Tax on Bitcoin Profits

makeorbrake

Okay, so ordinary residence scheme for Malta suggests that .."Individuals holding a residence permit under the ordinary residence scheme pay personal income tax, at progressive rates of up to 35%, on any local income and on any foreign sourced income which is remitted to a Maltese bank account."
If that's the case, could someone take up residency in Malta in 2018 - realise a gain during that time through an offshore account and NOT be subjected to CGT in either Malta or Ireland?

barneystinson

makeorbrake wrote: »

Okay, so ordinary residence scheme for Malta suggests that .."Individuals holding a residence permit under the ordinary residence scheme pay personal income tax, at progressive rates of up to 35%, on any local income and on any foreign sourced income which is remitted to a Maltese bank account."
If that's the case, could someone take up residency in Malta in 2018 - realise a gain during that time through an offshore account and NOT be subjected to CGT in either Malta or Ireland?

They might not have to pay CGT in Malta but you haven't considered their position in Ireland...

You'd need to stay abroad for several years and become no longer ordinarily resident in Ireland before realising a gain, in order not to be chargeable to CGT here on your worldwide gains.

makeorbrake

barneystinson wrote: »

You'd need to stay abroad for several years and become no longer ordinarily resident in Ireland before realising a gain, in order not to be chargeable to CGT here on your worldwide gains.

But if revenue define Irish tax residency as spending 183 days a year in Ireland, how can revenue request a chunk of any CG realised within that year if it's clear the person is resident overseas for that year?

barneystinson

makeorbrake wrote: »

But if revenue define Irish tax residency as spending 183 days a year in Ireland, how can revenue request a chunk of any CG realised within that year if it's clear the person is resident overseas for that year?

Because there is a concept of ordinary residence in Irish tax legislation, separate from tax residence i.e. you can be non resident but be ordinarily resident.

And Ireland taxes the gains of both its residents and its ordinary residents.

CIARAN_BOYLE

makeorbrake wrote: »

Okay, so ordinary residence scheme for Malta suggests that .."Individuals holding a residence permit under the ordinary residence scheme pay personal income tax, at progressive rates of up to 35%, on any local income and on any foreign sourced income which is remitted to a Maltese bank account."
If that's the case, could someone take up residency in Malta in 2018 - realise a gain during that time through an offshore account and NOT be subjected to CGT in either Malta or Ireland?

Also cgt or income tax would have to be paid in the location where the foreign source income is.

For example Irish source income is taxable in Ireland no matter where you are resident.

I'm not sure where Bitcoing capital gains would be considered sourced from.

makeorbrake

barneystinson wrote: »

Because there is a concept of ordinary residence in Irish tax legislation, separate from tax residence i.e. you can be non resident but be ordinarily resident.

Is there a full and clear definition of what qualifies as "ordinary residence"?

makeorbrake

CIARAN_BOYLE wrote: »

I'm not sure where Bitcoing capital gains would be considered sourced from.

I'd be interested in clarity on this aspect too as it can be that buffoon wasn't acquired through an exchange or doesn't rest in an exchange...

CIARAN_BOYLE

makeorbrake wrote: »

Is there a full and clear definition of what qualifies as "ordinary residence"?

Simple definition here

https://www.revenue.ie/en/jobs-and-pensions/tax-residence/how-to-know-if-you-are-ordinarily-resident-for-tax-purposes.aspx

makeorbrake wrote: »

I'd be interested in clarity on this aspect too as it can be that buffoon wasn't acquired through an exchange or doesn't rest in an exchange...

Would be interested if someone found an answer here.

cnocbui

makeorbrake wrote: »

But if revenue define Irish tax residency as spending 183 days a year in Ireland, how can revenue request a chunk of any CG realised within that year if it's clear the person is resident overseas for that year?

Because revenue are a very greedy lot. CGT isn't the same as income tax. The residency thing applies to income tax, not CGT, unless that starts and finishes within that 183 days you are elsewhere.

What is Ordinary Residence?
The term
ordinary residence
as distinct from residence refers to an individual’s pattern of residence over a number of
tax years. If you have been resident in Ireland for three consecutive tax years you are regarded as ordinarily resident
from the beginning of the fourth tax year. Conversely you will cease to be ordinarily resident in Ireland having been
non-resident for three consecutive tax years.
What is Domicile?
Domicile
is a concept of general law. It is broadly interpreted as meaning residence in a particular country with the
intention of residing permanently in that country. Every individual acquires a domicile of origin at birth. An Irish domicile
of origin will remain with an individual until such time as a new domicile of choice is acquired. However, before that
domicile of origin can be shed there has to be clear evidence that the individual has demonstrated a positive intention
of permanent residence in the new country and has abandoned the idea of ever returning to live in Ireland.
An
individual’s domicile status can influence the extent to which foreign sourced gains are taxable in Ireland.

https://www.revenue.ie/en/gains-gifts-and-inheritance/documents/cgt1-guide.pdf

Revenue will want their pound of CGT flesh if you return to Ireland to reside for taxation purposes, before 3 years are up. After that, any CGT gains are between you and your new country of residence.

Foreign banks will only report notable activity on your bank account to Revenue if they think you are resident in Ireland, and then, AFAIK, it will only be for the current financial years transactions they believe you were no longer tax resident in their country. I suspect that if you move to country B to reside, open a bank account with an address in that country, they will not be forwarding transaction details to Revenue for that financial year so long as the registered address for the account remains local and they think you are resident for tax purposes in that country.

.G.

dxhound2005 wrote: »

If you intend never to convert them to Euros, or they cannot be converted, what happens when you die? What provision would you need to make for someone to inherit them and be able to realise their value?

My last paragraph says what I'll do. If I make money from it I'll convert it to euros, pay my cgt and spend the rest.

barneystinson

cnocbui wrote: »

Because revenue are a very greedy lot. CGT isn't the same as income tax. The residency thing applies to income tax, not CGT, unless that starts and finishes within that 183 days you are elsewhere.

https://www.revenue.ie/en/gains-gifts-and-inheritance/documents/cgt1-guide.pdf

Revenue will want their pound of CGT flesh if you return to Ireland to reside for taxation purposes, before 3 years are up. After that, any CGT gains are between you and your new country of residence.

Foreign banks will only report notable activity on your bank account to Revenue if they think you are resident in Ireland, and then, AFAIK, it will only be for the current financial years transactions they believe you were no longer tax resident in their country. I suspect that if you move to country B to reside, open a bank account with an address in that country, they will not be forwarding transaction details to Revenue for that financial year so long as the registered address for the account remains local and they think you are resident for tax purposes in that country.

What's your point? That he should evade his taxes? I hope you'll be there to dispense more sage advice if/when the proverbial hits the fan...

nxbyveromdwjpg

CGT rate here really is a disgrace, it's actually worth leaving the country over.

Blacktie.

Itzel Careful Treasure wrote: »

CGT rate here really is a disgrace, it's actually worth leaving the country over.

Yep. If you have a substantial gain, I'm talking quit your job forever money, it would probably be worth becoming a resident in Germany for a year and getting out that way. No taxes if held for a year.

Bobeagleburger

Get professional advice regarding tax rather than ask on a public forum.

The penalties for dodging tax are mind boggling.

Tigger

EndaHonesty wrote: »

Do you know what a wasting chattel is?

yes

do you know that crypto is an asset

dxhound2005

superg wrote: »

My last paragraph says what I'll do. If I make money from it I'll convert it to euros, pay my cgt and spend the rest.

And your first paragraph says:

People focus on bitcoin and Ether but I want trade cryptos, all kinds, not just the ones that can be converted easily into Euros. You stated in a previous post that all of them are easily converted to euros and as such can be easily valued in fiat and that is simply not the case, there's hundreds of coins out there that can only be converted to other coins! I view them as shares in a company or an business idea rather than actual currency cos I'd never spend them to buy things.

Bit of a contradiction there. And just say you died unexpectedly tomorrow, how would someone get the value of those coins which cannot be converted to Euros?

.G.

dxhound2005 wrote: »

And your first paragraph says:

People focus on bitcoin and Ether but I want trade cryptos, all kinds, not just the ones that can be converted easily into Euros. You stated in a previous post that all of them are easily converted to euros and as such can be easily valued in fiat and that is simply not the case, there's hundreds of coins out there that can only be converted to other coins! I view them as shares in a company or an business idea rather than actual currency cos I'd never spend them to buy things.

Bit of a contradiction there. And just say you died unexpectedly tomorrow, how would someone get the value of those coins which cannot be converted to Euros?

Sorry I'm a bit lost here. Whats the contradiction? It doesn't matter what I view them as, there's an end game in mind where it'll be worth real actual cash rather than keeping them as crypto and spending them that way. I don't see them like that hence the first paragraph. When they are worth enough I know how to get them into fiat currency and thats what I'll do. Or maybe by then they'll be widely accepted as coins and I won't have to. Most of them aren't hence why I don't see them as currency.

If I die tomorrow who gives a ****, I haven't made any money yet and if I ever do those who need to will know how to get it.

barneystinson

Blacktie. wrote: »

Yep. If you have a substantial gain, I'm talking quit your job forever money, it would probably be worth becoming a resident in Germany for a year and getting out that way. No taxes if held for a year.

No taxes IN GERMANY.

You'd still be liable to Irish tax for 3-4 years... what would you do in Germany for 3-4 years before selling your asset? And worth bearing in mind, the asset in question could devalue substantially in that period of time... if it's a volatile asset like cryptos currently are, it could become worthless while you're in transit from Balbriggan to Bavaria...

A lot of people on here talking about Malta and Germany etc clearly have no idea about the actual practical realities of what would be required and the length of time required for this to be effective tax planning.

alb

barneystinson wrote: »

No taxes IN GERMANY.

You'd still be liable to Irish tax for 3-4 years... what would you do in Germany for 3-4 years before selling your asset?

Probably live in reasonably priced well constructed accommodation, use reliable timely public transport and drink extremely good beer. The struggle would be worth it.

makeorbrake

barneystinson wrote: »

A lot of people on here talking about Malta and Germany etc clearly have no idea about the actual practical realities of what would be required and the length of time required for this to be effective tax planning.

Yes, of course - a lot of people don't know but they may be making preliminary efforts to figure it out. I take the point that its much too serious to rely on hearsay - and that it will have to culminate in professional advice. However, I believe there is value in figuring out as much as possible oneself beforehand. To that end, this thread/discussion takes on major relevance.

barneystinson

alb wrote: »

Probably live in reasonably priced well constructed accommodation, use reliable timely public transport and drink extremely good beer. The struggle would be worth it.

Paid for how?
Sprechen sie Deutsche?

cnocbui

barneystinson wrote: »

What's your point? That he should evade his taxes? I hope you'll be there to dispense more sage advice if/when the proverbial hits the fan...

My point was to convey information. I don't believe I made any suggestions as to what he should or shouldn't do with that information.

Personally I am fed up with the level of taxation in this country and will be emigrating permanently as soon as I am able. I will then be able to realise a CG without having to worry about any Irish tax implications, only those of the country I have arrived in.

AndrewJRenko

Itzel Careful Treasure wrote: »

CGT rate here really is a disgrace, it's actually worth leaving the country over.

It's disgracefully low - encouraging businesses to return to investors through capital gains rather than dividends. It should be closer or just the same as income tax. What's the difference really?

ZeroThreat

cnocbui wrote: »

My point was to convey information. I don't believe I made any suggestions as to what he should or shouldn't do with that information.

Personally I am fed up with the level of taxation in this country and will be emigrating permanently as soon as I am able. I will then be able to realise a CG without having to worry about any Irish tax implications, only those of the country I have arrived in.

well unless you wait out the time period in order to become ordinarily resident, you'll have the revenue & forces of the law waiting for you if you should ever return through an Irish port or airport again....

nxbyveromdwjpg

AndrewJRenko wrote: »

It's disgracefully low - encouraging businesses to return to investors through capital gains rather than dividends. It should be closer or just the same as income tax. What's the difference really?

It's the 3rd highest rate of capital gains tax in the whole world.

Hence we have people looking to avoid it altogether (legally) meaning the revenue will get zero, whereas if they moved anywhere towards the average (15%?) or even highered the pathetic exemption threshold people might not feel so gouged by them that they are willing to up and move country.

ZeroThreat

AndrewJRenko wrote: »

It's disgracefully low - encouraging businesses to return to investors through capital gains rather than dividends. It should be closer or just the same as income tax. What's the difference really?

How is it 'disgracefully low' ?

If I recall, the only country has higher capital taxes - Denmark (Finland and France have about the same I think).

I'd prefer the rate to be lowered to about 25% (one quarter to the taxman sounds more palatable than one third), or at least 30% if that isn't feasible.

There was an older thread, a number of months ago on boards with some guy ranting about people not being entitled to 'non earned money'.

Seems to be a train of thought prevalent in this country that making money while your asleep outside the 9-5 (or whatever) daily grind is somehow unethical and immoral.

You never see such a hostile attitude to investment in most other parts of the world. (with exceptions to the likes of Venezuela and Cuba)

cnocbui

ZeroThreat wrote: »

well unless you wait out the time period in order to become ordinarily resident, you'll have the revenue & forces of the law waiting for you if you should ever return through an Irish port or airport again....

Won't happen. Once I have a bank account with a local residential address, the issue of them passing on any information to Revenue will never arise.

AndrewJRenko

ZeroThreat wrote: »

How is it 'disgracefully low' ?

If I recall, the only country has higher capital taxes - Denmark (Finland and France have about the same I think).

I'd prefer the rate to be lowered to about 25% (one quarter to the taxman sounds more palatable than one third), or at least 30% if that isn't feasible.

There was an older thread, a number of months ago on boards with some guy ranting about people not being entitled to 'non earned money'.

Seems to be a train of thought prevalent in this country that making money while your asleep outside the 9-5 (or whatever) daily grind is somehow unethical and immoral.

You never see such a hostile attitude to investment in most other parts of the world. (with exceptions to the likes of Venezuela and Cuba)

It's disgracefully low because it allows people to exploit the gap between CGT and income tax. There is no difference between mining bitcoin and any other part-time job, like delivering pizzas or driving a taxi. But because it is masked as an 'investment gain', the tax liability is significantly lower.

Why should mining bitcoin get a reduced tax rate from the lad who works a few extra shifts in the local pub?

Bobeagleburger

33% is probably in line with the lower rate of combined tax.

Prefer if it was lower obviously.

barneystinson

cnocbui wrote: »

Won't happen. Once I have a bank account with a local residential address, the issue of them passing on any information to Revenue will never arise.

But that's irrelevant because you're not suggesting you'll evade your Irish taxes, right..?