Taxation of proceeds from Ethereum mining

dublinbando

Hello,

I am looking for some information on the taxation of the proceeds from mining cryptocurrency?

I am making a fairly decent amount from it and need to know if I should be paying income tax or capital gains tax or even any tax at all?

Thanks!

TG860

dublinbando wrote: »

Hello,

I am looking for some information on the taxation of the proceeds from mining cryptocurrency?

I am making a fairly decent amount from it and need to know if I should be paying income tax or capital gains tax or even any tax at all?

Thanks!

It's a very interesting question. I'm not sure revenue has issued any definitive guidance on this issue to date.
In one respect, if you treat it like any other physical asset (e.g swap mining ethereum with building a house) then in theory it is subject to CGT on disposal.
However, it's also a currency, and while gains from currency trading would also generally be subject to CGT, how do you calculate the gain to pay tax upon? Is the cost of mining the currency easily quantifiable, and what is/isn't an allowable cost in that regard?

What guidance I could come across was from statements from Michael Noonan when he was finance minister. These seem to indicate that gains from the sale of cryptocurrencies is subject to normal CGT rules. See sources below

http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/dail2013121000054#WRD02700

http://bitcoinsinireland.com/irish-legal-position-march14reddit/

So in short, I would say that gains from Ethereum mining are subject to CGT.
While calculating your income from the sale would be easy, you'll need to quantify the cost of producing the coin to get your final assessable gain.
I don't know if that is easy/difficult for you to do but in theory that would be the approach.

dublinbando

TG860 wrote: »

It's a very interesting question. I'm not sure revenue has issued any definitive guidance on this issue to date.
In one respect, if you treat it like any other physical asset (e.g swap mining ethereum with building a house) then in theory it is subject to CGT on disposal.
However, it's also a currency, and while gains from currency trading would also generally be subject to CGT, how do you calculate the gain to pay tax upon? Is the cost of mining the currency easily quantifiable, and what is/isn't an allowable cost in that regard?

What guidance I could come across was from statements from Michael Noonan when he was finance minister. These seem to indicate that gains from the sale of cryptocurrencies is subject to normal CGT rules. See sources below

http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/dail2013121000054#WRD02700

http://bitcoinsinireland.com/irish-legal-position-march14reddit/

So in short, I would say that gains from Ethereum mining are subject to CGT.
While calculating your income from the sale would be easy, you'll need to quantify the cost of producing the coin to get your final assessable gain.
I don't know if that is easy/difficult for you to do but in theory that would be the approach.

Thanks for the reply and apologies for taking so long to respond!

I reckon I could say the profits are a result of a hobby (ethereum mining) and profits arising from hobbies are exempt from tax I believe?

Esel

"I play the stock market as a hobby."

"I work for a hobby."

Can't see that flying, tbh....

dublinbando

Esel wrote: »

"I play the stock market as a hobby."

"I work for a hobby."

Can't see that flying, tbh....

Well I don't do much with it, it's passive you know? I have a day job.

Maybe an hour or two a week I will perform maintenance and trade my takings to euro so I see it as a hobby.

But the problem I am having is finding absolute clarity on the rate of tax and under which type I should be paying.

Esel

dublinbando wrote: »

Well I don't do much with it, it's passive you know? I have a day job.

Maybe an hour or two a week I will perform maintenance and trade my takings to euro so I see it as a hobby.

Eh, no.

Take professional advice. Don't be a test case. Wait for the chips to fall, then take more professional advice.