Crypto tax situation - Read post 1 for thread banned users

Yes we should only tax the poor and let the wealthy into the country and tell them we will tax them differently just because they made money on crypto. Excellent idea 🙄

Its not out of line with anything!!!!!!

This is pretty much what Ireland does for corporations. We have a low corporate tax rate in the first place and are giving multinational companies even better deals that the baseline rate paid by small local companies

It isn’t a simple black and white issue though. You can say it is morally wrong to give large wealthy corporation such a low rate, but the net effect is that is does increase tax receipts for the government and pays for social spending (as otherwise those companies wouldn’t be here and would therefor pay no tax). A low CGT rate to attract foreign investor would have a similar effect (there might be other factors driving the CGT rate and there is an open discussion to be had on what makes the most sense for the country of course, but thinking that decreasing the rate would necessarily reduce the amount of tax paid would be a big mistake when it comes to this type of tax).

You don't have to provide full workings unless requested. You should have your full workings in order to have paid your CGT. Your return is just to match the CGT paid already.

This is exactly what CGT was designed for.

CGT was not conceived of as replacement for estate duty; you're thinking of CAT, a completely different tax.

The investments in the 70s were property investments. There were a number of cases of people buying up derelict properties, sitting on them during a property boom and then selling them for multiples of what they had paid, without having done any work at all; simply allowing them to deteriorate. The case that caught the public imagination, if I remember correctly, was a bank - was it AIB? - that bought up a collection of city centre properties with a view to constructing a corporate headquarters, later changed its mind and bought up abandoned cattle yards in Ballsbridge and put the headquarters there, sold off the city centre property for a stupendous gain, and avoided paying any tax on the basis that the property transactions were not undertaken in the course of their banking business. There was general public outrage that windfall gains accruing to a bank as a result simply of rom owning something at a time of rising prices would go untaxed, so CGT was introduced.

As for the incentive to leave the country: if you have a gain of €10m, the CGT on that is exactly the same regardless of whether your initial stake was €1, €1m, €10m or even €100m, and regardless of whether the gain accrued over one month, one year or ten years — it's €3.3m. It's also the same regardless of the nature of the asset; the CGT rate for gains on crypto is the same as the CGT rate for gains on fiat (which, since you ask, is comparable or superior to crypto in terms of value, transferabiilty and liquidity), gains on shares, gains on pretty well anything. You either do or do not consider that it's worth your while to uproot your life in order to save €3.3m — it's up to you. But the potential tax saving is the same regardless of how much you staked initially or how long you held the asset or (mostly) the nature of the asset you are selling; none of these considerations enter into your emigration calculation at all. Mentioning them in this context is a giant red herring.

Which means that, whatever incentive CGT creates for people to leave the country, it has always created. That has been a feature of the tax since it was introduced. If you have accrued a gain on a financial asset, it has always been possible to avoid CGT on it by moving to e.g. Portugal and becoming neither resident nor ordinarily resident in Ireland before you dispose of it. Crypto changes nothing there. Possibly with the crypto boom there are currently more people with larger gains who experience this incentive, but on the the other hand the opportunity cost to the exchequer from not taxing the gains is correspondingly greater, so I reckon that's a wash, from a public policy point of view.

I'm not sure why you think CGT in Ireland is anachronistic in this respect; as pointed out, the issue you identify is not new, and it's hardly unique to Ireland. Irish CGT, in taxing gains on crypto in exactly the same way as gains on other assets, is not unusual; SFAIK this is the international norm. If people are leaving Ireland to avoid CGT on their crypto gains, they are not relocating to countries that have special deals for crypto; they are relocating to countries that have low or no CGT in general.

On the fact that the incentive to leave the country because of CGT has always existed since the tax was introduced. Technically yes, but it has to be said that every time the rate was increased, that incentive was also increased.

At this point, Ireland clearly is a high CGT country in a European context (and thus in a global context as Europe tends to have the highest rates). If this is what the majority of Irish people think is the right thing to do this is fine, but we have to be clear on the fact that our system is rather punitive (not just the rate, but also the low yearly exemption, the deemed disposal rule, the the lack of tax-incentivised investment accounts for small/medium individual investors such as ISA in the UK or PEA in France, etc).

PS: is there still a way to only quote and outline a small section of a post instead of quoting the whole thing? (I might be missing something but I can't figure it out.

I have bitcoin purchased years ago using my UK bank account, so using pounds.

I now live/work in Ireland, I will be cashing out the crypto to my UK bank account but should I simply convert the final taxable figure to Euro for revenue or go back and convert the sterling transaction to euro on that day using the exchange rate on that day? ...

Been investing/trading since 2016 on an old exchange, and not kept a single record on that account. It contains a sizeable amount of crypto and probably has 80-100 trades, I was young back then and didn't understand the whole tax thing. I did it as a hobby.

Sieving though every trade I did years ago will be an absolute nightmare, is there any way around this? Can't I just 33% the total profit and hope for the best? How likely are they to ask for proof? Revenue will see the large deposit in my account anyways and basic math will all add up and correlate with what I would declare. Thanks.

A further point on high CGT rates:

Ireland does have high CGT rates, as Bob24's post illustrates. But, swings and roundabouts; Ireland's overall tax burden as a percentage of GDP (GNP* for Ireland) is pretty much the EU average, which means that we have other taxes that are below average. Our "taxes on production and imports" (VAT, excise duties) are pretty close to the EU average; the below-average taxes are "net social contributions" (social insurance contributions and contributions to pension funds, basically).

So I think crypto enthusiast who call for lower CGT (either for crypto, or generally) need to think about what other taxes could or would be raised. The likely answer is, social insurance contributions of one kind or another. So this would be a call for employers and employees to pay higher taxes so that crypto investors could enjoy lower taxes. It's a hard sell, politically.

Nobody seems to be bothered paying over 50% income tax but have a problem paying 35% CGT just because it effects them.

Yes one common misconception is that many people think labour taxation in Ireland is very high comparatively to other countries. Whereas it actually is one of the lowest in Europe if you include employer social contributions, employee social contributions, and income tax. Page 9 on this document provides a detailed and documented comparison of labour tax burdens for an average worker in multiple countries: https://www.institutmolinari.org/wp-content/uploads/sites/17/2021/07/tax_burden_on_global_workers2021.pdf

And if you were to include the effect of corporate tax which to some extend is an indirect tax on labour, then I suspect Ireland could be the lowest.

Having said that, I do not think that lowering the CGT rate would imply any significant rise in other taxes (maybe no rise at all).

The first reason is that CGT constitutes a very modest part of the government's tax receipts and consequently has a very limited impact on the overall tax picture. This can be verified on page 6 of this document: https://assets.gov.ie/118010/032dd0a9-fa96-4f7c-8e00-8542538d4812.pdf

The second reason is that as we already alluded to, lowering the rate wouldn't automatically mean that the amount of CGT collected by Revenue would drop, and it could even rise as a result (a lower rate tends to lead to more capital remaining in and entering the country, better compliance, and less tax optimisation).

In my opinion decisions on the rate aren't really about the money, and more about the political message the rate is sending.

And some got gifted money and, via CAT rules paid ZERO tax

Apologies for what I reckon might have been asked already but hoping someone might help me with this -

I understand the liability for CGT if you make a profit on crypto transactions but if your gains are well below the threshold (€1270?) and possibly even in the negative when you cash out do you still need to declare all the messing around to revenue despite being an experiment in the world of crypto (and just about breaking even?) with no intent on carrying on with this into the next year.

I suppose my other question is - will Revenue be told by exchanges like Binance and Crypto.com how much I've put into them or do they get a generic 'FGR has used our services!!!' alert without letting them know that I dabbled in less than 1k and not a crypto whale who needs auditing?

Plenty of people are absolutely bothered by the 50% income tax band, but it can at least be justified since income is progressively taxed (but even this needs an overhaul as the threshold is too low and there should be at least one more tier). If you're working full time as well that's guaranteed income. The reason the 33% CGT is such an issue is because of the fact you're already taxed on your income you worked to earn and dedicated effort to be able to allocate to savings, and then you also took further time of your own to learn about investing. And then you use some of your savings which were already taxed upon earning, and get taxed again for simply being in your bank, and YOU take the risk with it by investing it, and if you've actually been smart and manage to succeed, you get shafted for a further 33% on the profit you managed to secure. All after a measly, insultingly low threshold. It's absolutely embarrassing how uncompetitive Ireland's CGT setup is.

Another thing that you weirdos that seem to be trying to justify this pathetic setup are missing is the fact that even with such a punitive setup, the idiots in power that keep this in place are only managing to collect a paltry ~€900m from CGT. You'd say something if it was contributing loads to the economy for how high it is, and if those paying it were well rewarded for their efforts, but it's not. It only accounted for 1.69% of the exchequer tax receipts in 2020, and the people paying this are likely excluded from the overwhelming majority of social supports for the honour of getting shafted. People always say it but we really do have Scandinavian level taxes without their high quality public services and infrastructure.

We should overhaul the whole thing, have a tiered setup so for example something like your first €15,000 profit is tax free, your next €15,000 is taxed at 10% and anything beyond that is taxed at 12.5%-15% max. Eradicate deemed disposal and jail whoever even came up with the thought of it and all that played a part in implementing it, and ensure that the overall process of declaring and dealing with the taxes is as streamlined and easy to sort as possible. Doing this would open up investing to far more people and make people more inclined to actually try, because anecdotally I know for sure the €1,270 threshold and 33% rate put people off bothering to try at all. Do everything we can to make investing savings and trying to grow wealth more accessible and realistically possible for average people. This should all be done in tandem with encouraging wealthy people to start and grow their own businesses, because once someone has extra money to spare they'll be in a much better position to seriously consider this as well and this is very important for growing our economy since it'll ideally create new jobs

As CG Tax is self assessed, how likely are revenue to come looking for proof of workings? I'm a long time trader and haven't really kept records. Thinking it will be easier to just 33% the final lump sum for convenience..

Thanks.

One way to offset (not avoid) the tax is to buy stuff with big government grants. If you cash out 10k and pay 3300 in CGT. Then buy a 10k solar panel system. It will cost you around the 7k as there is a grant of around 3k. You at least get that tax back in a round about way.

You add equity in terms of home value. And A system that size then will easily generate over €500+ in after tax savings a year for the next 30+ years.

Electric cars also have a good 5k grant too.

I asked this before, and it seems unless the crypto was bought in both your names originally, you’ll have to transfer/gift her €1270 worth of crypto, which she can sell CGT free.

Bit of rigmarole, but obviously worth it.

The small gains exemption is not transferrable - it never has been.

The crypto, however, is transferrable, and assets have always been transferrable between spouses with triggering CGT or CAT liabilities. So you can transfer to your spouse so much crypto as would include an accrued gain of €1,270, and your spouse can dispose of it - or not, as your spouse wishes; once you transfer it it's your spouse's asset, not yours.

Has this person lived overseas for at least 3 years?

If not, both ireland and their current country of residency would be interested.

If the person has left ireland more than 3 years ago, their current country of residence would be interested. Although having a crypto account in ireland with an irish address, would have the Irish revenue interested.

That's a messy enough situation though, somewhere along the line this person is claiming residency in ireland (using an Irish address with their Irish crypto account) and overseas (using their foreign address for overseas crypto account).