The simple answer is yes. If you are tax resident in Ireland, then you need to pay Capital Gains Tax (CGT) of 33% on any profit you make on the disposal of a cryptocurrency.
What is Disposal?
Disposal is a tax term and is generally one of two things:
You sell the cryptocurrency for cash.
The nature of asset changes. If you sell one cryptocurrency and then buy another with the proceeds.
If any of these transactions generate a profit – then this profit is considered a capital gain and is subject to a CGT of 33%.
Is any of this tax-free?
The first €1,270 of your gains is tax-free. This is a yearly allowance.
When do you pay your CGT?
Revenue has added a complication here and there are two payment dates:
For disposals made between the 01 Jan and the 30th of November you need to pay the CGT by the 15th of December
For disposals made between the 01 Dec and the 30th of Dec, you need to pay the CGT by the 31st of Jan of the next year.
So, basically you need to pay your CGT in the same year that you dispose of the cryptocurrency.
Late payment will incur an interest charge. A late return will incur a penalty.
What if you have losses on your cryptocurrency assets?
CGT is only paid at the disposal of the cryptocurrency. If within the calendar year, you have losses on some disposals but gains on others – then normally the net amount is subject to CGT.
What if you re-invest your profit into more Cryptocurrency?
Even if all your cash is tied up in Cryptocurrency at the end of the year, you still need to pay CGT on the net gains from your trading/disposals.
How do you pay CGT?
You must register for CGT and then pay using ROS or myAccount. This applies to individuals and companies that may need to pay CGT.
Are tax authorities focusing on this?
Yes, and not just in Ireland. In the UK it was widely reported that HRMC asked for Coinbase to provide records of UK customers who received more than £5,000 last year.
There is a clear electronic trail of all transactions, so it would not be difficult for Revenue to analyse these and check if CGT was paid.
The message from Revenue is clear here. If you make profits on cryptocurrency, then you need to pay your taxes.