Simply put, a cryptocurrency is an online currency. An investment in cryptocurrency is looked upon by Revenue in the same manner that an investment in any other currency, stock or share would be. If you are making a profit through the disposal (selling, gifting or exchanging your asset) of your cryptocurrency, you will need to declare it to Revenue for Capital Gains Tax (CGT).
Fortunately, the first €1,270 of your cumulative annual gains (after deducting expenses and losses from other cryptocurrency investments – further details below) is exempt from tax. But, any profit that you make above this figure will be taxed at 33% and you will need to file a tax return each year.
If you are self-employed, you can include your CGT liability on your Form 11. If you make a disposal between 1 January and 30 November you must pay CGT by 15 December of the same year. And, if you make a disposal between 1 – 31 December, you will have to pay your CGT by 31 January of the following year.
Every single gain you make from a cryptocurrency disposal must be declared to Revenue.
More information on tax obligations relating to investments in cryptocurrency can be found here.
Many cryptocurrencies, such as Bitcoin, are traded on a number of exchanges. Unlike shares or commodities the value of the cryptocurrencies may vary between exchanges. Therefore, here isn't always a single “exchange rate” for cryptocurrencies. A reasonable effort should be made to use an appropriate evaluation for the transaction in question.
The direct taxes are corporation tax, income tax and capital gains tax
The profits and losses of a non-incorporated business on cryptocurrency transactions must be reflected in their accounts and will be taxable on normal IT rules.
The profits and losses of a company entering into transactions involving cryptocurrency would be reflected in accounts and taxable under normal CT rules.
If a profit or loss on a currency contract is not within trading profits, it would normally be taxable as a chargeable gain or allowable as a loss for CT or CGT purposes. Gains and losses incurred on cryptocurrencies are chargeable or allowable for CGT if they accrue to an individual or, for CT on chargeable gains if they accrue to a company PAYE treatment of cryptocurrencies. Where emoluments payable to an employee are paid in a cryptocurrency, the value of the emoluments for the purposes of calculating payroll taxes is the Euro amount attaching to the cryptocurrency at the time the payment is made to the employee. Returns to Revenue must be shown in Euro amounts and remittances made appropriately.
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