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

Cryptonovice

Peregrinus wrote: »

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.

Peregrinus thanks again. Helpful as always.

.G.

Peregrinus wrote: »

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.


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.

I don't ignore anything and yes they all have value but the value of most of them is only in other cryptos. It takes at least 2 disposals/conversions to get back to euros. The advice is we need to pay tax on all disposals of crypto and to do that you want us to try and convert them back to fiat to work out if a fiat gain was made and pay it. Whereas in my scenario a fiat gain was not made but the disposal still occurred and accrued another form of gain. Is this gain not taxable? If everything has to be related back to fiat then it makes a mockery of the advice given here and by revenue that every disposal, even crypto to crypto is taxable and any gain is liable to CGT so if I've made a crypto gain I need to give revenue 33% of it. If I've to pay tax on all gains, even crypto to crypto ones then how the hell do I do it if i made a gain in one crypto but a loss in euros. Who decides that the euro loss is the important transaction and not the BTC gain. To be fair and thanks for your answers but you don't have all the answers so I've asked them myself. I await their reply with interest.

The whole thing does my bloody head in. Its actually making me consider stopping trading even though my trading has been very successful in the aim I have for it which is not to increase my FIAT wealth but to increase my holdings of certain cryptos without actually spending any of my money to do so and with a view to seeing what they are worth at some undetermined point down the line. I have no actual real cash riding on it.

As for all revenue care about. In my mind all they care about is me paying them tax when I've made real money and I'll happily do so. I can't pay them tax if I haven't made real actual money from it. If all they care about is that I've disposed one crypto for another and made a gain then surely they wouldn't care that the gain, when reverted back to fiat was actually a loss because they aren't interested in that, I wasn't trading fiat, I was trading crypto and that's where my gain occurred. Conflicting advice it seems to me.

.G.

Quick final one. Lets say I have some BTC. I earned it in 2017. I haven't bought it or traded any money for it in 2018. I use that BTC to buy tron for example. I've now disposed of my BTC. How do I work out if I've made a gain in disposing that BTC in this tax year since I didn't acquire it in this tax year?

GreeBo

superg wrote: »

I don't ignore anything but the advice is we need to pay tax on all disposals of crypto and to do that you want us to try and convert them back to fiat to work out if a fiat gain was made and pay it. Whereas in my scenario a fiat gain was not made but the disposal still occurred and accrued another form of gain. Is this gain not taxable? If everything has to be related back to fiat then it makes a mockery of the advice given here and by revenue that every disposal, even crypto to crypto is taxable and any gain is liable to CGT. If I've to pay tax on all gains, even crypto to crypto ones then how the hell do I do it if i made a gain in one crypto but a loss in euros. Who decides that the euro loss is the important transaction and not the BTC gain. To be fair and thanks for your answers but you doin't have all the answers and I've asked them myself. I await their reply with interest.

The whole thing does my bloody head in. Its actually making me consider stopping trading even though my trading has been very successful in the aim I have for it which is not to increase my FIAT wealth but to increase my holdings of certain cryptos without actually spending any of my money to do so and with a view to seeing what they are worth at some undetermined point down the line. I have no actual real cash riding on it.

As for all revenue care about. In my mind all they care about is me paying them tax when I've made real money and I'll happily do so. I can't pay them tax if I haven't made real actual money from it. If all they care about is that I've disposed one crypto for another and made a gain then surely they wouldn't care that the gain, when reverted back to fiat was actually a loss because they aren't interested in that, I wasn't trading fiat, I was trading crypto and that's where my gain occurred. Conflicting advice it seems to me.

Its a gain in FIAT value, not an actual FIAT gain that is taxable.

GreeBo

superg wrote: »

Quick final one. Lets say I have some BTC. I earned it in 2017. I haven't bought it or traded any money for it in 2018. I use that BTC to buy tron for example. I've now disposed of my BTC. How do I work out if I've made a gain in disposing that BTC in this tax year since I didn't acquire it in this tax year?

You disposed of it in this tax y ear

.G.

GreeBo wrote: »

You disposed of it in this tax y ear

Yes but to calculate a gain or loss I need to assign an acquisition value to it and I acquired it last year. Also I'm sure you'll say that whatever euro price of bitcoin was way back then, I can get my value from that but I didn't acquire it using euros. I acquired it from the sale of another crypto. If I use euros then great cos as we all know, the value of it since then has plummeted which means all my successful BTC gains have been made at a euro loss so most likely so I'll be paying 0 tax.

.G.

GreeBo wrote: »

Its a gain in FIAT value, not an actual FIAT gain that is taxable.

So then everything must be brought back to FIAT in order to work out if gains or losses are made. You don;t have to sell it back to euro but you have to convert to eth or BTC and then to fiat to work out its fiat value. Which seems silly if you aren't selling them back to ETH or BTC. You're involving currencies that were never part of the trade, and I include euros in that.

Cryptonovice

superg wrote: »

I don't ignore anything and yes they all have value but the value of most of them is only in other cryptos. It takes at least 2 disposals/conversions to get back to euros. The advice is we need to pay tax on all disposals of crypto and to do that you want us to try and convert them back to fiat to work out if a fiat gain was made and pay it. Whereas in my scenario a fiat gain was not made but the disposal still occurred and accrued another form of gain. Is this gain not taxable? If everything has to be related back to fiat then it makes a mockery of the advice given here and by revenue that every disposal, even crypto to crypto is taxable and any gain is liable to CGT so if I've made a crypto gain I need to give revenue 33% of it. If I've to pay tax on all gains, even crypto to crypto ones then how the hell do I do it if i made a gain in one crypto but a loss in euros. Who decides that the euro loss is the important transaction and not the BTC gain. To be fair and thanks for your answers but you don't have all the answers so I've asked them myself. I await their reply with interest.

The whole thing does my bloody head in. Its actually making me consider stopping trading even though my trading has been very successful in the aim I have for it which is not to increase my FIAT wealth but to increase my holdings of certain cryptos without actually spending any of my money to do so and with a view to seeing what they are worth at some undetermined point down the line. I have no actual real cash riding on it.

As for all revenue care about. In my mind all they care about is me paying them tax when I've made real money and I'll happily do so. I can't pay them tax if I haven't made real actual money from it. If all they care about is that I've disposed one crypto for another and made a gain then surely they wouldn't care that the gain, when reverted back to fiat was actually a loss because they aren't interested in that, I wasn't trading fiat, I was trading crypto and that's where my gain occurred. Conflicting advice it seems to me.

Will you please ket us know what they say thanks.

GreeBo

superg wrote: »

So then everything must be brought back to FIAT in order to work out if gains or losses are made. You don;t have to sell it back to euro but you have to convert to eth or BTC and then to fiat to work out its fiat value. Which seems silly if you aren't selling them back to ETH or BTC. You're involving currencies that were never part of the trade, and I include euros in that.

Yes, because gains and losses are calculated in euro.

It's only silly because you are buying assets that are not traded in EUR.
If you were buying your alts in USD you would be doing the same thing.

You only need to use whatever bridge currency gets you back to a EUR value.
Presumably you are aware of the overall EUR position, otherwise I'm not sure how you are deciding what/when to trade.

How else do you think it should work?

.G.

GreeBo wrote: »

Yes, because gains and losses are calculated in euro.

It's only silly because you are buying assets that are not traded in EUR.
If you were buying your alts in USD you would be doing the same thing.

You only need to use whatever bridge currency gets you back to a EUR value.
Presumably you are aware of the overall EUR position, otherwise I'm not sure how you are deciding what/when to trade.

How else do you think it should work?

On point 1, I read a chart, I don't need to know what value something is in euros, I only need to know what value it is in whatever crypto I'm using to buy it. Principle is the same, buy low, sell higher, end up with more of the original crypto. Gain realised but not in euros.

Point 2, If I make a gain in a crypto I pay them 33% of that crypto for their troubles. If they are happy to wait until I sell those coins back to euros via BTC or ETH I can pay them in euros then but apparently that's not an option, they want their tax in euros even when I haven't actually made a gain in euros.

Anyway I've had a look at that tax calculating software somebody linked to a few weeks back which I'll have to have a proper look at but it requires manual entry of BTC and ETH deposits and the exchanges I use don't seem to list withdrawal and deposit fees or exact deposit times etc so I'll have to figure that out.

Any idea how to look up a wallet address and find out what exchange its from? I have the transaction ids and the wallets the coins came from and went to but some records of deposits and withdrawals on the exchanges I use don't seem to match all the deposits and withdrawals I know I have done.

.G.

Cryptonovice wrote: »

Will you please ket us know what they say thanks.

I will.

Peregrinus

superg wrote: »

I don't ignore anything and yes they all have value but the value of most of them is only in other cryptos. It takes at least 2 disposals/conversions to get back to euros.

So? Why should that make any difference?

superg wrote: »

The advice is we need to pay tax on all disposals of crypto and to do that you want us to try and convert them back to fiat to work out if a fiat gain was made and pay it.

No, you don’t have to convert your crypto to fiat. You just have to express its value in euros.

superg wrote: »

Whereas in my scenario a fiat gain was not made but the disposal still occurred and accrued another form of gain. Is this gain not taxable?

It is not taxable. It is not really a “gain” in any meaningful sense. Having a larger number of something doesn’t mean that you have any greater wealth. What matters is the value of what you have, not the quantity.

superg wrote: »

If everything has to be related back to fiat then it makes a mockery of the advice given here and by revenue that every disposal, even crypto to crypto is taxable and any gain is liable to CGT so if I've made a crypto gain I need to give revenue 33% of it. If I've to pay tax on all gains, even crypto to crypto ones then how the hell do I do it if i made a gain in one crypto but a loss in euros. Who decides that the euro loss is the important transaction and not the BTC gain. To be fair and thanks for your answers but you don't have all the answers so I've asked them myself. I await their reply with interest.

The only gain or loss that matters for tax (or any other) purposes is the gain in euros. The fact that as a result of series of transactions you now have (say) 100 units of CoinA when you started out with (say) 80 units it not a “gain” if, in fact, 100 units of CoinA is today worth less than 80 units were when you started out. That’s a loss.

There’s nothing novel or surprising about this proposition. This kind of thing happens all the time with people who buy and sell shares. You might be investing in shares that are traded on the New York Stock Exchange, and find that, as the combined effect of your transactions, movements in the share price (quoted in dollars) and movements in the dollar/euro exchange rate, you now hold more shares in number, but with a lesser value in euros, than when you started. You’ve made a loss. No sane person would think otherwise. The Revenue certainly won’t.

superg wrote: »

The whole thing does my bloody head in. Its actually making me consider stopping trading even though my trading has been very successful in the aim I have for it which is not to increase my FIAT wealth but to increase my holdings of certain cryptos without actually spending any of my money to do so and with a view to seeing what they are worth at some undetermined point down the line. I have no actual real cash riding on it.

What you’re saying there is that your investment strategy is not, at this stage, to seek to make immediate gains, but instead to build up your holdings of the cryptos that you expect or hope will appreciate most in value in the long term. What you’re doing, perhaps, is a variation on what’s called “penny share” investment in the US, where people buy shares with a low unit price on the theory that such shares have a greater capacity for future growth. When the share price falls, they take this as a signal to buy more of the share.

I refrain from offering any advice on the soundness of the investment theory. I’ll just say that if you are following such a strategy, it’s entirely possible that at this stage in your investment activities you are not yet realising any gains. If you buy CoinA in the hope or expectation that it will appreciate in value, but then decide that CoinB has a better prospect of long-term appreciation and so swap your CoinA for CoinB before CoinA has actually appreciated in value, there will be a disposal but no gain.

superg wrote: »

As for all revenue care about. In my mind all they care about is me paying them tax when I've made real money and I'll happily do so. I can't pay them tax if I haven't made real actual money from it. If all they care about is that I've disposed one crypto for another and made a gain then surely they wouldn't care that the gain, when reverted back to fiat was actually a loss because they aren't interested in that, I wasn't trading fiat, I was trading crypto and that's where my gain occurred. Conflicting advice it seems to me.

They don’t care whether you’ve made real money; they care whether you have made a real gain. If you gave €100, or something worth €100, to acquire your holding of CoinA, and later you dispose of your holding of CoinA for €150 or for something worth €150, you’ve made a real gain of €50. This is true regardless of whether what you got was €150 in cash, or something with a value of €150.

I don’t see why this should do anybody’s head in, really. Conceptually, it’s pretty straightforward.

Peregrinus

superg wrote: »

Quick final one. Lets say I have some BTC. I earned it in 2017. I haven't bought it or traded any money for it in 2018. I use that BTC to buy tron for example. I've now disposed of my BTC. How do I work out if I've made a gain in disposing that BTC in this tax year since I didn't acquire it in this tax year?

You look at what you paid to acquire it in 2017, in euro terms. You look at the value of what you got when you disposed of it in 2018, also in euro terms. The difference between these two figures is the gain or loss you have realised by disposing of the BTC. You realised that gain or loss in 2018, since that was the year in which you disposed of the BTC.

Let's say that you bought 1 BTC on 1 April 2017, and the value at that time was $1,322. You either paid $1,322 in US currency, or you paid with some other crypto, but it had a value of $1,322. (We can be confident of this because you would not be stupid enough to pay with crypto with a value of more than $1,322, and the seller would not be stupid enough to accept crypto with a value of less than $1,322. If one of you were that stupid, then obviously you would have to do this calculation by looking at the value of whatever crypto you paid with.) So your acquisition cost was $1,322, which given the USD/EUR exchange rate on 1 April 2017 was equivalent to €1,411.

So that's your acquisition cost: €1,411.

Right. You dispose of your BTC on 1 February 2018 for the then market price of $9,052. Again, it doesn't make any difference whether you get $9,052 in US currency, or other assets worth $9,052. At the USD/EUR exchange rate that prevailed on 1 February 2018, that's equivalent to €11,259.

So that's your disposal proceeds: €11,259.

Your gain is €11,259 - €1,411 = €9,848.

Note that we've been able to do this calculation without enquiring what crypto you used to buy, or what crypto you got when you sold, or the number of units of each that were involved in the transaction, or the price of each. We assume that, in each case, the other crypto has the same value as the BTC, since otherwise the transaction wouldn't have happened. You can, if you wish, redo the calculation looking not at the value of the BTC but at the value of the other cryptos involved, given the prices prevailing at the time. The answer shouldn't be materially different from €9,848.

davberd

superg wrote: »

Anyway I've had a look at that tax calculating software somebody linked to a few weeks back which I'll have to have a proper look at but it requires manual entry of BTC and ETH deposits and the exchanges I use don't seem to list withdrawal and deposit fees or exact deposit times etc so I'll have to figure that out.

I'm using bitcoin.tax and had to do very little manual data entry. I had to add a few opening trades from a couple of years ago, and some opening positions. For everything else they provide instructions on how to import trading data from lots of exchanges. All in all, I've found it very good and it has opened up my eyes about how the composition of your portfolio can change quite quickly, and in turn your tax liability. Essentially I owe a lot more CGT than I thought and the cost base of my portfolio is much higher. The higher cost base means that any future gains I realise will have a lower CGT liability that I thought (silver lining...hmmm). One danger that I could quickly see is that if you had bought low, sold high, then reinvested, and the market plummets, then you could be left with a hefty liability with possibly no means to pay it.

Peregrinus

davberd wrote: »

. . . . One danger that I could quickly see is that if you had bought low, sold high, then reinvested, and the market plummets, then you could be left with a hefty liability with possibly no means to pay it.

This is a standard risk when shifting investments between volatile assets. When you crystallise a gain by disposing of an asset, you need to think about how you're going to address the associated tax liability, when it falls due. If you have other assets available to you out of which you could pay it if necessary, great. If you don't, then it's risky to roll over the entire proceeds into another volatile asset because, as you point out, you could lose it. So don't do this, kids.

davberd

In my case I paid CGT last year and I'll top it up soon enough (even if it really pains me). However, I wonder how this is going to play out in the coming years. If you look at BAT (Basic Attention Token), for example, which is an ERC20 token living on the Ethereum blockchain. They've signed up lots of content providers on youtube and other websites where holders of the BAT token can pay/tip musicians/bloggers a few bob in appreciation for their efforts. In this case, the token is acting like a currency but obviously is being speculated on as well. The thing is as soon as someone buys a few euro worth of BAT and start tipping a couple of euro here and there, they're being dragged into the world of having to think about CGT. I don't like this idea at all - I see it stifling these innovations. I'm wondering if anyone has any thoughts on this?

Peregrinus

davberd wrote: »

In my case I paid CGT last year and I'll top it up soon enough (even if it really pains me). However, I wonder how this is going to play out in the coming years. If you look at BAT (Basic Attention Token), for example, which is an ERC20 token living on the Ethereum blockchain. They've signed up lots of content providers on youtube and other websites where holders of the BAT token can pay/tip musicians/bloggers a few bob in appreciation for their efforts. In this case, the token is acting like a currency but obviously is being speculated on as well. The thing is as soon as someone buys a few euro worth of BAT and start tipping a couple of euro here and there, they're being dragged into the world of having to think about CGT. I don't like this idea at all - I see it stifling these innovations. I'm wondering if anyone has any thoughts on this?

If you buy foreign currency in order to make purchases in foreign-land, that's generally not regarded as an investment transaction and any gain or loss that accrues to you as a result of exchange rate movements is ignored - gains not taxable, losses not offsettable against other gains. (If you're doing this in the course of a trade, exchange gains and losses will feed through to your profits, and so be subject to income tax, but that's a different matter.)

I think you could argue strongly (and probably successfully) for analogous treatment for cryptocurrencies (which are, after all, supposed to be currencies). If you buy some BAT in order to pay for online content, and you actually use it to make normal and reasonable payments for online content, I don't think that's a transaction that attracts CGT. But if you buy a bunch of BAT, sit on it and then sell it for fiat or swap it for, say, ETH, that's going to attract CGT.

As previously mentioned on this thread, CGT is a self-assessment tax, so in the first instance you get to decide which of your dealings in BAT are investment transactions and taxed as such, and which are not. But the Revenue will nail you to the wall if they don't think your view is formed in good faith.

nompere

Peregrinus wrote: »

If you buy foreign currency in order to make purchases in foreign-land, that's generally not regarded as an investment transaction ...

I don't think Revenue agree with that statement:

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-01-14a.pdf

.G.

Thanks for your answers Peregrinus and davberd. I'll look into that other tax website. The first one is fine except its having trouble with my csv files from bitfinex as its saying they don't have time stamps for the trades on them. Need to sort that because its a great site, they do all the work for me so I can remain trading relatively headache free with regards to my tax position. I haven't made a euro gain in 2017, that much I'm certain of even without the program. In 2018 so far with the way BTC went I'm pretty sure I haven't made one yet either but once a euro gain is realised I'll sell enough assets to pay it.

Cryptonovice

Anyone see Litepay (Litecoin) to be released feb 26th..game changer they reckon..ability yo change Litecoin to fiat and visa versa instantly...wonder how revenue will view that one...we may be the only country on earth held back as usual..there will be a serious amount of cg1 forms going in if they stick to their nonsense

Blacktie.

Cryptonovice wrote:

Anyone see Litepay (Litecoin) to be released feb 26th..game changer they reckon..ability yo change Litecoin to fiat and visa versa instantly...wonder how revenue will view that one...we may be the only country on earth held back as usual..there will be a serious amount of cg1 forms going in if they stick to their nonsense

How does this change anything to do with revenue?

Cryptonovice

Blacktie. wrote: »

How does this change anything to do with revenue?

Disposals? Sell gift or "exchange". They say its going to be a visa card...should bring confusion

Blacktie.

Cryptonovice wrote: »

Disposals? Sell gift or "exchange". They say its going to be a visa card...should bring confusion

This still changes nothing. Will it be hard to trace? Sure. But it's still your obligation to pay taxes on disposal of assets which will be when you use the card. Like people have previously said over and over just because you might not get caught it doesn't change your obligation to revenue.

Cryptonovice

Blacktie. wrote: »

This still changes nothing. Will it be hard to trace? Sure. But it's still your obligation to pay taxes on disposal of assets which will be when you use the card. Like people have previously said over and over just because you might not get caught it doesn't change your obligation to revenue.

Correct and right

.G.

Is there a specific method we have to use such as FIFO etc? Most methods are giving similar results except one which is half of all the others. Its called "average cost"

EDIT:- Its FIFO

Whelo79

This thread is like Ireland's biggest Merry-go-round!

Cryptonovice

Whelo79 wrote: »

This thread is like Ireland's biggest Merry-go-round!

Great thread! Some very knowledgeable people in here..im not one of them unfortunately! Learning though!

Peregrinus

nompere wrote: »

I don't think Revenue agree with that statement:

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-01-14a.pdf

Well, the Revenue practice statement says that "a chargeable gain/allowable loss can arise to a person buying and selling foreign currency otherwise than in the course of trade." But what we're looking at here is not buying and selling foreign currency; it's buying foreign currency and then using it to buy stuff. Just like you do every time you go on holiday outside the Eurozone, for example.

Peregrinus

Cryptonovice wrote: »

Anyone see Litepay (Litecoin) to be released feb 26th..game changer they reckon..ability yo change Litecoin to fiat and visa versa instantly...wonder how revenue will view that one...we may be the only country on earth held back as usual..there will be a serious amount of cg1 forms going in if they stick to their nonsense

It's already the case that if you think that, say, the US dollar is going to rise in value relative to the Euro, you can buy a bunch of US dollars and keep them in a shoebox under the bed (or in a US dollar bank account) and then sell them again when the expected rise has happened. It's all but impossible for the Revenue to detect this if you don't declare it.

So this isn't really a game-changer; it's just giving Litcoin more of the characteristics of a currency that fiat currencies already have. And it doesn't create a new risk/opportunity for tax evasion; given the highly liquid nature of currency, this is a risk/opportunity has always existed for those speculating in currency.

(If anything, the use of a Visa card to dispose of Litecoin should make transactions that little bit easier for Revenue to trace, because the issue of a visa card means there's a licensed and regulated bank in the loop.)

Emmo-m-

I see a lot of trading examples , exchanges , profit/loss on disposable assets etc. A LOT of overly complicated explanations from some smart people it seems but there is hardly a post or sticky with a simple example or explanation.

Simple example , lets see can I get a simple answer .

I buy 1 ethereum at €700 , I participate in an ICO and get 700 coins , those coins never get sent to an exchange by me they just sit in my wallet.

Throughout the year , the price of those 700 coins fluctuates like crazy as is the norm with crypto. Worth €1000 one week , €100,000 another week and €50 the next week.

How could this be liable for CGT?

Noctifer

Emmo-m- wrote: »

I see a lot of trading examples , exchanges , profit/loss on disposable assets etc. A LOT of overly complicated explanations from some smart people it seems but there is hardly a post or sticky with a simple example or explanation.

Simple example , lets see can I get a simple answer .

I buy 1 ethereum at €700 , I participate in an ICO and get 700 coins , those coins never get sent to an exchange by me they just sit in my wallet.

Throughout the year , the price of those 700 coins fluctuates like crazy as is the norm with crypto. Worth €1000 one week , €100,000 another week and €50 the next week.

How could this be liable for CGT?

When you hold those 700 coins you don't owe tax on them. You owe tax when you dispose of them for a profit. When you buy those 700 coins for 1 eth you are liable to pay tax on a disposal (eth was disposed for another coin). When you convert those 700 coins to something else (btc, euro, yen, whatever) you are liable to pay tax (in case you made a profit).

If you bought coins for of 700 euro, and then sell them a year later for 1.2 btc and that 1.2 btc is worth 2000 euro, then you made a gain of 1300 euro in that transaction, even though you converted to btc and not euro.

The only thing that matters is the price of the coin at the moment of disposal. If you buy BTC in 2015 for 2000 euro, you don't have to pay any tax or inform Revenue of it until the moment you dispose of it by either selling it for fiat or converting to something else.

Emmo-m-

Noctifer wrote: »

When you hold those 700 coins you don't owe tax on them. You owe tax when you dispose of them for a profit. When you buy those 700 coins for 1 eth you are liable to pay tax on a disposal (eth was disposed for another coin). When you convert those 700 coins to something else (btc, euro, yen, whatever) you are liable to pay tax (in case you made a profit).

If you bought coins for of 700 euro, and then sell them a year later for 1.2 btc and that 1.2 btc is worth 2000 euro, then you made a gain of 1300 euro in that transaction, even though you converted to btc and not euro.

The only thing that matters is the price of the coin at the moment of disposal. If you buy BTC in 2015 for 2000 euro, you don't have to pay any tax or inform Revenue of it until the moment you dispose of it by either selling it for fiat or converting to something else.

When you buy those 700 coins for 1 eth you are liable to pay tax on a disposal (eth was disposed for another coin).

So what would this equate to?

Noctifer

Emmo-m- wrote: »

When you buy those 700 coins for 1 eth you are liable to pay tax on a disposal (eth was disposed for another coin).

So what would this equate to?

You bought ETH for 700 euro, then you disposed of it when you get another coin. So you have to look at what the price of ETH was when you exchanged it for another coin. Considering how the price is constantly changing it's unlikely the price of ETH remained the same.

If you bought ETH for 700 euro and 2 minutes later exchanged it for another coin when it was worth 705 euro, you made a gain of 5 euro in that transaction.

Emmo-m-

Noctifer wrote: »

You bought ETH for 700 euro, then you disposed of it when you get another coin. So you have to look at what the price of ETH was when you exchanged it for another coin. Considering how the price is constantly changing it's unlikely the price of ETH remained the same.

If you bought ETH for 700 euro and 2 minutes later exchanged it for another coin when it was worth 705 euro, you made a gain of 5 euro in that transaction.

That is ridiculous. if that's what we assume is the procedure.

Appreciate the feedback.

barneystinson

Emmo-m- wrote: »

That is ridiculous. if that's what we assume is the procedure.

Appreciate the feedback.

It's the exact same if you substitute Sterling and Yen, or any other type of currency or chargeable asset, like land, shares, art.

That's how CGT works - you calculate your gain or loss in Euros, based on the difference between the € value at acquisition and the € value at disposal.

Emmo-m-

barneystinson wrote: »

It's the exact same if you substitute Sterling and Yen, or any other type of currency or chargeable asset, like land, shares, art.

That's how CGT works - you calculate your gain or loss in Euros, based on the difference between the € value at acquisition and the € value at disposal.

So similar to above :

1. Buy eth at €700
2. 2 weeks later eth is down to €500 and I buy 700 ico coins (CGT loss??)
3. 6 months later my 700 ICO coins are now worth €7000 in my wallet
4. I sell my ICO coins for eth which is now at €1000(CGT gain??)

How would it apply here? And that is a simple enough example.. Let alone if you were to sell half off your ico coins to another coin once or another 50 times?

If I buy eth at 2 different prices/time on the same day and do 4 ICO's...which price do you count towards the CGT on the eth then?

barneystinson

Emmo-m- wrote: »

So similar to above :

1. Buy eth at €700
2. 2 weeks later eth is down to €500 and I buy 700 ico coins (CGT loss??)
3. 6 months later my 700 ICO coins are now worth €7000 in my wallet
4. I sell my ICO coins for eth which is now at €1000(CGT gain??)

How would it apply here? And that is a simple enough example.. Let alone if you were to sell half off your ico coins to another coin once or another 50 times?

If I buy eth at 2 different prices/time on the same day and do 4 ICO's...which price do you count towards the CGT on the eth then?

You bought €700 worth of ETH and its value when you disposed of it was €500 - that's a €200 loss.

Your ICO coins have a base cost of €500 and you dispose of them when they are worth €7000, that's a €6500 gain.

AlmightyCushion

Emmo-m- wrote: »

So similar to above :

1. Buy eth at €700
2. 2 weeks later eth is down to €500 and I buy 700 ico coins (CGT loss??)
3. 6 months later my 700 ICO coins are now worth €7000 in my wallet
4. I sell my ICO coins for eth which is now at €1000(CGT gain??)

How would it apply here? And that is a simple enough example.. Let alone if you were to sell half off your ico coins to another coin once or another 50 times?

If I buy eth at 2 different prices/time on the same day and do 4 ICO's...which price do you count towards the CGT on the eth then?

That is exactly how it applies. Step 2. you made a loss. Step 3 you made a gain (you can also offset the gain with the loss you made from step 2). Yes, it gets complicated when you have a lot of trades but that is the same for every asset.

For disposals it's first in, first out. If you buy 1 ETH now at €400, another ETH at €1000 in an hour and 2 weeks from now you sell 1 ETH, it is the first ETH you bought at €400 that is being sold.

Emmo-m-

AlmightyCushion wrote: »

That is exactly how it applies. Step 2. you made a loss. Step 3 you made a gain (you can also offset the gain with the loss you made from step 2). Yes, it gets complicated when you have a lot of trades but that is the same for every asset.

For disposals it's first in, first out. If you buy 1 ETH now at €400, another ETH at €1000 in an hour and 2 weeks from now you sell 1 ETH, it is the first ETH you bought at €400 that is being sold.

So formula =

Eth price when bought -/+ eth price when sent to ICO = CGT gain/loss

ICO coins overall value when sold - original eth investment = CGT gain

Cryptonovice

So am I wrong in assuming if I buy ETH @ €150 and get 126 XRP @ €1.21 = €152.46 that my answer is not a gain of €2.46...its the value of the ETH when I swapped it which was €138...so a loss of €12???

Emmo-m-

How could any of this actually be tracked by an outside source if not yourself though? It would be hard enough task with data from centralized exchanges like Coinbase etc but practically impossible once decentralized exchanges go live

Thoughts?

Cryptonovice

Emmo-m- wrote: »

How could any of this actually be tracked by an outside source if not yourself though? It would be hard enough task with data from centralized exchanges like Coinbase etc but practically impossible once decentralized exchanges go live

Thoughts?

If revenue asked coinbase for info on all irish customers would they not just give it to them?

Emmo-m-

Cryptonovice wrote: »

If revenue asked coinbase for info on all irish customers would they not just give it to them?

Yes they would I assume.

But a decentralized exchange has no central entity for a government to request records. This is the whole point of the blockchain

Cryptonovice

Emmo-m- wrote: »

Yes they would I assume.

But a decentralized exchange has no central entity for a government to request records. This is the whole point of the blockchain

Can you tell us these names of exchanges that are decentralised. Interesting

Noctifer

Cryptonovice wrote: »

So am I wrong in assuming if I buy ETH @ €150 and get 126 XRP @ €1.21 = €152.46 that my answer is not a gain of €2.46...its the value of the ETH when I swapped it which was €138...so a loss of €12???

Exactly

Noctifer

Cryptonovice wrote: »

If revenue asked coinbase for info on all irish customers would they not just give it to them?

Coinbase would not release the info unless the would be required by law, like a court order. The have legal battles with the IRS in the states. The IRS was request all the info on all the users, they got it down to some of them, not all.

But you should assume that Revenue will get the info from exchanges at one point in time.

Cryptonovice

Noctifer wrote: »

Exactly

Exactly...€12 Loss ya? Interesting..I thought it was price of asset A vs price of Asset B when swapped/exchanged

barneystinson

Emmo-m- wrote: »

How could any of this actually be tracked by an outside source if not yourself though? It would be hard enough task with data from centralized exchanges like Coinbase etc but practically impossible once decentralized exchanges go live

Thoughts?

Absolutely.

And if Revenue have to estimate your tax liability would you like to bet on them underestimating or overestimating it...?

It's possible they'd look at the value of your holdings at a point in time, and if you can't prove what the original investment/base cost was, hit you with tax on most or all of it.

The tax system is based on self assessment, and the individual taxpayer is the person in possession of all the knowledge and information necessary for their true liability to be ascertained.

The way to ensure your liabilities are, or can be correctly calculated (even if you choose to evade paying) is to keep proper records of your transactions. This applies to cryptocurrency as it applies to all other assets.

AlmightyCushion

Cryptonovice wrote: »

So am I wrong in assuming if I buy ETH @ €150 and get 126 XRP @ €1.21 = €152.46 that my answer is not a gain of €2.46...its the value of the ETH when I swapped it which was €138...so a loss of €12???

I'm confused. You buy 1 ETH today at €150. Tomorrow you transfer ETH to XRP and get exactly 126XRP for your ETH (meaning you have no ETH left). At the time of the transfer ETH was worth €138 and XRP was worth €1.21 each so €152.46. Is that correct? If so, could someone not just buy a load of ETH and exchange it for XRP, then sell the XRP back to euro and make some easy money?

Noctifer

AlmightyCushion wrote: »

I'm confused. You buy 1 ETH today at €150. Tomorrow you transfer ETH to XRP and get exactly 126XRP for your ETH (meaning you have no ETH left). At the time of the transfer ETH was worth €138 and XRP was worth €1.21 each so €152.46. Is that correct? If so, could someone not just buy a load of ETH and exchange it for XRP, then sell the XRP back to euro and make some easy money?

You would lose money on the ETH to XRP transfer but you would have a gain on the XRP to EUR transfer (or whatever other fiat or crypto currency).