need a good tax advisor.

Yeah, I think professional help might be required. Thanks.

SteelyDanJalapeno

Can we instead spend our Bitcoin on sports exchanges like Betfair, and then withdraw any winnings in euros tax free?

There's plenty 1 - 2 % return markets out there on sports exchanges.

Peregrinus

Yes, you can do that (if Betfair are willing to accept stakes in bitcoins, and provide payouts in euro, obviously). But it doesn't magic away your liability to CGT on disposal of your bitcoins, which happens when you place the bet. And you'll have that liability regardless of whether you win or lose the bet.

AndrewJRenko

TiltedBrain wrote: »

Can we instead spend our Bitcoin on sports exchanges like Betfair, and then withdraw any winnings in euros tax free?

There's plenty 1 - 2 % return markets out there on sports exchanges.

I would imagine that Revenue and CAB would pay attention to large amounts going through Betfair, given the tendencies of criminal groups to launder money through betting.

nate.drake

de internet king wrote: »

For those of you not trying to avoid CGT, if you are holding multiple cryptos and have made a number of exchanges/trades, are you as concerned as me about how you're going to calculate how much to pay in CGT?

What I'm particularly unsure about is how to calculate CGT when I only want to withdraw a fraction of my crypto holdings. Lets say I wanted to withdraw only 10%. Would that mean that I should subtract 10% of the amount of initial investment as exempt from taxation? And, as according to Citizens Information, "The first €1,270 of taxable gains in a tax year are exempt from CGT." Does this mean that if I exchange just €1,270 worth of Bitcoin into euro that I don't have to pay any tax? Could I just keep converting this much each year and pay nothing?

Final question: Does anyone know of any accountant who deals with cryptocurrency issues?

To answer your question about the first €1,270, as CGT is only calculated when you actually sell your BTC then yes I believe you'd be exempt if you only sold this much per year. However in practical terms this may not be the best idea given how volatile Bitcoin's value is.

CGT is calculated on the initial value of an investment relative to your profit at the time you sold it, so you're right in saying it can be difficult to keep track. I use Bitstamp personally, who keep a record of each time you transferred money to them, you can also check your bank statements of course.

Bitcoin is a commodity like any other so am sure any competent accountant will do.