Cryptocurrency Regulation in Ireland

The Criminal Justice-the legislative basis for Virtual Asset Management Service Providers, amended a) Part 2 of the Criminal Justice Act 2013; b) of the Criminal Justice-money Laundering and Terrorist Financing-Act-Amendment-2018; c) the Criminal Justice-money Laundering and Terrorist Financing-Act-Amendment 2021 is in line with the European Union’s Fifth Anti-Money Laundering Directive, commonly referred to as 5AMLD.

The responsibility of supervision of credit and financial institutions, including SAPs operating in and out of Ireland, lies with the Central Bank of Ireland.

The Irish Blockchain invented an industry of not-for-profit digital networked to help and support the development of the blockchain sector by sharing information, arranging events, and publicizing successful stories with a desire to make Ireland the knowledge hub for cryptoasset businesses.

VASPs are those businesses that provide the following services:

• Exchange between virtual assets and fiat money
• Exchange between one or more types of virtual assets
• Virtual asset transfer means performing a transaction on behalf of another person moving a virtual asset from one virtual asset address or account to another
• Providing purses for custodians
• Participation in the provision or offering of financial services related to an offer of an issuer or sale of a virtual asset

The Act provides that a virtual asset shall mean a digital representation of value that can be digitally implemented or transferred and that can be used for payment or investment purposes but does not include a digital representation of fiat currencies, securities, or other financial assets.

With respect to anti-money laundering/terrorist financing law, VASPs shall do the following:

• Designate a senior officer responsible for implementation, management, and supervision of the measures against money-laundering/terrorist financing
• Designate an AML/CFT compliance officer
• Carry out appropriate risk assessment in its operations
• Customer due diligence for clients
• Ongoing monitoring of clients and their operations
• Report suspicious transactions to the Financial Intelligence Unit, Ireland, and the Revenue Commissioner in cases of known or suspected money laundering or terrorist financing
• Design and implement policies, procedures, and controls internally to prevent money-laundering/terrorist financing
• Identify politicians by developing procedures
• Retain relevant customer data and regulatory procedures
• Provide ongoing anti-money-laundering/counter-financing of terrorism training to all staff

Depending on the specific nature of the risk, this could range from presentations and seminars, through risk assessment questionnaires, backed up with on-site inspections to review meetings with the Central Bank of Ireland’s supervisory model.

Persons holding managerial positions in CEC have to comply with the Physical Training and Integrity Regime devised by the Central Bank of Ireland and have, therefore, to be approved by the competent agency. That way, it is ensured that senior management has a proper degree of training and integrity for this particular role.

In developing an AML/CFT policy controls and procedures should focus on:

• Maintenance of detailed documented policies that demonstrate incorporation of and compliance with all legal and regulatory requirements, supported by guidance and accurately reflect operational practices
• Ensuring the policy is accessible to all staff, and that the policy is fully implemented and adhered to
• Detailed procedures regarding formal policy reviews at least annually
• Update the policy in good time in response to events and emerging risks and ensure that such information is promptly disseminated to the concerned staff members
• See to it that all policies and updates have been reviewed and approved by senior management
• Ensure the policy has been subjected to review and verification

VASPS REGISTRATION

Cryptocurrency firms that seek to offer their services in Ireland must, for this purpose, register as VASPs with the Central Bank of Ireland. Registration, since its introduction, has been solely for the purpose of oversight in terms of compliance with the AML/CFT law. An application must be received for entry on this register maintained by the Central Bank of Ireland. Only an applicant who is in a position to satisfy the prescribed form that he or she can comply with the relevant legislation will be approved as a SAP.

The Central Bank of Ireland tries to review an application within the relevant timeframe but takes into consideration that such a review period depends upon the ability of the applicant to submit all the relevant documentation and information in a complete and transparent manner. At the moment, this body does not impose any specific requirements or supervisory fees.

Since AML/CFT compliance is a focus, any of the following limitations should be eliminated before the very start of the application procedure:

• Development of internal AML/CFT policies and control mechanisms appropriate to the scale and complexity of business
• Conduct of AML/CFT business risk assessment
• Preparation of an organizational chart showing corporate responsibility and how it can ensure compliance with AML/CFT requirements
• Detailed information on VASP owners-beneficiaries and top management
• Business Plan – overall, demonstrating transaction workflows
• Information about outsourcing roles and outsourcing service firms

Applicants can request an optional pre-submission meeting with the Central Bank of Ireland that will address pertinent questions regarding the registration process and the completion of the VASP AML/CFT registration form. Applicants desiring to arrange such a meeting will be expected to have prepared their registration documents and questions in advance and will be required to send an email to [email protected].

Key steps in the application process:

• The applicant submits a VASP pre-registration form to the Central Bank of Ireland, and sends an email with the completed form to [email protected]
• The Central Bank of Ireland sends an email to the applicant with the Institution number, reporting date and details on how to access and submit the VASP AML/CFT registration form via the Online Reporting System of the Central Bank of Ireland (ONR)
• The applicant submits VASP AML/CFT registration form and all supporting documentation via ONR
• The Central Bank of Ireland sends an email to confirm receipt of the registration application
• The Central Bank of Ireland will consider whether the VASP application is complete for the purposes of the assessment phase, that is to say whether all relevant information and documentation has been provided. If the registration is complete, the applicant will be contacted by email to that effect. In that event, the application review process will not be commenced until the application is complete.
• Where an application is complete with all relevant information and documentation, it is considered by the Central Bank of Ireland which may write to an applicant requesting further documentation or clarification
• The Applicant addresses further requests for information
• Complementary information received is reviewed by the Central Bank of Ireland, and the applicant is accordingly informed. He may be once again called upon to address other issues or comply with particular conditions post registration.
• The notice could also contain conditional requirements that the applicant should meet subsequent to the granted registration, in which the applicant would be given 21 days to meet up to the claims
• If it is a decision to refuse to register, then the applicant is afforded another 21-day period in which to reply in writing to state the reasons why registration should be granted.
• The Central Bank of Ireland is going to write to the applicant with a final decision of the following:
• Registration: the Central Bank of Ireland has decided to provide the registration.
• Conditional registration – the Central Bank of Ireland decides to grant the registration with conditions attaching and advises as such. Conditions will be set out in the letter.
• Refusal of registration – Central Bank of Ireland explains why the registration is refused.

The registration shall come into operation on the date of its registration or such later date as the Central Bank of Ireland may determine and that institution shall be entitled to cancel such registration at any time if the circumstances so warrant. In addition, the Bank may amend the registration by altering, varying or deleting any condition, or by imposing a new condition, if that is necessary for the adequate control of the VASP, and especially so that the business will not be used for money laundering or terrorist financing. Whereupon receipt of the Bank’s notice, the licensee shall, within 21 days, write to the Bank giving reasons why the proposed changes should not be effected.

Following forms shall be submitted by the applicants for SSA registration:

• VASP AML/CFT Registration Form, together with information and documentation showing that it has effective AML/CFT policies and procedures.
• The under-mentioned forms of applications of beneficiaries owners:
• Application at the level of every legal entity or other form of company that is the owner to the VASP Claimant
• Application for each individual who is the beneficiary of the owner in the VASP claimant
• The applicant should ensure that, for the purpose of maintaining physical fitness and integrity, all relevant persons proposing leadership positions complete individual questionnaires on physical fitness and integrity submitted in an electronic format through the ONR

Detailed guidance on the process for submitting application forms and supporting documentation via the ONR has been provided in a manual prepared by the Central Bank of Ireland.

The objective of this regime of physical fitness and integrity is such that the persons occupying any important customer-related position or any other key or critical position-which it calls in the said legislation ‘Controlled Functions’ or CFSs and ‘pre-decision-making functions’ or PCFs-were competent and capable; honest, ethical, and of integrity, as well as financially prudent.

Should the CF or PCF be transferred to an entity that does not come under the regulation of the Central Bank of Ireland, the SBS needs to get prior written approval from the Central Bank of Ireland in respect of appointing such a person, so as to perform SES, and PCP outsourced would also have to comply with the Physical Training and Integrity Regime. Also, LCA intends to appoint any person to the CF or PCF other than in Ireland must obtain the prior written consent of the Central Bank.

The Physical Training and Integrity Regime is not applied to persons performing a CF on behalf of a VASP authorized by the competent authority of another EEA country and providing services in Ireland on a cross-border or industry basis.

Under the Criminal Justice (Money Laundering and Financing of Terrorism) (Amendment) Act 2021 a person cannot be and is not fit for duty if any of the following provisions apply:

A person has been convicted of any of the following offences:

• Money laundering
• Terrorist financing
• Offence of fraud, dishonesty or breach of trust
• Of conduct in a state other than the State which would constitute an offence of the kind referred to above if such conduct had occurred in the State
• He is less than eighteen years of age
• A person has reason to believe that he/she has suspended payments of any part of his/her debt to his/her creditors, or is unable to pay his/her debts or is an insolvent
• The other persona is not fit and proper and the right one

Registered SPEs are required to keep in a form as prescribed by the Central Bank of Ireland and retain certain records for at least minimum period of six years. They are to be retained either in an office that is registered or in any other premises in Ireland. All change of address is to be furnished in writing to the Central Bank of Ireland.

HOW TO OPEN A CRYPTOCURRENCY COMPANY IN IRELAND

The most common form of legal type of business organization in Ireland is Private Company Limited by Shares orbital (LTD). It does not require the minimum share capital and can be established by only one founder/shareholder.

Required documents:

• Certified photocopies of the passports of directors, secretaries, and shareholders
• Certified confirmation of the address of each director and shareholder
• Certificate of company name registration
• Confirmation of the address of the registered office
• Directors’ and shareholders’ written consent

Steps for opening a new company VASP in Ireland:

REPORTING REQUIREMENTS

Save for AML/CFT reports, there are no specific reporting requirements for CSAM based in Ireland. However, the normal requirements for corporate reporting apply accordingly.

Private limited liability companies are obliged to appoint an auditor and audit their accounts annually. The audited accounts have to be filed along with an annual declaration, which has to be made by the company once at least within a calendar year in the CRO.

The following conditions must be satisfied for a company to be exempt from auditing:

• The company must fall within the category of the Companies (Amendment) Act 1986
• The turnover of the company must not exceed 8.8 million EUR
• Assets of the company not exceeding EUR 4.4 million at the end of the financial year
• Average number of employees up to 50
• A company cannot be a holding company or subsidiary company

The conditions indicated above cover both the current financial year and the immediate previous financial year, except when the year in respect of which exemption is claimed happens to be the first financial year of the company.

Crypto regulation in Ireland overview

TAXATION

Taxes in Ireland are administered by the Office of the Revenue Commissioners and the tax year runs from the 6th of April to the 5th of April the following year. Ireland hasn’t imposed any specific taxes on VASPs but such businesses are still required to pay regular taxes.

Depending on the nature of activities, the following taxes may be applicable:

• Corporation Tax – 12.15%
• Capital Gains Tax: 33%
• Dividend Withholding Tax: 25%
• Social Security Contributions: 11.05%
• Stamp Duty: 7.5%
• VAT: 23%

Tax liability on chargeable gains from assets normally comes within the company’s Corporation Tax payment. That means the chargeable gain will be computed at the Corporation Tax rate. Due to the difference in Corporation Tax and Capital Gains Tax, this capital gain has to be adjusted. An adjusted gain has to be reported in the capital gains section of the online CT1 form.

How to calculate the adjusted gain:

• Calculate what the amount of Capital Gains Tax liability would be at the Capital Gains Tax rate
• Divide this amount by the Corporation Tax rate

A remarkable advantage of the Irish taxation system is a three-year exemption from the Corporation Tax, which may be reduced to 0% for new companies in case their Corporation Tax due is less than or equal to 40,000 EUR in one and the same tax year. Where it is greater than 40,000 EUR but not greater than 60,000 EUR, marginal relief may be given.

Moreover, the cryptocurrency business may enjoy the following other tax exemptions:

• Bitcoin and other cryptocurrencies are VAT exempt
• Through R&D tax credit scheme qualifying R&D expenditure can generate a 25% tax credit to offset against the Corporation Tax

Certain corporate pre-trading expenses, for example, advertising, preparation cost of business plan, accountancy fees, are allowable in computing the taxable trading profits when once the trade has commenced. A deduction is allowed for pre-trading expenses incurred in the 3 years prior to commencement of the trade.

Our team of dedicated lawyers, focused on quality, will be happy to offer customized value-added support for setting up a cryptocurrency company in Ireland, including its registration with the Central Bank of Ireland, from the very beginning. You will be supported in-depth with knowledge of local legislation, company formation, reporting, and tax advice.

Establish a Crypto Company in Ireland

Ireland is among the most business-friendly countries, due to its positive attitude to innovation and a favorable tax system, which is crowning in a three-year corporate tax exemption.

Other Irish jurisdiction advantages:

• Stable economic environment where lots of transnational corporations, including one of the oldest BitEx cryptocurrency exchanges, are effectively developing their business
• Favorable tax system, including significant tax incentives for start-ups and generous capital benefits for R&D – a total tax relief of 37.5%
• Gateway to the EU, the world’s largest economy
• Ireland ranked 24th out of 190 countries on the World Bank Index
• Competitive operating costs

Establishment, day-to-day management, management, and liquidation/dissolution of companies in Ireland are governed by the Companies Act 2014. It is part of the government’s response to making the country the most business-like jurisdiction in the world through streamlining processes, business related.

Types of business entities

In Ireland, it is possible to choose nearly any type of legal business structure for crypto activities if such a choice corresponds to the complexity of the business model and can perform appropriate risk management mechanisms.

An Irish company of any type should have a director who ought to be a resident of an EEA country; otherwise, this will need to obtain a security bond before registering in Ireland for which the fee is 25,000 euros. The bond provides that, in the event of failure on the part of the company to pay a fine or fine in respect of an offence under the Companies Act 2014 or the Tax Consolidation Act 1997, the amount of cash up to the value of the bond shall be paid as surety for the obligations of the company.

If the CRO provides certification that the company is, in fact, engaged in at least one of those economic activities in Ireland, then there is no need for the EEA resident director or the bond.

The other general requirement in this respect is that a qualified secretary should be resident of the EEA. Among the key duties of the Registrar, annual reports are filed – if they are not filed, this will involve a fine and necessity to audit the financial statements within two years.

Documents required to establish a company of limited liability in Ireland:

• Articles of association
• Application including a list of Directors and Secretary, Address of the Registered Office of the Company, and Address of Central Office of the Company
• Financial accounting documents: sample – annual income to be deposited regardless of whether the company is engaged in economic activity or not
• Certified photocopies of the passports of the directors, secretary, and shareholders of the company
• Proof of residence address of every director, secretary, and shareholder involved
• Certificate of reservation of company name
• Proof of the address of its registered office to which all its official correspondence is to be sent
• Written consent of each Director and Secretary to such functions
• Written consent of shareholders
• VASP AML/CFT registration form

Private Company Limited by Shares (LTD)

The private interest company (LLC) is among the most common forms of legal business structure in Ireland and is accordingly governed under Part 2 of the Companies Act 2014. It does not have a minimum share capital, and it can easily be established by only one founder/shareholder. The liability of the shareholders shall be limited only to the amount, if any, of the outstanding shares registered in the names of the shareholders. That is to say, only the company itself can be held responsible for its obligations and claim its rights.

Primary characteristics of a limited-share private company (LTD):

• Its constitution is only comprised of the charter – the form is available here
• The name of such a company should end with Limited (Ltd) or Teoranta (Teo)
• No more than one director allowed (not necessarily resident in Ireland)
• A secretary can’t be the same person as a director if there’s only one director
• 1-149 shareholders (members) allowed
• No AGM needs to be held if all the members entitled to attend and vote sign a unanimous resolution acknowledging the receipt of financial statements and resolving all matters which could be resolved at that AGM.
• Requirement for Mandatory audit is not there if the company qualifies as a small company.

A company shall be considered to be a small company if at least two of the subsequent amounts are not exceeded:

• Turnover – 12 million euros
• Balance – 6 million euros
• Average number of employees – 50

Public Limited Company (PLC)

The type of Public Limited Liability Company is chosen when there is an intention to get listed in the stock exchange and offer its shares to the public at large and to expand on a bigger scale. The liability of shareholders shall be limited to the amount, if any, of the shares held by them.

The main features of PLC:

• Memorandum and Articles of Association – sample format here
• The company name must end with the Public Limited Company (PLC) or Cuideachta Phoiblí Teoranta (CPT)
• Minimum of one shareholder; maximum number of shareholders – unlimited
• Minimum two directors
• Registrar can be one of the Directors
• The minimum issued share capital – 25,000 EUR; at least 25% of it must be fully paid before the economic activity starts
• Registered office in Ireland is compulsory
• AGM is necessarily to be held under any circumstances
• It cannot be exempt from auditing, or from auditing an inactive company

A Public Limited Company (PLC) can provide possibilities for online participation in AGMs by providing the following options:

• Vote by a mechanism available before or during the meeting at which no member of the assembly needs to be physically present or appoint any representative thereof for physical attendance at the meeting.
• Simultaneous transmission of the meeting.
• Two-way real-time communication means participants can speak during the meeting from other locations.

The two major preconditions for virtual meetings would be the ability to recognize the participants of the meeting and the security of the electronic communication.

The public limited liability company is not able to start any business and to take advantage of the right of borrowing until such time as the CRO issues to the JSC a certificate on the possibility of commencing an economic activity. For the provision of such a certificate, it is necessary that the company file with the CRO form A4, confirming that the nominal value of the company’s equity is not less than 25,000 euros.

Ireland

Capital	Population	Currency	GDP
Dublin	7,026,636	GBP	$102,217

What you are required to do

It’s not difficult to set up a crypto company in Ireland, considering that all the documentation that needs to be filed is appropriately prepared and the company qualifies for receiving a license. Generally, it takes up to 10 days to register a new company in Ireland with the CRO and to receive an incorporation certificate.

To become a crypto company in Ireland, you need to take the following steps:

• In order to apply for reservation of a unique name, which shall not be offending or contain certain words not allowed, at least three names should be proposed so that at least one may get reserved. The fee for application reservation of company name is 25 EUR and it can remain reserved for 28 days.
• Find and register a physical office in Ireland
• Sign the company’s founding documents in front of an Irish notary
• Pay an application fee of 50 EUR to register your company
• Fill out an application form (Form A1) along with all supporting documents and submit them to the CRO
• An application can be made online through the Companies Online Registration Environment, which we can gladly help you with.
• Form A1: The name of the company, the company’s registered office, the description of the proposed economic activities, details concerning the directors and secretary and their consent to take up those positions, details about subscribers and their shares, and a declaration that the company complies with the Companies Act 2014.
• These documents are retained by the CRO, available for public inspection.
• Appoint a director and secretary as well as any other staff the law demands
• Open an Irish bank corporate account: This will demand the original certificate of incorporation, the company’s Constitution, and a copy of Form A1.
• Register the organization with the Office of the Revenue Commissioners, for tax purposes
• Apply for VASP registration

Only licensed crypto companies can perform economic activities in Ireland. For getting the Irish crypto license, one should be included in the Register of VASP, provided by the Central Bank of Ireland, whose task is carrying out rules, including AML/CFT. “The application procedure will open with the submission of the VASP pre-submission form and the duration will depend on how many and what type of applications are reviewed”. Currently, this body does not have any particular equity requirements and levies no application or periodic review fees whatsoever.

All constituent and licensing documents are to be in Irish or English. Please contact our staff for arrangements regarding certified translators.

When your business gets up, running, and fully licensed, you should make sure to follow initiatives like Techstars and Blockchain Ireland that help entrepreneurs devise revolutionary blockchain products. Blockchain Ireland is one of the industry’s innovative networks that support the development of the blockchain sector in fields like cryptocurrencies through sharing information, organizing events, and promoting successful stories with a view to creating Ireland as a knowledge hub for crypto asset businesses.

Taxation of Irish crypto companies

Taxes in Ireland are collected and administered by the Revenue Commissioners. The nature of the tax regime that applies is determined by the type of economic activity undertaken, the parties to that activity, and the residence status of the company. A company is considered a tax resident in Ireland if it has been incorporated there, or if it is no longer seen as a tax resident with a country with which Ireland has a double taxation agreement. A company may also be regarded as an Irish tax resident if it is not incorporated in Ireland but is centrally managed and controlled there.

Ireland has more than 70 international double taxation agreements that will enable your company to salvage its tax income in two different countries. These agreements cover capital gains tax, corporate tax, universal social tax, and income tax.

Irish crypto companies are obliged to adhere to the general Irish principles of taxation and pay the following types of general taxes:

• Corporation Tax (CT) – 12.5%
• Capital Gains Tax (CGT) – 33%
• Universal Social Charge: 0.5-11%
• Value Added Tax: 23%
• Stamp Duty: 7.5%
• Withholding Tax: 25%

Irish tax residents are also liable for corporation tax in respect of their worldwide income and capital gains. A non-resident who carries on trade through agencies or subsidiaries situated in Ireland is required to pay income tax in respect of that agency or subsidiary and specified income arising within the state. The capital gains tax on the assets is typically aggregated with the company’s profits for tax purposes.

In Ireland, cryptocurrency transactions are zero-rated for VAT purposes, as the Court of Justice of the European Union has ruled that cryptocurrencies like Bitcoin are treated as fiat money for VAT purposes.

For this reason, all organizations dealing in crypto products or services must keep a record of all crypto transactions related to virtual assets for taxation purposes. Records maintained on crypto wallets or on any device, whether a laptop or a mobile phone, must be produced upon request to the Tax Commission. These records should be preserved for a period of six years in accordance with the law.

If you are interested in opening a crypto company in Ireland, we can offer professional and dynamic services via our Regulated United Europe team. Professional advice on company incorporation, licensing issues, and taxation is available. Additionally, we are glad to assist if you need accounting services. Be assured that we guarantee efficiency, privacy, and attention to every detail that impacts the success of your business. Contact us today to book an appointment personalized especially for you.