Tax on Bitcoin Profits

cnocbui

h0neybadger wrote: »

4 Antminer S9's won't generate 4 BTC a month. You'll need closer to 40 of them to do that.

I bow to your no doubt far more in-depth and realistic costings. I was only going roughly and spent about 5 minutes on it.

I said 12, not 4. This review says an Antminer S9 will mine 0.36 bitcoin in a month, so 3 would mine one bitcoin in a month; 3 * 4 = 12.

That was 8 months ago so the difficulty no doubt has increased and those rough calculations would no longer apply.

I imagine the Chinese government will soon ban bitcoin mining so used Antminer S9s will probably appear on Alibaba by the container load for a fraction of current prices.

cnocbui

barneystinson wrote: »

So the company pays tax at 25%. You the individual still haven't seen a penny personally, and will have to pay further tax on extracting the cash.

Hadn't thought that far, true.

Webmonkey

cnocbui wrote: »

I bow to your no doubt far more in-depth and realistic costings. I was only going roughly and spent about 5 minutes on it.

I said 12, not 4. This review says an Antminer S9 will mine 0.36 bitcoin in a month, so 3 would mine one bitcoin in a month; 3 * 4 = 12.

That was 8 months ago so the difficulty no doubt has increased and those rough calculations would no longer apply.

Indeed, the bitcoin difficulty has been on the rise since: (https://bitcoinwisdom.com/bitcoin/difficulty)

The S9 now does an estimated ~0.09 BTC per month https://www.cryptocompare.com/mining/calculator/btc?HashingPower=13.5&HashingUnit=TH%2Fs&PowerConsumption=1500&CostPerkWh=0.12

I imagine the Chinese government will soon ban bitcoin mining so used Antminer S9s will probably appear on Alibaba by the container load for a fraction of current prices.

Already rumours out about it: http://news.8btc.com/will-bitcoin-mining-farm-in-china-be-closed. China FUD is big right now.

jobless

how is gifting digital assets treated for tax..... say i gift an amount and its value trebles over the next 5 years... is the other person liable for CGT?

barneystinson

jobless wrote: »

how is gifting digital assets treated for tax..... say i gift an amount and its value trebles over the next 5 years... is the other person liable for CGT?

How do you gift a digital asset?

jobless

barneystinson wrote: »

How do you gift a digital asset?

transfer it to a wallet that person owns.... and they cash it out down the road on their own exchange account?

cnocbui

barneystinson wrote: »

How do you gift a digital asset?

Get them to install a wallet then tell you their receiving address and then you just send the crypto gift from your wallet to theirs. Alternatively, just hand over your wallet and password to them.

Peregrinus

jobless wrote: »

how is gifting digital assets treated for tax..... say i gift an amount and its value trebles over the next 5 years... is the other person liable for CGT?

Yes. Why wouldn't they be? Intangible assets are not treated differently from tangible assets for CGT purposes.

jobless

Peregrinus wrote: »

Yes. Why wouldn't they be? Intangible assets are not treated differently from tangible assets for CGT purposes.

what is that person live in a country with no cgt?

Peregrinus

jobless wrote: »

what is that person live in a country with no cgt?

In that case the tax treatment of someone who receives a gift of bitcoins will be decided according to the tax laws of that country. So we can't really give an answer without knowing what the country is, and what its tax laws say.

It's a reasonably safe bet, though, that the tax consequences will be the same regardless of whether the asset is tangible (land, goods) or intangible (stocks, shares, bonds, bitcoins). What possible policy reason could there be for treating tangible and intangible assets differently for tax purposes?

ZeroThreat

jobless wrote: »

what is that person live in a country with no cgt?

Pretty sure that all Irish citizens are liable to CT worldwide gains.
Unless you want to give up your passport like the Malteeser


Edit : Or maybe it's simply Irish Domiciled, not sure.

Peregrinus

ZeroThreat wrote: »

Pretty sure that all Irish citizens are liable to CT worldwide gains.
Unless you want to give up your passport like the Malteeser


Edit : Or maybe it's simply Irish Domiciled, not sure.

It's Irish-resident. Citizenship is irrelevant.

ZeroThreat

Peregrinus wrote: »

It's Irish-resident. Citizenship is irrelevant.

yeah, that seems about right, pretty sure Dobby still has a harp on his passport.

jobless

Peregrinus wrote: »

In that case the tax treatment of someone who receives a gift of bitcoins will be decided according to the tax laws of that country. So we can't really give an answer without knowing what the country is, and what its tax laws say.

It's a reasonably safe bet, though, that the tax consequences will be the same regardless of whether the asset is tangible (land, goods) or intangible (stocks, shares, bonds, bitcoins). What possible policy reason could there be for treating tangible and intangible assets differently for tax purposes?

not sure, thats why i ask... just trying to find out how it works...

cnocbui

If you are looking at a life-changing amount of gain, just emigrate before realising it. I think someone said that Germany doesn't have CGT if you have held an asset for more than 12 months. You could always come back after you had been tax resident outside Ireland for 6.01 months or more.

Shamo

cnocbui wrote: »

If you are looking at a life-changing amount of gain, just emigrate before realising it. I think someone said that Germany doesn't have CGT if you have held an asset for more than 12 months. You could always come back after you had been tax resident outside Ireland for 6.01 months or more.

I was reading up on this and it said you are liable up to 3 years after moving out of Ireland and being resident elsewhere. Does the Double Taxation Agreement between said countries avoid this 3 year wait?

cnocbui

Shamo wrote: »

I was reading up on this and it said you are liable up to 3 years after moving out of Ireland and being resident elsewhere. Does the Double Taxation Agreement between said countries avoid this 3 year wait?

Well if you paid tax of 10%, in another country they would be able to ask for the balance, but could not tax you twice.

But in the real world:

1) How would they ever know? You wouldn't be silly enough to go using your Irish bank account.

2) Wait 3 years or don't come back.

If you look at the full scope of the tax regime in this country, you really, really aught to think twice before even contemplating coming back - IMO.

Shamo

cnocbui wrote: »

Well if you paid tax of 10%, in another country they would be able to ask for the balance, but could not tax you twice.

But in the real world:

1) How would they ever know? You wouldn't be silly enough to go using your Irish bank account.

2) Wait 3 years or don't come back.

If you look at the full scope of the tax regime in this country, you really, really aught to think twice before even contemplating coming back - IMO.

Agreed, the tax setup in this country is a joke.

AndrewJRenko

cnocbui wrote: »

But in the real world:

1) How would they ever know? You wouldn't be silly enough to go using your Irish bank account.

You know that banks share data with tax authorities, and tax authorities share data with other tax authorities, right?

barneystinson

Shamo wrote: »

Agreed, the tax setup in this country is a joke.

In what way, that you have to pay tax, is it?

cnocbui

AndrewJRenko wrote: »

You know that banks share data with tax authorities, and tax authorities share data with other tax authorities, right?

Yes, I am, given that such supposedly applies to me personally.

Imagine the New Zealand Tax Office flooding Revenue with a list of all the bank accounts held there by Irish citizens. What is Revenue going to do with details of the 300 bank accounts held by Paul Murphy? I am pretty doubtful the New Zealand tax office would have the PPS numbers of Irish citizens there.

I take the media stories of this massive data sharing with a bucket of salt. it's just scare tactics for the most part in terms of bulk exchanges of information. I don't think most people would have anything to worry about except where they were actually being targeted by revenue and Revenue was asking a foreign tax office about a specific individual.

cnocbui

myshirt wrote: »

Cnocbui, you are way behind buddy. Way behind.

Look up CRS, read about FATCA. Be a good start for you, but ultimately educate yourself about what is going on. And talk to a professional rather than the lads down the pub.

Anyway, moving on Blockchain has more applications than just bitcoin. Once it matures ironically no one will be anonymous. Bad for tax evaders, but also bad for people traffickers.

In short, if you as much as farted at the scene of any of the long list of things you can do according to this thread, it's possible to be able to link you to it.

I'm not your buddy.

As for being way behind: I hold dual nationalities and I have had bank accounts in a foreign country for decades. I have even told Revenue about them. I have never been queried about transactions made on those accounts. Contrary to what you might think, I do pay my taxes, however, were I to move to a foreign country and realise a capital gain on a crypto, I wouldn't be inclined to pay CGT to Revenue. To the foreign country's tax authority, yes, but hell could freeze over before I made a payment to Revenue in those circumstances.

FACTA and the like are just public relations scare tactics without absolute identifying data such as PPS numbers.

A lot can be done if an individual is actively targeted and a lot of resources are thrown at it, but any notion there is automatic and accurate matching up of individuals across borders is currently a nonsense. I think the media stories are more designed to scare people into being honest than they are actually about systems that have much chance of catching people who are dishonest, automatically.

Shamo

barneystinson wrote: »

In what way, that you have to pay tax, is it?

3rd highest CGT in the world and overly complex tax reporting for ETFs such as for the VOO index fund. Vulture funds get a nice 12% though (officially).

relax carry on

cnocbui wrote: »

I'm not your buddy.

As for being way behind: I hold dual nationalities and I have had bank accounts in a foreign country for decades. I have even told Revenue about them. I have never been queried about transactions made on those accounts. Contrary to what you might think, I do pay my taxes, however, were I to move to a foreign country and realise a capital gain on a crypto, I wouldn't be inclined to pay CGT to Revenue. To the foreign country's tax authority, yes, but hell could freeze over before I made a payment to Revenue in those circumstances.

FACTA and the like are just public relations scare tactics without absolute identifying data such as PPS numbers.

A lot can be done if an individual is actively targeted and a lot of resources are thrown at it, but any notion there is automatic and accurate matching up of individuals across borders is currently a nonsense. I think the media stories are more designed to scare people into being honest than they are actually about systems that have much chance of catching people who are dishonest, automatically.

I'm afraid the day of not paying attention to data relating to assets held by citezens in other states is rapidly coming to a close. FATCA, DAC, and the CRS while in their early stages will yield either direct benefit from tax recouped or indirect from their deterrent value.

https://www.revenue.ie/en/companies-and-charities/international-tax/aeoi/what-is-aeoi.aspx

ZeroThreat

Shamo wrote: »

3rd highest CGT in the world and overly complex tax reporting for ETFs such as for the VOO index fund. Vulture funds get a nice 12% though (officially).

Perversely, most of the vulture funds had charity status to avoid paying ANY tax.

I guess average joe/jane citizen gets ridden up the jacksie with no lube to compensate for vulture funds charitable status, low CT rates, tax evasion by tech companies facilitated by the government/legal bills in the millions to defend methods used by said companies.

But then we're going off topic.

cnocbui

relax carry on wrote: »

I'm afraid the day of not paying attention to data relating to assets held by citezens in other states is rapidly coming to a close. FATCA, DAC, and the CRS while in their early stages will yield either direct benefit from tax recouped or indirect from their deterrent value.

https://www.revenue.ie/en/companies-and-charities/international-tax/aeoi/what-is-aeoi.aspx

You move to a another country. You are now resident there for tax purposes and make a capital gain on your crypto and then pay CGT in your new tax jurisdiction, if required.

Please do tell me how Revenue will be aware of this and what they can practically do to even ask you to cough up, let alone what they can do if you don't? They wouldn't even have your address or contact details to so much as send you a letter.

ZeroThreat

cnocbui wrote: »

You move to a another country. You are now resident there for tax purposes and make a capital gain on your crypto and then pay CGT in your new tax jurisdiction, if required.

Please do tell me how Revenue will be aware of this and what they can practically do to even ask you to cough up, let alone what they can do if you don't? They wouldn't even have your address or contact details to so much as send you a letter.

extraordinary rendition?

AndrewJRenko

cnocbui wrote: »

Yes, I am, given that such supposedly applies to me personally.

Imagine the New Zealand Tax Office flooding Revenue with a list of all the bank accounts held there by Irish citizens. What is Revenue going to do with details of the 300 bank accounts held by Paul Murphy? I am pretty doubtful the New Zealand tax office would have the PPS numbers of Irish citizens there.

I take the media stories of this massive data sharing with a bucket of salt. it's just scare tactics for the most part in terms of bulk exchanges of information. I don't think most people would have anything to worry about except where they were actually being targeted by revenue and Revenue was asking a foreign tax office about a specific individual.

So, so maybe the NZ banks don't have your Irish PPS number. But is there a document somewhere linking your Irish PPS number with your NZ id number or equivalent, maybe on your visa application?

And if the NZ tax authorities haven't bothered to match up these details this year, are you confident they won't bother to do it next year, or the year after?

Here's a list of people who were all sure they were smarter than Revenue;

https://www.revenue.ie/en/corporate/press-office/list-of-defaulters/index.aspx

They were wrong.

cnocbui

ZeroThreat wrote: »

extraordinary rendition?

At least you get it, because that is about what it would take.

AndrewJRenko wrote: »

So, so maybe the NZ banks don't have your Irish PPS number. But is there a document somewhere linking your Irish PPS number with your NZ id number or equivalent, maybe on your visa application?

And if the NZ tax authorities haven't bothered to match up these details this year, are you confident they won't bother to do it next year, or the year after?

Here's a list of people who were all sure they were smarter than Revenue;

https://www.revenue.ie/en/corporate/press-office/list-of-defaulters/index.aspx

They were wrong.

Dual citizenship means I am an Irish citizen and have an Irish passport, so no visas or forms or either tax jurisdiction having any clue about anything.

Once you emigrate, you change legal and tax jurisdictions, unless you are an American. Revenue have a neck so long as to make a giraffe jealous, but even they have to pull it in on occasion and people emigrating is one of them. You leave the country, that's it - sayonara, and thanks for all the fish.

Even without looking at your list I can tell you one thing with absolute certainty - not one of those people had moved to another country or was renditioned from a foreign country. Bitcoin could hit a million a piece and you could sell several for a massive profit the week after you moved and your only practical obligation would be to abide by the CGT requirements of the country you had moved to. If you become a resident of a foreign country for tax purposes, Revenue will never be informed by that country of bank accounts you might open there or what transactions transpire on them while that is the case, the inter-government data sharing, when it eventually gets going, only applies to people who have accounts in the country but are not resident there for tax purposes.

exaisle

pro_gnostic_8 wrote: »

Interesting thread !

Gents, may I ask please ...............
If I were to buy gold with my bitcoin profits and using bitcoin to do so, would I be liable for CGT?
I.E., is CGT only liable if cashing out to fiat -- or is it also payable if cashing out to gold?

Yes. CGT arises on the disposal of the asset.