Can we pool our knowledge regarding TAX and crypto and make some kind of FAQ/sticky?

Halflifept

The form CG1 for 2017 is already available.
https://www.revenue.ie/en/gains-gifts-and-inheritance/documents/formcg1.pdf

Tinder Surprise

Purely hypothetical question....


Whats stopping someone transferring back to FIAT and depositing say into a Revolut card/account

I get its 100% tax avoidance.

GreeBo

Tinder Surprise wrote: »

Purely hypothetical question....


Whats stopping someone transferring back to FIAT and depositing say into a Revolut card/account

I get its 100% tax avoidance.

Whats to stop someone not paying any CGT?

AlmightyCushion

Tinder Surprise wrote: »

Purely hypothetical question....


Whats stopping someone transferring back to FIAT and depositing say into a Revolut card/account

I get its 100% tax avoidance.

If that someone is doing so to avoid paying taxes then it's tax evasion not tax avoidance. Evasion is illegal, avoidance is not. There's nothing stopping them doing it. Do Revolut report things like this to Revenue like other banks do? I think they do. But if they currently don't, then they may do in the future.

GreeBo

I guess the whole point is that its self assessment, so there is nothing forcing anyone to pay CGT.

However, there are huge fines for getting caught so...

Fakent.ie

GreeBo wrote: »

I guess the whole point is that its self assessment, so there is nothing forcing anyone to pay CGT.

However, there are huge fines for getting caught so...

so its "pay" or they take the 33% and more, really doesnt sound like paying to me

ZeroThreat

Fakent.ie wrote: »

so its "pay" or they take the 33% and more, really doesnt sound like paying to me

It's pretty much pay tax or lose it all and more in most countries of the world.

Ireland isn't unique in that regard.

relax carry on

Tinder Surprise wrote: »

Purely hypothetical question....


Whats stopping someone transferring back to FIAT and depositing say into a Revolut card/account

I get its 100% tax avoidance.

Nothing. And that's not tax avoidance. Failing to declare your gains/profit for taxation purposes is tax evasion. Tax avoidance is something else.

thegolfer

relax carry on wrote: »

Nothing. And that's not tax avoidance. Failing to declare your gains/profit for taxation purposes is tax evasion. Tax avoidance is something else.

Tax avoidance is the effective structuring of your affairs so as to legally minimise your tax exposure within the parameters of the tax laws..

sunrainmooncl

Cryptonovice wrote: »

I got this reply from revenue today. I have deleted my name and the lady who replied to me for privacy purposes. They took 4 weeks to reply initially to my first query and 3 days to reply to my second question which is answered below.

Dear ....., If you sell, gift or exchange your cryptocurrency, this is considered to be a disposal. Capital Gains Tax is payable on any gain you may make at the time of disposal. For disposals made between 1 January and 30 November (the initial period) you must pay CGT by 15 December of the same year. For disposals made between 1 December and 31 December (the later period) you must pay CGT by 31 January of the next year. Further information on the how you calculate and pay Capital Gains Tax can be found on our website; www.revenue.ie Kind regards,..

So I guess thats it finally, Peregrinus, Greebo et al. you were spot on...I had a feeling you were. Anyway, can we please use this thread now for advise purposes because there is people here who know what they are talking about and people who dont have experience in this area (Like myself)

Sound. Now if I disposed of BTC for 400 euro.. do I pay that in CGT tax and then get refunded in tax credits (because it's below the 1200ish relief amount) or... what?

AlmightyCushion

sunrainmooncl wrote: »

Sound. Now if I disposed of BTC for 400 euro.. do I pay that in CGT tax and then get refunded in tax credits (because it's below the 1200ish relief amount) or... what?

No, you just don't pay any CGT at all.

Peregrinus

Noctifer wrote: »

Does Revenue usually ask where the money comes from we use for trading?

Not usually. But they can ask.

Noctifer wrote: »

I made good gains last year, but since I am not a tax resident in Ireland last year I won't report the tax for that here. However, I won't report it either in my home country as they don't consider it a gain till I actually cashed it out to a local bank account (asked accountant about it, the fact that I cashed out this year on an Ireland account does not count as a gain).

So, would I ever need some kind of justification of where the money came from? Would they care even though the money was illegally acquired?

In your circumstances the Revenue are unlikely to be interested in where your initial investmen capital came from. You're a new tax resident in Ireland. Any investment capital you have at your disposal is presumably something you earned (or inherited, or were gifted, or whatever) in the past, and that you brought with you when you came to Ireland. There's no reason to think that the circumstances in which you earned, inherited, etc that money give rise to a charge to tax in Ireland. Therefore, they are not likely to be interested. Even if they do ask, "I earned this money last year when I was resident in Germany" or similar is an answer which is likely to satisfy them.

Peregrinus

sunrainmooncl wrote: »

Sound. Now if I disposed of BTC for 400 euro.. do I pay that in CGT tax and then get refunded in tax credits (because it's below the 1200ish relief amount) or... what?

No.

It works like this:

1. If you have a CGT liablity you have to calculate and pay it fairly quickly. For gains accruing between January and November in each year, you have to calculate and pay by 15 December. For gains occuring in December, you have until 31 January. You just send in the money with a CGT payslip which basically identifies you and says the money is in respect of CGT. If your aggregate gains for the year are below the small gains exemption you have no CGT liability so you don't have to make any payments under this rule.

2. If you have capital gains then regardless of whether you have a CGT liability you have to complete and file a capital gains tax return (form CG1). You have to file a return for the calendar year (January-December) by 31 October in the following year.

This means that, if you have a CGT liability, you pay the CGT before you file the return. When you file the return, the Revenue will use the information in it to check whether you have correctly calculated and paid the CGT due. If you haven't made any payment, the Revenue will use the information to check that you had no liability.

Cryptonovice

Anyone on here have any experience filling in the CG1 form...what would an accountant charge if u went to one? I see taxback will do it starting at about 240 euro..seems a bit weird to be paying that kind of money when your gain isn't even anywhere near that!
Does anyone here fill them out themselves??

If one has no gains, we are still required to complete the CG1 form to show reliefs/losses....is this correct?

Halflifept

Peregrinus wrote: »

No.

It works like this:

1. If you have a CGT liablity you have to calculate and pay it fairly quickly. For gains accruing between January and November in each year, you have to calculate and pay by 15 December. For gains occuring in December, you have until 31 January. You just send in the money with a CGT payslip which basically identifies you and says the money is in respect of CGT. If your aggregate gains for the year are below the small gains exemption you have no CGT liability so you don't have to make any payments under this rule.

2. If you have capital gains then regardless of whether you have a CGT liability you have to complete and file a capital gains tax return (form CG1). You have to file a return for the calendar year (January-December) by 31 October in the following year.

This means that, if you have a CGT liability, you pay the CGT before you file the return. When you file the return, the Revenue will use the information in it to check whether you have correctly calculated and paid the CGT due. If you haven't made any payment, the Revenue will use the information to check that you had no liability.

Lets say hypothetically that I did not payed the payslips in 2017.
Can I pay it now when filling the CG1?

Noctifer

Cryptonovice wrote: »

If one has no gains, we are still required to complete the CG1 form to show reliefs/losses....is this correct?

Yes. Even though there is no tax to paid you still have to report any disposals you made to Revenue.

If not, you could get fined if they find out.

Peregrinus

Halflifept wrote: »

Lets say hypothetically that I did not payed the payslips in 2017.
Can I pay it now when filling the CG1?

Yes. Or, better still, pay it now, and file the CG1 any time between now and 31 October. Don't delay paying it in order to pay simultaneously with lodging the CG1, in other words.

Others are debating whether to instruct an accountant to assist with this, and how much it might cost. In a situation where you realise that you have a CGT liablity and you're already in default in paying it, that might tip the balance towards consulting an accountant, if only for basic advice on how to conduct yourself so as to minimise the consequences of your default. You could still do the donkey-work of completing and submitting the CG1 yourself to minimise the cost in professional fees to the accountant.

Cryptonovice

Lets say down the line I want to take all I have on binance say ripple, funfair and tron...whatever they are worth in 5 year's. ..I will have to swap them back to ETH as coinbase only has like 4 coins and ETH is one of them. I want to then go from coinbase to my bank account to convert to euro...is this part considered the disposal or is it the swap initially on binance back to ETH....
Anyone get me? Anyone do this?

Peregrinus

Cryptonovice wrote: »

Lets say down the line I want to take all I have on binance say ripple, funfair and tron...whatever they are worth in 5 year's. ..I will have to swap them back to ETH as coinbase only has like 4 coins and ETH is one of them. I want to then go from coinbase to my bank account to convert to euro...is this part considered the disposal or is it the swap initially on binance back to ETH....
Anyone get me? Anyone do this?

There are two disposals; you dispose of your Ripple (say) for ETH, and then you dispose of your ETH for euros.

The gain on disposal of your Ripple you already know about. The gain or loss on disposal of your ETH will depend on price movements between your acquisition of the ETH and your disposal of it. As that will be a short time the price movements may be small and the gain/loss correspondingly small. But if you do this at a time of great volatility then obviously there is a risk of a larger gain/loss.

jobless

so it seems we have two different reponses from revenue.... better send an enquiry myself!

barneystinson

jobless wrote: »

so it seems we have two different reponses from revenue.... better send an enquiry myself!

There's one right one, and one ambiguous one.

Cryptonovice

barneystinson wrote: »

There's one right one, and one ambiguous one.

Hope mine is the ambiguous one!!

.G.

Peregrinus wrote: »

Not necessarily. I think you can use any reasonable method of valuing the assets involved as long as you use the same method consistently across all your transactions.

I seem to recall - I could be quite wrong here - that in relation to foreign exchange transactions, if you have a lot of them the Revenue are happy with calculations done on the basis of the mid-point of the daily range of the relevant exchange rate, or on the closing price each day, rather than on the basis of the actual rate that was being quoted at the instant your transactions settled. My guess is that they would be happy with a similar approach to crypto transactions, if a taxpayer wished to use it.

Here is an online chart which shows a price for ETH, expressed in USD, for every day since the currrency was introduced. Here is the same chart for Ripple. Data like this certainly exists, and is readily obtainable; I found these charts by googling. My guess is that the Revenue would be happy with calculations which rely on daily data from sources like these. If you wanted to use more specific data because it gives you a better tax outcome, the Revenue would be happy with that too, provided you use it consistently.

Added on edit: In the example given, where the taxpayer buys ETH and then trade it for XRP the same day, if the daily average price/closing price approach is used then the ETH will be treated as bought and sold at the same price, so no gain/no loss. In effect, you could treat the cash amount paid to acquire the ETH holding as the acquisition cost of the XRP holding.

Which is all fine and dandy as all coins mentioned above have FIAT trading pair so you can easily determine their worth in FIAT at the time of disposal. There are hundreds that don't have a FIAT trading pair. Also in crypto, the closing position of a coin could be many thousands more than it was when you bought it so I really think folk need to do their best to get as accurate a value in FIAT as they can at the exact time they made their disposal

davberd

Peregrinus wrote: »

Move to one of these places, wait three years so that you cease to be ordinarily resident in Ireland for tax purposes, hope to God that your crypto does not decline in value during this period and then cash out.

Some time back I had a brief conversation about this with a tax lawyer and I don't think this is quite right. I can't remember the exact details, but here's how I understood it...

If you moved to Germany you could sell your crypto right now and your capital gains would be payable there in Germany instead of in Ireland (assuming for this year you would be tax resident in Germany). However, Irish revenue can lay claim to CGT if you move back within the next three years. Some tax agreement between Ireland and Germany is what trumps the requirement to pay CGT while still an ordinary resident for the three years after leaving Ireland. Can anyone confirm or elaborate on this?

Noctifer

davberd wrote: »

Peregrinus wrote: »

Move to one of these places, wait three years so that you cease to be ordinarily resident in Ireland for tax purposes, hope to God that your crypto does not decline in value during this period and then cash out.

Some time back I had a brief conversation about this with a tax lawyer and I don't think this is quite right. I can't remember the exact details, but here's how I understood it...

If you moved to Germany you could sell your crypto right now and your capital gains would be payable there in Germany instead of in Ireland (assuming for this year you would be tax resident in Germany). However, Irish revenue can lay claim to CGT if you move back within the next three years. Some tax agreement between Ireland and Germany is what trumps the requirement to pay CGT while still an ordinary resident for the three years after leaving Ireland. Can anyone confirm or elaborate on this?

The double taxation law doesn't mean you don't have to pay taxes in Ireland when you pay them in Germany. It means you don't have to pay higher taxes than what the highest possible tax is of those countries.

For example, let's say German CGT is 10% and Irish one is 33%. If you pay the 10% in Germany, you still owe Revenue the other 23% if you are a tax resident in Ireland. Double taxation agreement means you don't have to pay 10% in Germany and 33% in Ireland.

I_warren

Sorry to go off the main topic here but got some questions:
Is it possible to claim crypto gains as self employment?

Can you voluntarily report it as a trade versus investment, and thus be subject to income tax vs capital gains?
(Reading articles aimed at the UK where it mentions the difference between them, for limited companies)

Scenario A: Let’s just say you were self employed, made 20k from the day job, invested 20k in crypto and didn’t make any further trades or disposal, net gain at the end of the year would be 0?

Scenario B,
Made 20k from day job, invested 5k in cryptocurrency, no further trades or disposal, taxable amount end of year is 15k?

Scenario C:
Made 20k, invested 5k, no further trades but the cryptocurrency value tripled so you cashed out to fiat, taxable amount end of year is 35k?

Scenario
Made 20k, invested 5k, ended up crashing and crypo ended up being worth 0, end of year amount is 15k?

Obviously the higher tax bracket would result in being taxed higher than capital gains but trying to wrap my head around this! Is it possible for it to make more sense to claim it as a trade vs investment in some cases?
If self employed I’m not seeing the logic in paying taxes at the higher rate, to make investments in crypto which are then taxed at capital gains if they turn a profit?

Might also be the benefit of not having to pay until later than the CGT due date, if it’s classed as self employment?

Maybe I’m totally lost on this but any input is appreciated!

Peregrinus

I_warren wrote: »

Sorry to go off the main topic here but got some questions:
Is it possible to claim crypto gains as self employment?

Can you voluntarily report it as a trade versus investment, and thus be subject to income tax vs capital gains? . . .

You can't just choose to have your crypto activity taxed as a trade rather than as investment; you have to get the Revenue to agree that you really are carrying on a trade of buying and selling crypto, which is not something they tend to accept lightly.

There's a link earlier in this thread to the section of the Revenue's Tax Practice Manual which discusses when a pattern of activity will be regarded as a trade, and when it won't.

If your activity is a trade, then your profits are computed on a slightly different basis, but the main difference is that they are taxed as income, at income tax rates. For most people this will mean a higher tax than if their earning fell under the CGT regime. However if you have actually made losses, then if you're carrying on a trade your losses are deductible for income tax purposes, and they can serve to reduce the tax you pay on your earnings from your "day" job. It's usually in these circumstanced that people claim to have been carrying on a trade, and it's not really surprising that the Revenue tend not to agree.

davberd

Noctifer wrote: »

The double taxation law doesn't mean you don't have to pay taxes in Ireland when you pay them in Germany. It means you don't have to pay higher taxes than what the highest possible tax is of those countries.

For example, let's say German CGT is 10% and Irish one is 33%. If you pay the 10% in Germany, you still owe Revenue the other 23% if you are a tax resident in Ireland. Double taxation agreement means you don't have to pay 10% in Germany and 33% in Ireland.

@Noctifer that's interesting - thanks for the info. The conversation I had was brief and casual so perhaps he got that wrong. Here's the taxation agreement between Ireland and Germany:

revenue.ie/en/tax-professionals/tax-agreements/double-taxation-treaties/g/germany-2011.pdf

(Sorry - it seems that as a new user I'm unable to post a proper link, so just prefix that with "www.".)

Article 13 relates to capital gains tax. I don't believe paragraphs 1-4 apply and paragraph 5 says the following:

Gains from the alienation of any property, other than that referred to in
paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the
alienator is a resident.

This would suggest that no CGT would be payable, but paragraph 6 goes on to say the following:


Where an individual was a resident of a Contracting State for a period of 3
years or more and has become a resident of the other Contracting State, paragraph 5
shall not prevent the first-mentioned State from taxing under its domestic law an
amount that is effectively determined by reference to the capital appreciation of the
shares in a company for the period of residence of that individual in the first mentioned
State. In such case, the appreciation of capital by reference to which the
amount was taxed in the first-mentioned State shall not be included in the
determination of the subsequent appreciation of capital by the other State.


Is this what you're referencing in your example? I have to say I don't quite understand what this means in the context of selling cryptocurrency, specifically "an amount that is effectively determined by reference to the capital appreciation of the shares in a company for the period...". Next time I chat to my tax lawyer friend, I'll see if he can clarify.

Noctifer

I am no expert when it comes to law and I mainly know how double taxation works from my home countries taxation views. So yes, if you want to know more I suggest you ask your account friend.

Peregrinus

davberd wrote: »

. . . Is this what you're referencing in your example? I have to say I don't quite understand what this means in the context of selling cryptocurrency, specifically "an amount that is effectively determined by reference to the capital appreciation of the shares in a company for the period...". Next time I chat to my tax lawyer friend, I'll see if he can clarify.

I think what it means is this: Suppose you are and Irish resident. You buy an asset. (It may or may not be crypto; there are no special rules for crypto.) You remain in Ireland for three years, then move to Germany and, two years after the move, five years after buying the asset you sell it, realising a nice fat gain. The gain will be apportioned, with 3/5ths of it being subject to Irish CGT, and the remaning 2/5ths being subject to the German equivalent.

Peregrinus

superg wrote: »

Which is all fine and dandy as all coins mentioned above have FIAT trading pair so you can easily determine their worth in FIAT at the time of disposal.

Are you saying that there are cryptocurrencies which cannot be exchanged for fiat currency on any exchange anywhere in the world? Can you give an example of an actual cryptocurrency which suffers from this limitation?

What can these cryptocurrencies be exchanged for?

Noctifer

Peregrinus wrote: »

What can these cryptocurrencies be exchanged for?

There are 1526 cryptocurrencies according to Coinmarketcap. Most of those are traded only for BTC, not fiat.

Peregrinus

Noctifer wrote: »

There are 1526 cryptocurrencies according to Coinmarketcap. Most of those are traded only for BTC, not fiat.

But BTC is traded for fiat, isn't it? So when you sell one of these and get BTC in return, putting a fiat value on the proceeds of sale seems like a fairly straightforward exercise. It'll be the fiat value of whatever quantity of BTC you received.

It's no different to a share swap. If my highly attractive little software startup, whose shares are not listed and therefore do not have a quoted cash value, is acquired by Microsoft and I'm paid in Microsoft shares, well, the proceeds of the disposal are the euro value of the Microsoft shares that I have received.

.G.

Peregrinus wrote: »

But BTC is traded for fiat, isn't it? So when you sell one of these and get BTC in return, putting a fiat value on the proceeds of sale seems like a fairly straightforward exercise. It'll be the fiat value of whatever quantity of BTC you received.

It's no different to a share swap. If my highly attractive little software startup, whose shares are not listed and therefore do not have a quoted cash value, is acquired by Microsoft and I'm paid in Microsoft shares, well, the proceeds of the disposal are the euro value of the Microsoft shares that I have received.

If I dispose of BTC to buy another coin, I use the FIAT value of BTC to determine its worth. If I dispose of the other coin back to BTC, why would I use the FIAT value of BTC again since I'm not disposing of BTC? It doesn't tell me what the coin I'm disposing of is in FIAT, merely tells what the BTC I've received is worth in FIAT. This is what confuses me.

And even if I was, the way BTC is going, by the time I make the trade back to BTC it could be worth thousands less than it was when I first used it to by the other coin therefore no FIAT gain in BTC is made, but I have made a BTC gain. All through January as BTC slumped all my trades increased my BTC holdings but the value of that BTC was less than what it was when the trade was initiated.

I'm not interested in BTC's current value in FIAT, my whole aim in trading is to increase my holdings of certain coins in the hope that they'll be worth far more when I do actually convert to FIAT than they are right now. And that time is at least a year away, maybe even longer. I'll be trading all year but I won't be turning any of it into cash. Unless of course I have to to pay the tax man.

Cryptonovice

Did anyone here ever fill in a cg1 return form? A simple coin to coin exchange is my scenario...bought coin A (ETH) for €150..sent to binance and swapped for coin B (XRP-ripple) I got 126 XRP and the value of XRP was €1.21.(value got from coinmarketcap within 5 mins of the swap between coins) 126 x €1.21 = €152.46...a whooping €2.46 gain.
How would I translate this scenario onto the cg1 form..what would be the aggregate consideration in my case..any help would be greatly appreciated folks. Great forum thanks again

GreeBo

superg wrote: »

If I dispose of BTC to buy another coin, I use the FIAT value of BTC to determine its worth. If I dispose of the other coin back to BTC, why would I use the FIAT value of BTC again since I'm not disposing of BTC? It doesn't tell me what the coin I'm disposing of is in FIAT, merely tells what the BTC I've received is worth in FIAT. This is what confuses me.

And even if I was, the way BTC is going, by the time I make the trade back to BTC it could be worth thousands less than it was when I first used it to by the other coin therefore no FIAT gain in BTC is made, but I have made a BTC gain. All through January as BTC slumped all my trades increased my BTC holdings but the value of that BTC was less than what it was when the trade was initiated.

I'm not interested in BTC's current value in FIAT, my whole aim in trading is to increase my holdings of certain coins in the hope that they'll be worth far more when I do actually convert to FIAT than they are right now. And that time is at least a year away, maybe even longer. I'll be trading all year but I won't be turning any of it into cash. Unless of course I have to to pay the tax man.

You use the BTC to fiat value to determine your initial cost.
Then same again when you sell.
The difference is your gain for CGT purposes.

You are not paying tax on BTC profits, you pay on any fiat gains, after conversion.

E.g. buy 1 BTC at €10k.
Buy 10,000 alt coins for 1 BTC
Your initial value of alt coins is still €10k, a assuming you don't feck around for days in-between.

You then sell your alt for .8 BTC
Let's say that's worth €10,500

You have realised a gain of €500.

GreeBo

Cryptonovice wrote: »

Did anyone here ever fill in a cg1 return form? A simple coin to coin exchange is my scenario...bought coin A (ETH) for €150..sent to binance and swapped for coin B (XRP-ripple) I got 126 XRP and the value of XRP was €1.21.(value got from coinmarketcap within 5 mins of the swap between coins) 126 x €1.21 = €152.46...a whooping €2.46 gain.
How would I translate this scenario onto the cg1 form..what would be the aggregate consideration in my case..any help would be greatly appreciated folks. Great forum thanks again

Just the 2.46, they don't care about anything else unless you get audited.

Fakent.ie

Peregrinus wrote: »

But BTC is traded for fiat, isn't it? So when you sell one of these and get BTC in return, putting a fiat value on the proceeds of sale seems like a fairly straightforward exercise. It'll be the fiat value of whatever quantity of BTC you received.

It's no different to a share swap. If my highly attractive little software startup, whose shares are not listed and therefore do not have a quoted cash value, is acquired by Microsoft and I'm paid in Microsoft shares, well, the proceeds of the disposal are the euro value of the Microsoft shares that I have received.

Its possible to go euro/btc/Alt/alt/alt/alt/alt and so on

h0neybadger

Question.

If someone bought Crypto while living in Ireland, and then spent 3+ years travelling abroad, through several different countries, where would they be liable to pay CGT?

Peregrinus

h0neybadger wrote: »

Question.

If someone bought Crypto while living in Ireland, and then spent 3+ years travelling abroad, through several different countries, where would they be liable to pay CGT?

When do they dispose of the crypto, and where are they resident and ordinarily resident when they dispose of it?

Peregrinus

Fakent.ie wrote: »

Its possible to go euro/btc/Alt/alt/alt/alt/alt and so on

I don't think that matters, in principle.

When you swap the the BTC for Alt-A, you're disposing of the crypto. You need to identify the proceeds of the disposal. The proceeds are so many units of Alt-A, so what you need to do is put a euro value on X units of Alt-A. (This will normally, of course, be the same as the euro value of the BTC that you are disposing of, but but what you are actually looking for is not the value of the thing you disposed of, but the value of the proceeds of the disposal.)

The euro value of the Alt-A units at the time of the disposal does not depend on what you do, or intend to do, with the Alt-A units, so the fact that you subsequently swapped them for Alt-B, which in turn you swapped for Alt-C, and so in, is completely irrelevant to the business of valuing them at the time you got them in exchange for your BTC.

The later swaps of Alt-B for Alt-C, Alt-C for Alt-D, etc, are independent disposals, and in each case you have to assign a value the proceeds of the disposal. (I'm assuming these are all happening at spaced intervals, on different days.) But each of these valuation exercises is separate, and is unaffected by the others.

Yes, if you dispose of lots of different assets on lots of different days, you will have lots of different calculations to do. This is true regardless of whether the assets are crypto or something else. But the individual calculations themselves do not become more complicated.

Peregrinus

superg wrote: »

If I dispose of BTC to buy another coin, I use the FIAT value of BTC to determine its worth.

You swap X number of BTC for Y number of Othercoin. What you actually need to value is the disposal proceeds, Y number of Othercoin. However, pretty much by definition, the two sides of the swap have the same value; otherwise the transaction wouldn't happen. So X times the fiat value of BTC should be equal to Y times the fiat value of Othercoin. So you can value the proceeds be looking at the fiat value of either crypto.

And the same goes for an Othercoin-to-BTC swap; you can value the proceeds by looking at the value of either crypto involved.

Strictly speaking, you're always trying to value the disposal proceeds, the coins that you get in the transaction, rather than the coins that you give away. But since the two figures should be the same, in practice you can work off the value of whichever crypto is the easiest one to get an acccurate price quote for the date and time of the transaction.

superg wrote: »

And even if I was, the way BTC is going, by the time I make the trade back to BTC it could be worth thousands less than it was when I first used it to by the other coin therefore no FIAT gain in BTC is made, but I have made a BTC gain. All through January as BTC slumped all my trades increased my BTC holdings but the value of that BTC was less than what it was when the trade was initiated.

I'm a bit confused. If you swap BTC for Othercoin, then hold the Othercoin while the price of BTC slumps, and then swap back in to BTC, the price movement in BTC will not give you either a gain or a loss, because you weren't holding any BTC. Whether you made a gain or a loss will depend on movements in the value of your holding of Othercoin during the period when you held it, not the movements in the value of BTC.

superg wrote: »

I'm not interested in BTC's current value in FIAT, my whole aim in trading is to increase my holdings of certain coins in the hope that they'll be worth far more when I do actually convert to FIAT than they are right now. And that time is at least a year away, maybe even longer. I'll be trading all year but I won't be turning any of it into cash. Unless of course I have to to pay the tax man.

As long as you're buying and holding the "certain coins", you have no liability to CGT; CGT liability only arised when you dispose of things.

Of course, if you dispose of something in order to buy the "certain coins", then you may (or may not) have a CGT liablity - not in relation to the certain coins, but in relation to the disposal of whatever it was that you disposed of in order to buy them.

h0neybadger

Peregrinus wrote: »

When do they dispose of the crypto, and where are they resident and ordinarily resident when they dispose of it?

They dispose of the Crypto after 3-4 years.
But during that time, they have no residence.

Say, the person rented a house in Ireland. Bought Bitcoin, and other Alt’s.
Put them on a wallet.
Left job, left rented house, sold all possessions.

Went travelling for 3-4 years, staying 2-3 months in different countries.

Once finished, decided to sell Crypto. And that person was currently still abroad, staying in hotel etc.

Peregrinus

h0neybadger wrote: »

They dispose of the Crypto after 3-4 years.
But during that time, they have no residence.

Say, the person rented a house in Ireland. Bought Bitcoin, and other Alt’s.
Put them on a wallet.
Left job, left rented house, sold all possessions.

Went travelling for 3-4 years, staying 2-3 months in different countries.

Once finished, decided to sell Crypto. And that person was currently still abroad, staying in hotel etc.

It's kind of difficult to be tax resident nowhere, since a lot of countries have fairly far-reaching residency laws that will attempt to keep a clutch on you unless and until you establish residence somewhere else. I'm not saying that it's impossible to be tax resident nowhere, but to be certain that you are tax-resident nowhere you need to be abreast of the tax laws and practices of a lot of different countries.

Most people who have enough money to make it worth their while to organise their lives around minimising their tax don't aim to be tax-resident nowhere; they aim to be tax-resident in a jurisdiction with very low taxes. This is much easier to pull off successfully and reliably.

If all you are worried about is avoiding capital gains tax on the disposal of some asset that you hold, the job is even easier; you just need to become a resident of a country that doesn't tax capital gains. There are quite a few of these; Belgium is a notable one and one in which EU nationals, of course, have a right to reside. New Zealand has no capital gains tax, if you want an English-speaking country.

The problem with this strategy is that to avoid Irish CGT it's not enough to be resident in Belgium or New Zealand; you also have to be not resident or ordinarily resident in Ireland. (It's perfectly possible to have tax residence in two or more countries.) And "ordinary residence" is the kicker here, since if you start out by being resident and ordinarily resident in Ireland, as most of us are, it will take three years away to lose ordinary resident status.

Which may be fine from a travel point of view; you might quite fancy three years in New Zealand, if you can organise a visa. But from an investment point of view, it means you have to defer selling your crypto for three years. And three years in the future, of course, your crypto could be worth as little as it was three years in the past.

My point is not to rain on anybody's crypto parade; my point is that with a highly volatile asset like crypto you do not want to be committed to making investment and disposal decisions based on criteria that have nothing to do with the investment characteristics of the asset. The right time to sell your crypto should be a decision driven by investment considerations. It makes no sense to prioritise avoiding tax on your gain over priorising realising a gain in the first place.

.G.

Peregrinus wrote: »

I'm a bit confused. If you swap BTC for Othercoin, then hold the Othercoin while the price of BTC slumps, and then swap back in to BTC, the price movement in BTC will not give you either a gain or a loss, because you weren't holding any BTC. Whether you made a gain or a loss will depend on movements in the value of your holding of Othercoin during the period when you held it, not the movements in the value of BTC.

OK so I do a number of trades, sometimes I'll get one a day sometimes only one a week but always end up with more BTC than I started with. For example, I use my BTC to buy Alt - a as I know that within a few days the price of Alt A will rise and then I sell my holding of it back to BTC. Rinse and repeat everytime the chart allows it. So say I realise a gain of 15% in BTC terms over a few days on one trade but at the same time the fiat value of BTC has dropped by 20% over the same time period then I've made a fiat loss while at the same time as making a BTC gain. So if I've to relate everything back to fiat for tax purposes then I don't have a gain in fiat to report for that trade even though I have actually made a gain!

Granted this scenario hasn't happened most of the time but it was happening all through January.

AlmightyCushion

superg wrote: »

OK so I do a number of trades, sometimes I'll get one a day sometimes only one a week but always end up with more BTC than I started with. For example, I use my BTC to buy Alt - a as I know that within a few days the price of Alt A will rise and then I sell my holding of it back to BTC. Rinse and repeat everytime the chart allows it. So say I realise a gain of 15% in BTC terms over a few days on one trade but at the same time the fiat value of BTC has dropped by 20% over the same time period then I've made a fiat loss while at the same time as making a BTC gain. So if I've to relate everything back to fiat for tax purposes then I don't have a gain in fiat to report for that trade even though I have actually made a gain!

Granted this scenario hasn't happened most of the time but it was happening all through January.

Whilst you have made a gain in BTC, because BTC has dropped in price in Euro you have made a loss in Euro so for CGT purposes you have made a loss.

Say, I want to buy some shares that are sold in dollars. I convert €10,000 to dollars and I get $10,000 and I buy 10 shares valued at $1,000 each. The shares do well and increase 10%. My shares are now worth $11,000 and I sell and keep the $11,000. I don't convert back to euro for whatever reason, maybe I believe the dollar will increase in value some day. Between the time I bought and sold the shares, the euro has gotten stronger and my $11,000 is now only worth €9,000. So whilst my shares increased in value in dollars, they decreased in value in euros so I actually lost money. For CGT purposes I have lost €1,000 on my investment.

.G.

AlmightyCushion wrote: »

Whilst you have made a gain in BTC, because BTC has dropped in price in Euro you have made a loss in Euro so for CGT purposes you have made a loss.

Say, I want to buy some shares that are sold in dollars. I convert €10,000 to dollars and I get $10,000 and I buy 10 shares valued at $1,000 each. The shares do well and increase 10%. My shares are now worth $11,000 and I sell and keep the $11,000. I don't convert back to euro for whatever reason, maybe I believe the dollar will increase in value some day. Between the time I bought and sold the shares, the euro has gotten stronger and my $11,000 is now only worth €9,000. So whilst my shares increased in value in dollars, they decreased in value in euros so I actually lost money. For CGT purposes I have lost €1,000 on my investment.

Which is all fine but it comes back to the point that for crypto to crypto trades, unless we convert it back to euros there can never be a gain/loss that's reportable. So having to account for all trades seems a bit pointless cos some don't have a natural fiat pair and to convert it back to fiat may not even result in a gain even though the trade itself had produced a gain in the thing you are trading, crypto.

The reverse is also true, while BTC was skyrocketing last December I was doing my usual and increasing my BTC holding. But even without even having to make profit in any trade my paper fiat worth was increasing all the time even though none of my coins where ever converted to fiat.

Cryptonovice

I buy ETH @ €637.3. I spend €150 and receive 0.2281097 ETH. subtotal = €145.37 (637.3 x 0.2281097) and the remainder went on fees.

When I send it to exchange 2 to swap for ripple (XRP) it says I sent €133 worth of ETH.

The market value of XRP at the time of the swap (according to coinmarketcap to 5 minutes) was €1.21 and €606 for ETH.
(606x 0.2281097 = €138)
1.21/606 = 0.001996.
The trading price on exchange 2 was recorded as 0.00179 when I traded ETH with XRP. I got 126 no XRP @ €1.21= €152.46.

My long winded question is it okay to just say original total cost of €150 (coin A) vs €152.46 (Coin ...€2.46 into CG1 form...as I am staying the right side of the losses and I just want to keep it simple.
Thanks in advance

Peregrinus

superg wrote: »

Which is all fine but it comes back to the point that for crypto to crypto trades, unless we convert it back to euros there can never be a gain/loss that's reportable. So having to account for all trades seems a bit pointless cos some don't have a natural fiat pair and to convert it back to fiat may not even result in a gain even though the trade itself had produced a gain in the thing you are trading, crypto.

What does not having a "natural fiat pair" have to do with anything? The assets you are acquring and disposing of have a value, and that value will determine whether you have made a loss or a gain. I can't think of any reason why you would ignore the loss or gain for tax purposes because you can't identify a "natural fiat pair", whatever that is. For that matter, I can't think of any reason why you would ignore the loss or gain when evaluating the success of your own investment strategy.

superg wrote: »

The reverse is also true, while BTC was skyrocketing last December I was doing my usual and increasing my BTC holding. But even without even having to make profit in any trade my paper fiat worth was increasing all the time even though none of my coins where ever converted to fiat.

So what? Why should the Revenue care whether you convert them to fiat or to something else? That's your business. All the Revenue cares about is that you have diposed of your asset and thereby locked in whatever gain or loss results from changes in its value. What you choose to do with the gain or loss has no bearing on the tax consequences of the disposal.

Peregrinus

Cryptonovice wrote: »

I buy ETH @ €637.3. I spend €150 and receive 0.2281097 ETH. subtotal = €145.37 (637.3 x 0.2281097) and the remainder went on fees.

When I send it to exchange 2 to swap for ripple (XRP) it says I sent €133 worth of ETH.

The market value of XRP at the time of the swap (according to coinmarketcap to 5 minutes) was €1.21 and €606 for ETH.
(606x 0.2281097 = €138)
1.21/606 = 0.001996.
The trading price on exchange 2 was recorded as 0.00179 when I traded ETH with XRP. I got 126 no XRP @ €1.21= €152.46.

My long winded question is it okay to just say original total cost of €150 (coin A) vs €152.46 (Coin ...€2.46 into CG1 form...as I am staying the right side of the losses and I just want to keep it simple.
Thanks in advance

I as see it:

There's only one disposal here. You disposed of your holding of ETH. You have only one gain/loss calculation to do.

The acquisition cost of your holding of ETH was €150, including charges.

You disposed of your holding of ETH for a holding of XRP which, at the market price at the time of the disposal had a value of €152.46

So your gain is (€152.46 - €150 €2.46.

Later, when you dispose of your XRP, you will do a similar calculation. The acquistion cost of your XRP in that calculation will be €152.46, and your disposal proceeds will be whatever they will be.