Cryptocurrency transactions are subject to both Income Tax and Capital Gains Taxes in Ireland, as well as to Capital Acquisitions Tax, or 'Gift Tax'. Revenue has set out guidelines on how cryptocurrency buying, trading and mining is taxed. This guide breaks down everything you need to know about crypto taxes in Ireland and how you can avoid notices, audits and penalties later on. We'll also explain how to calculate your crypto taxes, the forms you need, and tips on how to reduce your tax bill.
This guide is regularly updated
One last thing before we start - the rules on crypto tax are in constant flux. At Koinly we keep a very close eye on Revenue's crypto policies and regularly update this guide to keep you informed and tax-compliant.
First Published 24 May 2021: Welcome to your Irish cryptocurrency tax guide!
Yes, Cryptocurrency is taxed in Ireland.
In Ireland, crypto investments are treated just like investments in stocks or shares. In other words, if you’re making profits (or losses) through the disposal of your cryptocurrency — whether by selling, gifting or exchanging — you need to pay a 33% Capital Gains Tax (CGT) to Revenue.
Per normal CGT rules, the annual exemption of 1270€ still applies. Any profit you make above this figure will be taxed at 33% and it doesn't matter how much you earn (or if you make a loss), you will need to file a tax return to Revenue each year.
Depending on the nature of your crypto activities you could also pay Income Tax and Capital Acquisitions Tax on crypto in Ireland.
Profits from crypto mining ,whether carried on by an individual or a company, are likely to be seen as as trading profits subject to income tax/corporation tax rather than CGT.
Capital Gains Tax Rate
In Ireland, crypto is typically taxed as Capital Gains Tax, at a CGT rate of 33%.
How will Revenue know about crypto accounts?
If you have an account with a European digital currency exchange, then it's likely Irish Tax and Customs already has your data.
When the European Union’s Sixth Anti-Money Laundering Directive comes fully into force on June 3 2021, every company that provides financial services to cryptocurrency customers and businesses will have to comply with much tougher regulations about when and how they identify customers. Data is made available between EU member states in a bid to stamp out money laundering and illegal activities.
Here's how Ireland taxes Cryptocurrency
The Irish government does not see Bitcoin and other cryptocurrencies as money or as foreign currency. Instead, Revenue classes crypto as property, and as an asset for Capital Gains Tax (CGT) purposes.
In most countries where crypto is taxed, three types of tax rules typically apply. This is the case in Ireland too, with a 4th class added for the receiving of gifts.
Note This is a quick summary of the taxes that apply. Scroll down for more detail on each tax category.
Capital Gains Tax
CGT is currently charged at a rate of 33%, but the first €1,270 profit a year is exempt. The following crypto activities attract capital gains tax in Ireland:
- Buying Crypto as as Investment
- Selling Crypto
- Exchanging & Trading Crypto
- Buying Goods and Services
- Gifting Crypto, Stablecoin Trades, Buying Goods and Services , Margin Trading, ICOs / IEOs, Forks / Chain Splits.
The following crypto activities are tax-free in Ireland:
- Buying Crypto
- Token & Coin Swaps
- Transferring Crypto Between Own Wallets
Ireland's Revenue states that profits and losses of a non-incorporated business on cryptocurrency transactions must be reflected in their accounts and will be taxable on normal income tax rules.
- Getting paid in Crypto
- Accepting crypto for payment of goods and services
- Signup & referral bonuses
- Interest from lending, staking, DeFi and Masternodes.
- Crypto mining
Capital Acquisitions Tax (Gift Tax)
Receiving crypto inheritance or gift. (The receipt of an inheritance or gift of a crypto-asset would be subject to Capital Acquisitions Tax (CAT). CAT is currently 33% to the value of the crypto-asset on the valuation date subject to reliefs.
If you dabbled in the crypto market in 2020-2021, then you will likely pay one or all of these taxes depending on the type of activity you were involved in. We'll jump into the detail of each tax type a little further down.
Tax deadline - 31 October 2021
Irish tax needs to be filed by October 31. When to pay crypto tax in ireland?
If you made profit on crypto in Jan-Nov the deadline to pay any tax due is 15 Dec.
If you made profit on crypto in Dec the deadline to pay any tax due is 31 Jan.
How should you report your crypto tax activity in Ireland in 2021?
Irish Tax and Customs wants to know about your crypto activity in terms of income and capital gains. You'll need to declare both in your annual tax return, in the same way you need to report your regular income, gains and losses.
Once you, or your accountant has calculated your crypto tax (we have an app for that!), the easiest way to file and pay your taxes is online using the Revenue Online Service (ROS) or myAccount.
To file Irish bitcoin taxes, PAYE Workers should use myAccount (activate the CGT payment option via Revenue). Self Employed Irish residents should use ROS.
PAYE Worker CG1 Form
Self Employed Form 11
WHO NEEDS TO FILE THIS?
PAYE Workers who earned income or made capital gains (not just from crypto).
WHAT INFORMATION IS NEEDED?
This form requires you to enter all your income tax information.
WHO NEEDS TO FILE THIS?
Self Employed or Chargeable Persons are required to submit a Form 11 to the Revenue Commissioners on or before the 31st October each year. A Chargeable Person is an individual who has non-PAYE gross income in excess of 50,000€ or assessable non-PAYE income of 3,174€ or more. With effect from 01/01/2016, the limit is increased to 5,000€.
Company Directors, owning more than 15% of the shareholding in the company, are also required to complete a Form 11 each year.
WHAT INFORMATION IS NEEDED?
This form requires you to enter all your capital gains totals.
You need to keep records
Revenue requires you to keep detailed records of cryptocurrency transactions for 5 years after you “prepared or obtained the records”, or “completed the transactions or acts those records relate to”, whichever is later. You need to keep the following records:
- the date of your crypto transactions
- the value of the cryptocurrency in Euros at the time of the transaction (which can be taken from a reputable online exchange.)
- what the transaction was for and who the other party was (even if it’s just their cryptocurrency address).
It's recommends to use an Irish crypto tax software like Koinly for record keeping.
Who can help you calculate your Irish crypto taxes?
Crypto tax reporting is fairly new, and a road less travelled for most accountants. That doesn't mean that Revenue is going to cut you any slack. Here are 4 ways you can tackle your crypto taxes and keep in the taxman's good books. We'll start with the easiest and most accurate method first.
- Use a crypto tax calculator like Koinly to create a report of crypto activity. Send the report to your accountant to complete your tax return. Super accurate, super easy.
- Use a crypto tax calculator like Koinly to create a report of crypto activity. Add the necessary data to your tax return and file it yourself. Accurate, and easy, if you know what you're doing.
- Get your accountant to work out your crypto activity by supplying transaction histories, statements etc. Let them work it out and file for you. Not very accurate, lots of admin.
- Work out your activity yourself, and file yourself. (Best of luck to you.)
How to use a crypto tax app like Koinly to calculate your Irish tax
Don't get stuck in the busywork. Don't get it wrong. Don't rely on your accountant to know where to look. Use Koinly. Here's how easy it is:
- Sign up for a FREE account.
- Select your base country and currency.
- Connect Koinly to your wallets and exchanges. Koinly integrates with Binance, CoinSpot, Bitcove, Kraken, Swyft, and 300+ more. (See all)
- Let Koinly crunch the numbers. Make a coffee.
- Ta-da! Your data is collected and your full tax report is ready!
- To download your crypto tax report, upgrade to a paid plan from $49 per year.
- Send your report to your accountant, or complete your Revenue submission yourself, using the figures from your Koinly report.
Now that you know how to go about calculating and submitting your taxes, let's explore Ireland's crypto tax rules in more detail.
Capital Gains Tax
Capital gains tax (CGT) is the type of tax most crypto investors face in Ireland. That applies in Ireland and many other countries including the USA, UK and Canada. Before we look at the different crypto 'events' that a trigger a capital gain tax in the eyes of Revenue, let's define what a capital gain is. Simply put, a capital gain is the profit or loss you make from trading or selling crypto:
Capital gain = selling price - buying price - fees
Your buying price + associated fees are also known as the cost-basis or just basis in accounting lingo.
For example, if you bought 1 BTC for 1000€ and also paid a fee of 10€, then your cost basis is 1010€. If you later sell the Bitcoin for 1500€ then you will realise a capital gain of 1500€- 1000€ - 10€ = 490€.
You will have to pay a capital gains tax on this amount - we will go deeper into how much tax you will have to pay in the next section.
An investment in Bitcoin or any other cryptocurrency is treated in a similar way to any other investment. If you make a profit when disposing of your cryptocurrency, you are need to declare it to Revenue for Capital Gains Tax (CGT).
Crypto sold within four weeks of acquisition
Investors should note that each time they buy shares, it is deemed to be a separate holding for capital gains tax purposes.
When selling the shares which have been acquired in stages over a period, the Revenue uses the FIFO (First in First Out) system to determine which shares have been disposed of. An exception to the FIFO rule is where shares are sold within four weeks of purchase. In this case, the shares sold are deemed to be the most recently acquired shares, even though there may be an older holding of the same class of shares. If shares are sold at a loss and reacquired within four weeks, this loss can only be set against gains made on a subsequent disposal of the reacquired shares and not against other gains.
Where shares are sold at a loss, the loss can be set against other gains and if not utilised, can be carried forward indefinitely. It is important to make a claim for the loss, even though there may be no gains in the particular tax year, since these losses may be needed in the future.
Capital Gains Tax Rate
CGT is currently charged at a rate of 33%, but the first €1,270 profit a year is exempt. The following crypto activities attract capital gains tax in Ireland: Buying Crypto as as Investment, Selling Crypto, Exchanging & Trading Crypto, Buying Goods and Services, Gifting Crypto, Stablecoin Trades, Buying Goods and Services, Margin Trading and ICOs / IEOs.
Buying Crypto as an investment
An investment (as opposed to conducting your business) in cryptocurrency is looked upon by Revenue in the same manner that an investment in any other currency, stock or share would be. You will need to declare it for Capital Gains Tax (CGT) should you make an annual profit on disposals. Per normal CGT rules, the annual exemption of 1270€ still applies. Any profit you make above this figure will be taxed at 33% and it doesn't matter how much you earn (or if you make a loss), you will need to file a tax return each year.
If you’ve made any losses on your crypto this can be offset against gains on other investments.
If you have made a loss and have no profit to offset that against, unused losses can be carried forward to be offset against next year’s profits.
CAPITAL GAINS TAX
According to Ireland's Revenue, selling crypto for fiat currency is a taxable event and results in capital gains tax.
Craig purchases 0.1 Bitcoin in July 2017 for 2000€ and sells it in November 2017 for 4000€. His total capital gain is thus 2000€
CAPITAL GAINS TAX
Trading or exchanging crypto
Trading one crypto for another (ex. BTC → XRP) is also a taxable event in Ireland. Revenue sees a trade as 2 separate transactions, first you are selling your BTC for X amount of fictional euros, then you are buying ETH with these fictional euros. Even though you never received any euros in hand, you still have to pay tax on the sale of the BTC.
The market value (in EUR) of the purchased coins is used to determine the capital gain. If the cryptocurrency that you received can't be valued, you will have to take into account the market value of the crypto you sold at the time of the transaction.
Let's say you purchased 1 Bitcoin for 1000€ in July 2017.
In November 2017, you exchanged 0.5 Bitcoin for 3 Ether. At this time, the market value of 3 ether was around 2000€.
This means your capital gains come to 2000€ and the cost of acquisition is 500€. In other words, your capital gains would be 1500€.
CAPITAL GAINS TAX
Paying for goods and services
When you pay for goods and services with crypto, this is seen as a 'disposal' - and that equals capital gains tax. Whether you are paying rent, buying a home cinema setup or paying for a netflix subscription with cryptocurrency, you are still taxed in the same way as when you sell crypto.
This transaction is similar to the crypto to crypto scenario above. In the eyes of the taxman, if you pay 1 BTC for a TV then you are first selling your crypto for X amount of fictional euro, and using these euros to pay the seller. The disposal of your BTC is therefore taxed as a capital gain.
Gifting crypto to friends & family
In Ireland gifting crypto is viewed exactly the same as selling it, so it's a taxable event and you'll need to pay capital gains tax on the 'disposal' of your crypto. The sales proceeds would be the fair market value of the crypto on the date when the gift was made. Remember that a different type of tax applies if you're on the receiving end of a crypto donation, called Capital Acquisition Tax, or Gift Tax.
Trading with stablecoins
A stablecoin - like TrueUSD or Tether, is simply a class of cryptocurrency that offers price stability. That's because stablecoins are backed by a reserve asset, usually a stable fiat currency like USD or EUR. As far as Irish Tax and Customs is concerned however, stablecoins like TrueUSD are exactly the same as any other cryptocurrency, and so the tax treatment - capital gains tax - is the same as for regular crypto to crypto exchange.
There is no major advantage or disadvantage between trading with fiat and trading with a stablecoin when it comes taxes.
CAPITAL GAINS TAX
Margin trading with crypto involves borrowing funds from an exchange to carry out your trades and then repaying the loan later. There is usually some interest involved as well.
There is currently no guidance on how this is taxed however it is important to note that there is a clear differnce between margin trading and trading with futures, so the rules that apply to futures trading/speculation may not apply to margin trades.
On a futures trade you are speculating on the rise/fall of a coin, on a margin trade you are borrowing funds to carry out some trades. Most exchanges have different platforms for both, for ex. Binance allows margin trading on spot markets, whereas you have to trade on a completely different platform if you want to do futures as well - Binance Futures.
Taking this into consideration, the conservative approach is to simply treat borrowed funds as your own investments and pay CGT on the repayment of the loan (since this would be deemed a disposal).
CAPITAL GAINS TAX
Participating in an ICO / IEO
ICOs (Initial Coin Offerings) or IEOs (Initial Exchange Offerings) refer to a situation where investors can purchase tokens/coins in a yet-to-be-released cryptocurrency/company. This purchase usually happens via an existing cryptocurrency likes Bitcoin or Ethereum.
This amounts to a crypto-to-crypto trade. The taxable event is triggered on the date of the ICO transaction, when you receive the new tokens. When you sell the new tokens at a later date, the cost base of that transaction will be the value of the cryptocurrency that you paid for it on the date of the ICO/IEO.
CAPITAL GAINS TAX
Tax Free crypto activity
Believe it or not, not every aspect of crypto trading is taxable. In some cases, you might not have to pay any tax at all. The following crypto activities are tax-free in Ireland: Buying Crypto, Token & Coin Swaps, Transferring Crypto Between Own Wallets.
Like in most parts of the world, there are no taxes on buying or hodling cryptocurrencies in Ireland. However, keeping accurate records of the purchase is very important so that you can calculate the cost basis of the transaction when you decide to sell or 'dispose' of your crypto.
Koinly is not just a crypto tax calculator but a crypto portfolio tracker too - the perfect tool to keep a hold on your crypto purchase and sale dates.
Transferring crypto between own wallets
Moving crypto between different wallets or accounts is not a taxable event and doesn't trigger capital gains tax. Having said that, it's important to keep track of these movements because automated crypto tax software like Koinly use these movements to keep track of your cost-basis.
Let's say Sam buys 4LTC for 1000€ on Coinbase. She later moves the funds into her private LTC wallet. A few days later she transfers the LTC from her private wallet to her Binance account and sells it for 2000€, making a profit of 1000€.
If Sam wants to use Koinly to generate her crypto tax report, she will have to connect all three wallets. If she doesn't sync her private wallet but only syncs the Coinbase and Binance account, Koinly won't be able to identify that the funds she transferred into her Binance account are the same funds she purchased on Coinbase. However, once Sam adds her private wallet address, Koinly can match the transfer by tracing it from Coinbase to her wallet and then from her wallet to Binance. This will help in producing an accurate tax report.
If she no longer has access to her private wallet, she will have to make some manual changes using the Koinly web interface. She will have to mark the transfer from Coinbase as Ignored so that Koinly doesn't realise gains on it and she doesn't have to pay taxes twice. She would then change the value of the incoming transaction to Binance to match the cost-basis of the outgoing transaction from Coinbase.
Token address change / mainnet launch
When a cryptocurrency changes its underlying tech for ex. when EOS went from the ETH blockchain to the EOS mainnet or when DAI changed its contract address and named the old coin SAI - there are no tax liabilities. Note that if your old coins continue to hold value even after the new ones have been issued then Irish Tax and Customs may consider this as a fork and not a swap - this may give rise to a CGT event.
Ireland's Revenue states that profits and losses of a non-incorporated business on cryptocurrency transactions must be reflected in their accounts and will be taxable on normal income tax rules. In Ireland, income tax on crypto activities typically involves getting Paid in Crypto, accepting crypto for payment of goods and services, airdrops, signup & referral bonuses, interest from lending, staking, DeFi and masternodes.
Profits from crypto mining activities are typically subject to income tax/corporation tax rather than Capital Gains Tax.
Getting paid in crypto
Whether you are freelancing or working for a company that pays employees in crypto, you can't escape income tax.
Any coins received as income are taxed at market value at the time you received them so make sure you declare this income on your annual tax return or you might end up facing the taxhammer.
Accepting payment of goods and services in Crypto
In general, businesses accepting crypto payments for goods or services should keep records of crypto transactions. No special rules have been introduced so far and taxable profits should be calculated according to the current tax legislation.
CAPITAL GAINS TAX / INCOME TAX
Signup & Referral bonuses
Any crypto you get in return for signing up or referring users to a service is taxed as Income.
Airdrops received from an established token are considered ordinary income at the fair market value of the tokens on the date you received them.
Interest from DeFi / Lending / Staking / Masternodes
Lending your cryptocurrency and getting interest on the same generates taxable passive income. This is similar to mining coins and is subject to similar rules. ou have to declare it on your Income tax statement as additional ordinary income.
Crypto mining gains are viewed as trading profits subject to income tax/corporation tax rather than CGT. If the mining activity does not amount to a trade, the value of any crypto-assets or fees received for successful mining, less allowable expenses, may be taxable as miscellaneous income.
Income Tax / Corporation Tax
Capital Acquisition Tax
CAT or Gift Tax is a specific tax class unique to Ireland.
Receiving a gift of crypto
The receipt of an inheritance or gift of a crypto-asset would be subject to Capital Acquisitions Tax (CAT). CAT is currently 33% to the value of the crypto-asset on the valuation date subject to reliefs
Capital Acquisitions Tax
Calculating your crypto taxes (example)
Let's look at how capital gains are calculated by way of an example.
- Michael bought 1 BTC for $1000 on 1st July 2020.
- He traded it for 20 ETH on 5th July 2020. The market value of 20 ETH at this point was $1500.
- He also received 0.15 ETH (worth $10) from Coinbase as a signup bonus.
To calculate crypto taxes for Michael we are going to use Koinly which is a free online crypto tax calculator.
After entering the 3 transactions into Koinly manually, this is the output:
We can see the gain/loss on each transaction clearly. Navigating to the Tax Reports page also shows us the total capital gains.
As you can see, Michael will have a taxable capital gain of $500 along with taxable income of $10 from cryptocurrencies.
The good thing about crypto tax software is that whether you have 10 transactions or 10,000 - it is equally easy to generate your tax reports! You can sign up for a free Koinly account and view your capital gains in a matter of minutes.
Accounting methods used in the calculations
Revenue requires you to use FIFO (first in, first out) when calculating your crypto taxes.
Step 2: Preview your capital gains
Koinly does a number of things under the hood in order to calculate your capital gains and income.
First it fetches the market rates at the time of your trades, then it matches transfers between your wallets and exchange accounts and finally it calculates your capital gains.
All this is automated so the only thing you have to do is head over to the Tax Reports page to see a summary of your gains:
Note that you can also use the Dashboard to stay on top of your taxes as you carry out trades. This can help you make good tax-friendly trades and avoid surprises at tax time! It also helps with the record-keeping that Revenue wants all crypto traders to do.
Step 3: Download your tax reports
The final step is to download your tax reports. The tax report you want is called the Complete Tax Report, it contains everything you need to report to Revenue.