Tax on Bitcoin Profits

exaisle

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?

The recipient isn't liable for CGT until HE sells them, but you are immediately liable. CGT arises on the disposal/sale/gifting away of the asset. Gifting is treated in the same way for CGT purposes as if you had sold them with the exception that you have to place a value on the assets that you gifted. That will be the value that the recipient will use when he sells them, or if he's liable for CAT.

Depending on the amount, (if it's more than €3000) then the recipient may be liable for CAT (Capital Acquisitions Tax).

exaisle

Just one thing to note....the first €1270 of capital gains in any year is exempt.
So, where somebody holds assets that are fairly liquid, (easily converted into cash), they should sell a sufficient amount to generate a gain of €1,270 EVERY year. So, if you bought for €5,000 and the current value is €10,000, sell €2,540 worth, generating a capital gain of €1,270, which is exempt.
Then immediately buy €2,540 worth of the asset again.
Do this every year and save €419 each year.
Not much point if you're dealing in hundreds of thousands, but for the small investor it's worth while minimising their exposure to CGT for the sake of one transaction once a year.

AndrewJRenko

cnocbui wrote: »

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.

If you're talking about a permanent or long-term move, then yes, that's correct - once you've left the country, Revenue here say goodbye and Revenue NZ or whatever they are called take over - with pretty much the same degree of intelligence and access to information over there - so they will be paying as much attention to cash and property transactions over there.

I was really talking about the situation of people who reckon they can hide money or assets off shore and Revenue here won't find out.

Rd96

Mr.S wrote: »

All financial institutions will flag any deposits larger than approx 5k with revenue. If (more like when) Revenue follow up on that, is another story.

If you deposit frequent large sums it will also get flagged.

You would be mad to not declare and pay the correct tax.

If a bank account gets flagged what would be the normal procedure from Revenue?
If they decide a person should have been paying CGT and they haven't, what would they do ?

Peregrinus

Rd96 wrote: »

If a bank account gets flagged what would be the normal procedure from Revenue?
If they decide a person should have been paying CGT and they haven't, what would they do ?

They send you what amounts to a postcard which says, in essence, "We have reason to believe that you have undisclosed income/capital gains. Please comment." This marks the start of a dialogue in which you protest indignantly that you have no idea what they are talking about and they ask you rather more pointed questions, which gives you some hint about what they are on to, but you don't really know how much they know, and therefore you don't know what lies you can tell without risk of detection. With this kind of pressure on the one hand and on the other hand your tax advisers pointing out to you that the sooner and in more detail you make a full disclosure the lower the interest and penalties will be, the notion of stonewalling indefinitely begins to look unattractive. If you do stonewall, they issue you with an assessment based on what they know or believe, and it's then up to you to challenge the assessment by appealing it, and the sanctions for not making full disclosure in the appeals process are medieval in their severity. If you simply pay the assessment, they assume that in fact they pitched it too low, and there is more for the chasing, so expect further attention from them.

Of course, it all depends on whether they think you're worth chasing. It's a lot of work for them, and they prefer to put their energies into the people who have the highest unpaid liabilities. They generally aren't going to give you the full treatment for five hundred euro. Unless, perhaps, you're running an evasion arrangement which is small when viewed individually but which is run by many, many people, and they need to demonstrate that it is evasion, and you are one of their test cases.

jobless

exaisle wrote: »

Just one thing to note....the first €1270 of capital gains in any year is exempt.
So, where somebody holds assets that are fairly liquid, (easily converted into cash), they should sell a sufficient amount to generate a gain of €1,270 EVERY year. So, if you bought for €5,000 and the current value is €10,000, sell €2,540 worth, generating a capital gain of €1,270, which is exempt.
Then immediately buy €2,540 worth of the asset again.
Do this every year and save €419 each year.
Not much point if you're dealing in hundreds of thousands, but for the small investor it's worth while minimising their exposure to CGT for the sake of one transaction once a year.

anyone dealing with lower amounts of bitcoin for example if better off using local bitcoins or an atm to take out the money and spend it

ZeroThreat

Peregrinus wrote: »

They send you what amounts to a postcard which says, in essence, "We have reason to believe that you have undisclosed income/capital gains. Please comment." This marks the start of a dialogue in which you protest indignantly that you have no idea what they are talking about and they ask you rather more pointed questions, which gives you some hint about what they are on to, but you don't really know how much they know, and therefore you don't know what lies you can tell without risk of detection. With this kind of pressure on the one hand and on the other hand your tax advisers pointing out to you that the sooner and in more detail you make a full disclosure the lower the interest and penalties will be, the notion of stonewalling indefinitely begins to look unattractive. If you do stonewall, they issue you with an assessment based on what they know or believe, and it's then up to you to challenge the assessment by appealing it, and the sanctions for not making full disclosure in the appeals process are medieval in their severity. If you simply pay the assessment, they assume that in fact they pitched it too low, and there is more for the chasing, so expect further attention from them.

Of course, it all depends on whether they think you're worth chasing. It's a lot of work for them, and they prefer to put their energies into the people who have the highest unpaid liabilities. They generally aren't going to give you the full treatment for five hundred euro. Unless, perhaps, you're running an evasion arrangement which is small when viewed individually but which is run by many, many people, and they need to demonstrate that it is evasion, and you are one of their test cases.

It is possible that with the higher prominence of bitcoin in the media lately that revenue are closely watching any significant bank transfers to any of the better known crypto sites/exchanges and are compiling a dossier of names and addresses and who knows what other information.

At the end of the day, revenue and customs have more or less unlimited powers, far more than the Garda or any other organs of the state and can pretty much do anything they want.

McCrack

ZeroThreat wrote: »

It is possible that with the higher prominence of bitcoin in the media lately that revenue are closely watching any significant bank transfers to any of the better known crypto sites/exchanges and are compiling a dossier of names and addresses and who knows what other information.

At the end of the day, revenue and customs have more or less unlimited powers, far more than the Garda or any other organs of the state and can pretty much do anything they want.

Revenue commissioners and customs have certain powers under statute. They are far from unlimited and are subject to judicial scrutiny which any person can appeal to.

barneystinson

McCrack wrote: »

Revenue commissioners and customs have certain powers under statute. They are far from unlimited and are subject to judicial scrutiny which any person can appeal to.

If it relates to the previous 4 years their statutory powers to compel production of records relating to one's financial dealings effectively border on unlimited. Waste money on judicial review if you like.

cnocbui

Speaking of records. Does anyone know what gives regarding statements?

My banks all urge me constantly to turn off paper statements and to download pdf versions. Does this mean a pdf is acceptable as a tax record?

thierry14

Where can i buy bitcoin?

1000e worth

cnocbui

One place would be https://www.belgacoin.com/

Peregrinus

cnocbui wrote: »

Speaking of records. Does anyone know what gives regarding statements?

My banks all urge me constantly to turn off paper statements and to download pdf versions. Does this mean a pdf is acceptable as a tax record?

It generally will be accepted, yes. If the Revenue are concerned that it's a forgery they can of course look behind it, but the same goes for paper documents.

Coin123

exaisle wrote: »

Just one thing to note....the first €1270 of capital gains in any year is exempt.
So, where somebody holds assets that are fairly liquid, (easily converted into cash), they should sell a sufficient amount to generate a gain of €1,270 EVERY year. So, if you bought for €5,000 and the current value is €10,000, sell €2,540 worth, generating a capital gain of €1,270, which is exempt.
Then immediately buy €2,540 worth of the asset again.
Do this every year and save €419 each year.
Not much point if you're dealing in hundreds of thousands, but for the small investor it's worth while minimising their exposure to CGT for the sake of one transaction once a year.

On this, can expenses (fees) be used to offset the total gain? If so would they be fees across all Bitcoin trades that year or only those relating to the Bitcoin being sold. Even if those fees were incurred in another year?

Adren

Some of you might find this site useful if your hoping to get your CGT in order.

cointracking.info

You can pull transaction history from the main exchanges, and it builds a portfolio for you.

It's also has tax in mind, however it's for the US. But there is a 'Realized and Unrealized Gains' section, which if all the records are correct, should give you a good reading for these metrics.

I have a few questions though.

Say I have 1 BTC, and that is worth 5,000 euros when I purchase it, it then goes up to 11,270. I then 'dispose' of the BTC at 11,270 by buying 1 ETH ( Who's rate in euros will say is for this example is 11,270 ).

So my CGT on the BTC that I disposed of should be 1650 ( 33 percent of 5000 ( 11,270 - 1,270 exemption ) )

But how do I pay for this?

My BTC wasn't cashed out, but it was technically disposed of into ethereum, but I do not have realised gains in cash, so how would I pay the CGT?


Another question, if I gift my BTC to someone who lives in Germany, would I have to pay CGT on it? If so, again, how would I pay it?

barneystinson

Adren wrote: »

Some of you might find this site useful if your hoping to get your CGT in order.

cointracking.info

You can pull transaction history from the main exchanges, and it builds a portfolio for you.

It's also has tax in mind, however it's for the US. But there is a 'Realized and Unrealized Gains' section, which if all the records are correct, should give you a good reading for these metrics.

I have a few questions though.

Say I have 1 BTC, and that is worth 5,000 euros when I purchase it, it then goes up to 11,270. I then 'dispose' of the BTC at 11,270 by buying 1 ETH ( Who's rate in euros will say is for this example is 11,270 ).

So my CGT on the BTC that I disposed of should be 1650 ( 33 percent of 5000 ( 11,270 - 1,270 exemption ) )

But how do I pay for this?

My BTC wasn't cashed out, but it was technically disposed of into ethereum, but I do not have realised gains in cash, so how would I pay the CGT?


Another question, if I gift my BTC to someone who lives in Germany, would I have to pay CGT on it? If so, again, how would I pay it?

It's up to you to organise your affairs so that you can pay your tax liabilities.

Tigger

EndaHonesty wrote: »

CGT is liable on the profits from the sale of currency.

What is the legal definition of currency in Ireland?

I would imagine it would revolve around the term "legal tender".

IMO Cryptocurrencies are not, as of now, legal tender.

Until there is specific legislation around cryptocurrencies it is not factually correct to say the CGT is definitely liable on the sale of crypto.

As an asset, again IMO, until cryptocurrencies are specifically legislated for, there are no definite rules.

the is cgt on cg
you make a capital gain you pay tax
if you made stupid money then mive to malta before cashing out
otherwise just pay

Tigger

barneystinson wrote: »

It's up to you to organise your affairs so that you can pay your tax liabilities.

a wile ago revenue told me "we dont do your tax returns we enforce your tax returns "

Tigger

thierry14 wrote: »

Where can i buy bitcoin?

1000e worth

dont it s too late

EndaHonesty

Tigger wrote: »

the is cgt on cg
you make a capital gain you pay tax
if you made stupid money then mive to malta before cashing out
otherwise just pay

Do you know what a wasting chattel is?

barneystinson

EndaHonesty wrote: »

Do you know what a wasting chattel is?

You obviously don't, if you think you can shoehorn cryptocurrency into that category.

EndaHonesty

barneystinson wrote: »

You obviously don't, if you think you can shoehorn cryptocurrency into that category.

I'm asking a poster a question.

What has that got to do with you?

barneystinson

EndaHonesty wrote: »

I'm asking a poster a question.

What has that got to do with you?

Oh sorry, I thought it was an open forum, did I miss something?

EndaHonesty

barneystinson wrote: »

Oh sorry, I thought it was an open forum, did I miss something?

Well barney you obviously missed that I quoted a specific poster and asked that poster a direct question...

barneystinson

EndaHonesty wrote: »

Well barney you obviously missed that I quoted a specific poster and asked that poster a direct question...

So does that mean no one else gets to talk to you?

Do you know what a wasting chattel is?

Do you think cryptocurrency is a wasting chattel?

EndaHonesty

barneystinson wrote: »

So does that mean no one else gets to talk to you?

Do you know what a wasting chattel is?

Do you think cryptocurrency is a wasting chattel?

You obviously think it's an invitation to butt your fat head in...

Get over yourself barney.

I'll wait for the expert who was dishing out advice to answer my question...

barneystinson

EndaHonesty wrote: »

Talk to me?!

You should change your name to Travis Bickle

(Or Terry Tibbs)

EndaHonesty

barneystinson wrote: »

You should change your name to Travis Bickle

(Or Terry Tibbs)

Go find another thread to bore you div...

barneystinson

EndaHonesty wrote: »

Go find another thread to bore you div...

Back to the topic at hand...

Guidance on wasting chattels here:
https://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/nfg/sec0603-nfg.html

.G.

Adren wrote:

My BTC wasn't cashed out, but it was technically disposed of into ethereum, but I do not have realised gains in cash, so how would I pay the CGT?

CGT only applies if you dispose of the assets into fiat currency so you won't be liable until you've converted it into hard cash.