Ireland Crypto Tax

In case you are a newly born crypto startup that needs a safe nest where you can start growing your wings, then the Irish taxation system is what you need because there are three years of exemption from Corporation Tax, which, for new startups, can be reduced to 0% if their Corporation Tax due is 40,000 EUR or less in one tax year. Even if your crypto business is more mature, Ireland still has its attractiveness through the low general tax rates and attractive incentives for taxes.

Taxes in Ireland are governed by the Revenue Commissioners. The tax year runs from the 1st of January to the 31st of December.

Irish companies can file and pay their taxes, such as annual returns, make payments, claim repayments, etc., online through the Revenue Online Service’ (ROS). If you are registered with ROS or if you have signed up to its MyAccount, you can register your company as a taxpayer online using their eRegistration service. The eRegistration service is available only for companies with Irish-resident directors.

The residency status decides the manner of taxation a company would face. In Ireland, any company incorporated therein is regarded as a tax resident, unless it is already regarded as a tax resident in another country with which Ireland has a double taxation agreement. Centrally managed and controlled in Ireland after being incorporated elsewhere is considered an Irish tax resident accordingly.

Ireland has more than 70 international agreements on the elimination of double taxation affecting Capital Gains Tax, Corporation Tax, Universal Social Charge, and Income Tax.

There are no crypto-specific tax or regulations in Ireland. However, the only registered VASPs have to comply with the general Irish taxation principles to pay such wide taxes:

The following business activities can give rise to a liability to Irish taxes:

• Exchange between virtual assets and fiat money
• Exchange between one or more types of virtual assets
• Virtual assets transfer, meaning the conduct of a transaction on behalf of another person that moves a virtual asset from one virtual asset address or account to another;
• Provision of custodian wallets;
• Participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset or both.

However, since virtual assets or crypto assets are not adequately defined and classified, each case is considered separately in the light of facts and circumstances. Eventually, tax treatment for crypto-related transactions depends upon the nature of the business activities and the parties concerned.

Corporation Tax

As a rule, all the companies which are involved in some activity connected with cryptography are obliged to pay tax on corporations. The Irish tax residents pay corporate tax on their worldwide income, profits, and capital gains, while non-residents who trade through Irish-based subsidiaries or agencies are obliged to pay income tax to these Irish locations for a certain income earned in Ireland.

The returns have to be completed, and all payments that are due should be made up to the 23rd of the ninth month, from the end of the accounting period. It includes computation and payment of preliminary tax, filling of the CT1 and 46G forms, as well as the balance of the tax. The failure to pay in time would mean the headache of paying interest at a daily rate of 0.0219 per cent.

Companies that receive cryptocurrencies in return for their products or services would continue with the same revenue recognition and profit calculation principles. Moreover, they are responsible for recording the cryptocurrency transactions for tax-reporting purposes. Company profits and losses regarding crypto transactions should be included in their accounts, and general corporate tax rules should apply.

Companies engaged in crypto-related activities may hold their books and records in a currency other than the euro, but only if that is their functional currency. However, cryptocurrencies cannot be considered functional currencies, and thus accounts for tax purposes cannot be held in cryptocurrencies.

Capital Gains Tax

The capital gains tax is imposed on asset sales, including the transfer of virtual assets. The profit collected, or the taxable amount, represents the difference between proceeds from sales and the value of crypto assets. Gains from each realization of each asset need to be calculated separately. Refund applications of capital gains tax need to be filed by October 31st of each year following the date of sale.

The Irish resident tax companies on their worldwide income, while non-residents are required to pay tax on the disposal of virtual assets used in the conduct of business in Ireland.

In the case of capital losses derived from investments in assets, these would normally be deductible from the gains obtained in the same or future year. If the loss were to exceed the profit, the remaining loss could be carried forward and used as an increase to be recognized in the future. On the other hand, it is not possible to compensate capital losses with corporate income or to reject capital losses within the tax group.

The tax liabilities on taxable income from property are usually part of the company’s corporate tax. It implies that the collected gain will be taxed at the corporate rate of tax and contributed in the CT1 return form. The difference in corporate and capital gain creates a need for gains adjustment.

The adjusted gain is computed as follows:

• The amount of the capital gains tax at the rate of the capital gains tax
• Divide this amount by the corporate tax rate

Value Added Tax

Since the Court of Justice of the European Union (CJEU) decided that such cryptocurrencies as bitcoin are treated as fiat currencies for VAT purposes, cryptocurrencies aren’t charged with VAT in Ireland.

Because it is a service, in any case, it may be, the exchange of cryptocurrencies against fiat and vice versa is exempt under paragraph 6(1)(d) of the 2010 VAT consolidation law, only insofar as the company acting as a provider of exchange services acts as principal, i.e., it acts as the owner of the virtual assets it sells.

In cases when suppliers of ordinary goods and services are paid with cryptocurrencies, the generally applicable rules will apply when settling VAT. Thus, the taxable amount is stated in euros of the value of the cryptocurrencies at the time of the supply.

Income from mining cryptocurrencies is usually exempt from VAT on the ground that the activity is not an economic activity for VAT purposes.

Tax Incentives

It incentivizes crypto companies with such facilities as 25% credit available for qualified R&D expenses, concessional IP taxation rates, and energy-efficient equipment at concessional rates, among others.

The tax credit is applicable to the full amount that a company pays to qualify for R&D and is applicable over and above the ordinary 12.5% deduction for R&D, leading to a total tax credit of 37.5%.

Currently, Irish companies acquiring intellectual property are exempt from stamp duty and can deduct capital costs of acquiring certain intellectual property, namely: patents, copyrights, trademarks, licenses, software, etc., utilized in economic activities.

Finally, it must be reminded that companies offering crypto products or services are obliged to keep records of all transactions involving virtual assets for tax purposes. Should these records be stored in a crypto wallet or safe on devices like laptops or mobile phones, those must be handed over upon request to the Tax Commission. These records should be kept for six years according to law.

How to Pay Taxes on Crypto in Ireland, 2024

The taxing of crypto earnings is one of the biggest and most relevant news for investors and users of this type of currency in Ireland in 2024. Under Irish tax law, the taxpayer is under obligation to declare income received in cryptocurrencies and pay the due taxes on it. This article provides insight into the highlights of how to pay income tax on cryptocurrency earnings in Ireland for 2024.

Determining the Tax Status of Cryptocurrencies

Cryptocurrencies have not been regarded as legal tenders within Ireland, but for Ireland tax law purposes, they are regarded as assets or property. Consequentially, income from cryptocurrency transactions is taxable, both capital gains and mining income.

Capital Gains Tax

Major types of tax applicable to gains on cryptocurrency include capital gains tax. For Ireland, this remains at a rate of 33% on the capital gains realized upon the sale of cryptocurrency in 2024. The gain in capital is essentially the difference between the asset’s sale price and the original acquisition cost, considering possible allowable expenses.

Mining and Staking Income

In general, income arising in Ireland from the mining and/or staking of cryptocurrencies is subject to income tax at the rates currently prevailing, 20%, or 40%, depending on the extent of the taxpayer’s total annual income. The income would be reported as “employment income” for the purposes of an annual tax return.

Tax Liabilities and Declarations

It is the taxpayer’s responsibility to calculate the tax due in respect of his/her own tax liability and to file a return for the relevant period. The Irish tax year coincides with the calendar year. The date for receipt of returns and payment of taxes is normally 31 October in the following year.

Accounting and documentation

Because cryptocurrency tax accounting involves appropriate documentation, all transactions should be documented with the date of the transaction, volume transacted, the purchase and sale price, and how much it has gained or lost in capital. This would allow you to calculate your tax obligations, and this is what you would need if a tax audit is required.

Key considerations

• Retention Periods for Records: Irish tax law requires retention of all documentation and records related to a liability for a tax for a period of six years from the end of the tax year in which the return was filed.
• International taxation: Where the transaction involves parties in different countries, or other persons have tax liabilities overseas, the possibility of double taxation would need to be considered, with international tax treaties applied where applicable.

Taxation of cryptocurrency gains in Ireland is a matter of careful planning and recordkeeping. Given the complicated legislation on taxation, as well as the fast-evolving nature of the cryptocurrency market, taxpayers will do well if they seek professional tax advice that meets all their obligations with optimized tax burdens.

Table of Basic Rates for 2024 Relating to Irish Taxation

personal income tax, corporation tax, VAT, and capital gains tax rates applicable to cryptocurrency income.

Particular attention should be drawn to the fact that several types of tax credits and deductions may apply for individuals, which can cut down the overall burden of taxation.

If you are about to register and operate a crypto company in Ireland, our highly experienced and insightful team of Regulated United Europe (RUE) is ready to support you. We provide full-scale consultations on crypto taxation, cryptocurrency regulations of Ireland, crypto company formation, and obtaining a crypto license in Ireland. Moreover, in the case of accounting services, we would gladly help you. Be sure: we ensure efficiency, confidentiality, as well as attention to every detail that influences your business success. We invite you to contact us right now to arrange a consultation.

Lawyers from Regulated United Europe also provide legal support for crypto projects, assist in adaptation to MICA regulations.