It's tempting to think that your crypto is safe from the long arm of the Irish Revenue Commissioner, but unfortunately, this isn’t the case, and failing to pay your taxes could result in a hefty fine. But don’t despair; in this guide, we’ll cut through the Irish tax system’s technical tax jargon, and cover everything you need to know about crypto tax evasion in Ireland.
Paying taxes is always a drag and tax on your hard-earned crypto gains is even worse. So why not just keep quiet about your holdings? Surely the Irish Revenue Commissioner (also just known as Revenue) doesn’t know what happens on the blockchain, right?
Although a few years ago, Ireland was behind the curve when it came to crypto tax and regulation, recent legal changes mean that hiding from the tax authority could lead to you paying some serious fines. Crypto taxes are complicated, but we've covered everything you need to know in our Ultimate Ireland Crypto Tax Guide. But in this guide, we’re going to give you an overview on Ireland’s crypto tax laws and take a look at the dangers that crypto tax evasion could pose to your financial well-being.
What happens if you don’t pay your crypto taxes in Ireland?
If you decide not to pay your taxes or submit false information regarding your crypto investments, you’re likely to end up in serious trouble with all your profits and more soaked up by fines. So, even though not paying tax might seem tempting, getting caught will do some real damage to your finances.
How does Revenue tax crypto?
Revenue will tax your crypto based on how they categorise what’s in your wallet:
- Income Tax: If you’re paid by your employer or clients in crypto, or if you're otherwise earning crypto, then the Revenue will levy the standard Income Tax rate on every transaction.
- Capital Gains Tax: If you trade, swap, spend or gift tokens (excluding to your spouse), then your profits will be hit with Capital Gains Tax.
- Corporation Tax: If you run a company that operates in the crypto space, you might be subject to Corporation Tax.
- Capital Acquisitions Tax: Gifts or inheritance paid in crypto may be subject to Capital Acquisitions Tax; you can find out more about this here.
When doesn’t Revenue tax crypto?
It feels like Revenue has covered all bases with crypto and will find at least one way to fill its coffers with your gains. Luckily, there are a few exemptions that might help you save some money:
- Buying crypto with fiat currency.
- Hodling crypto.
- Transferring tokens between your own wallets.
- Gifting crypto to your spouse or civil partner.
If you’re looking for a more detailed dive into when Revenue will tax your crypto, then check out Koinly’s Crypto Ireland Tax Guide.
In the decentralised and privacy-oriented world of crypto, we can’t blame ourselves for wondering if it wouldn’t be easier to simply keep our holdings hidden from Revenue.
The reality of the crypto space today is that governments are quickly breaking down the wall of privacy and becoming increasingly aware of what happens on blockchains and crypto exchanges.
In 2021, the Irish government implemented the European Union’s Fifth Anti-Money Laundering Directive, which increases the pressure on companies to obtain Know-Your-Customer (KYC) data from customers and requires crypto companies to register with the central bank.
Although you might be able to hide in the short term, it's increasingly likely that the Irish government will find your crypto; when they do find out you’ve been hiding your crypto, the penalties can be severe.
What are the penalties for evading crypto tax in Ireland?
Revenue will hit you with a fine or maybe even a stint in jail if you are caught evading crypto tax. They issue penalties depending on the case's specifics, with a maximum fine amounting to 100% of the tax evaded on top of the original amount, essentially doubling your tax bill. Revenue also applies 0.0219% interest to overdue taxes every day.
If you’re convicted of tax evasion, you can face imprisonment of up to 12 months. Worse still, if you’re indicted or later found guilty, you can face up to five years!
How much tax will you have to pay?
The amount of Income Tax you’ll pay on your crypto will depend on whether you fall into the 20% tax rate category or the 40% category, while Capital Gains Tax is set at a flat 33% rate. You can find out exactly where you stand at the Revenue’s official website.
What happens if I’ve previously avoided crypto taxes?
It’s possible that you’ve accidentally failed to pay your crypto tax in the past; don’t panic. You can avoid future penalties by making an Unprompted Qualifying Disclosure. If your disclosure is successful, Revenue might offer you an amnesty or reduce your penalties.
You should consider completing an Unprompted Qualifying Disclosure if:
- You haven’t reported all your crypto income or gains.
- You made a mistake when you filed your crypto taxes.
To get more information about how to submit a disclosure, visit Revenue.ie.
How Koinly can help you stay compliant
Koinly’s crypto tax calculator is built on the premise that crypto investors need an easy-to-use tax calculator that removes the red tape that often overwhelms and even discourages people from paying taxes.
Some of the features Koinly offers include:
- Simple and user-friendly UI.
- Market leading integrations.
- Availability in dozens of countries.
- Revenue compliant tax reports.
If you’re worried that we’re being biased, read our reviews on Trustpilot, where we rank at the top of the list for crypto tax providers, and to learn more about how Koinly crypto tax calculator works or to try it for yourself, visit our site.