Introduction - crypto tax Ireland
Like most jurisdictions around the world, there are no specific tax rules that apply to the buying and selling crypto assets in Ireland.
Therefore, like those other jurisdictions, the tax position on the sale of crypto assets will be subject to general Irish tax law principles.
In addition, the Irish Revenue has also issued guidance in some particular areas.
This article will mainly discuss cryptocurrencies – such as bitcoin, Ethereum and Dogecoin. The position for non-fungible tokens (“NFTS”) and other digital assets might differ.
Buying cryptocurrency
As one might surmise, the purchase of cryptocurrency is unlikely to give rise to any direct tax implications. For instance, there is no stamp duty on crypto assets (as there might be on the purchase of shares, for instance). Further, it is unlikely there will be any VAT implications where we are looking at an investor or trader buying and selling crypto-assets.
However, the purchase of the cryptocurrency will be relevant for determining the base cost of the crypto when the investor decides to sell the assets.
Sale of crypto-assets by individuals
General
The Irish tax position will depend on the Irish residence position of our crypto-investor. Specifically, whether they are:
- Resident for tax purposes in Ireland; or
- They are not resident for tax purposes in Ireland
Irish resident individuals selling cryptocurrency
If an Irish resident individual sells such an asset at a gain then it will usually be subject to capital gains tax. This is currently 33%.
Where the disposal results in a loss, then this capital loss can generally be:
- Used in the current year against other gains; or
- Carried forward to future years
The position is slightly different if the person is carrying on a ‘trade’ of dealing in crypto. Here, any profit on the sale of crypto would be subject to income tax. Marginal income tax rates of up to 55% - where one includes social charges – might therefore be payable.
It is worth noting that a trading classification is only likely in exceptional cases with the trading needing to be carried out in a deliberate and commercial fashion.
Non-resident individual
A non-Irish resident individual (who is also non-ordinarily resident) is liable to Irish CGT on gains arising in Ireland from the disposal of Irish ‘specified’ assets only (e.g. land and buildings in Ireland). As such, crypto gains should not be taxable.
Sale of crypto-assets by Companies
An Irish resident company that disposes of crypto at a gain will be subject to capital gains tax at 33%. Similarly, losses will also be treated in the same way as set out above for individuals.
Where such a company conducts a ‘trade’ of dealing in crypto, then it’s profits will generally be subject to corporation tax at 12.5%.
Again, the threshold at which activities might be considered a trade is a high one. However, it is generally thought that a company might satisfy this more easily than an individual.
Mining cryptocurrencies
General
The Irish Revenue has not provided any guidance on the position when it comes to the mining of cryptocurrencies.
If they follow the UK tax authorities position on the same activity, then the treatment will depend on whether:
- The person is conducting a trade of mining crypto; or
- The person’s activities fall short of a trade
Trade
Here, the person will be taxable on the trading profits generated from the mining activities.
A company will pay tax at 12.5% but an individual will be subject to tax at their marginal rates.
No trade
Where the activities fall short of a trade, then the income received by the person will be treated as ‘miscellaneous’ income.
Miscellaneous income tends to qualify for fewer reliefs than trading income.
A company will pay tax at 12.5% but an individual will be subject to tax at their marginal rates.
If you have any queries about this article, crypto tax in Ireland or the matters discussed more generally, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article
For further resource on crypto assets please see www.cryptotaxdegens.com.