The Taxation of Crypto Assets

Posted in CGT, Good Advice, Taxation, VAT

Many people are now dealing in cryptocurrency so they should know the tax issues that may arise.

Capital Gains Tax (CGT)

Section 532 TCA 1997 states that any currency other than the currency of the State is an asset for the purposes of CGT.

The Revenue Commissioners (Revenue) have confirmed that where a profit or loss on a currency contract is not within trading profits, it would usually be taxable as a chargeable gain or allowable loss for individuals and companies.

It would be extremely difficult to have Revenue accept that profits and losses arising to individuals and companies on normal cryptocurrency transactions are taxable under income tax/corporation tax rules with expenses allowable in calculating taxable profits.

Revenue regard these transactions as making investments rather than trading similar to the buying and selling of shares.

So normal cryptocurrency transactions are taxed at the current CGT rate of 33%.

The tax on profits realised from Jan 1 to Nov 30 is due on Dec 15 in the same year and tax on profits realised in Dec is due on the following Jan 31.

Besides transferring into cash, profit can also be realised if you transfer from one currency/exchange to another.

VAT

VAT arises in the usual way for suppliers of goods/services sold in exchange for cryptocurrency.  The taxable amount for VAT purposes will be the Euro value of the cryptocurrency at the time of the supply.

Revenue considers cryptocurrencies as negotiable instruments and so they are exempt from VAT.

Inheritance/Gift Tax (CAT)

The receipt of an inheritance or gift of any crypto asset is subject to the usual rules applying to CAT.

Stamp Duty

An instrument transferring crypto assets may be subject to Irish stamp duty.

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