Cryptocurrency Regulation in Ireland

The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (SLA 2010) is the principal legislation governing Virtual Asset Management Service Providers (SAP) as amended a) part 2 of the Criminal Justice Act 2013, b) of the Criminal Justice (Money Laundering and Terrorist Financing) Act (Amendment) 2018 and c) the Criminal Justice (Money Laundering and Terrorist Financing) Act (Amendment) 2021, which is aligned with the EU’s Fifth Anti-Money Laundering Directive (5AMLD).

The Central Bank of Ireland is responsible for the supervision of credit and financial institutions, including SAPs operating in and out of Ireland.

One notable effort to promote the growth of the cryptocurrency industry in Ireland is the creation of the Irish Blockchain, an innovative network industry that supports the development of the blockchain sector by sharing information, organising events and promoting successful stories to create Ireland as a knowledge hub for cryptoasset businesses.

VASPs are companies that provide the following services:

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

According to law, a virtual asset is a digital representation of value that can be implemented digitally or transferred and can be used for payment or investment purposes, but does not include a digital representation of fiat currencies, securities or other financial assets.

In order to comply with anti-money laundering/terrorist financing legislation, VASPs must:

• Appointment of a senior official with primary responsibility for the implementation, management and supervision of measures to combat money-laundering/terrorist financing
• Appointment of an AML/CFT compliance officer
• Conduct appropriate risk assessment in its operations
• Customer due diligence for clients
• Continuously monitor clients and their operations
• Report suspicious transactions to the Financial Intelligence Unit (FIU) of Ireland and the Revenue Commissioner when money laundering or terrorist financing is known or suspected
• Development and implementation of domestic policies, procedures and controls to combat money-laundering/terrorist financing
• Establish procedures to identify politicians
• Retention of relevant customer data and regulatory procedures
• Provision of ongoing anti-money-laundering/counter-financing of terrorism training to all staff

Depending on the level of risk, the supervisory model of the Central Bank of Ireland may include presentations, seminars, risk assessment questionnaires, as well as on-site inspections and review meetings.

Persons holding managerial positions in CEC are required to comply with the Physical Training and Integrity Regime established by the Central Bank of Ireland and must therefore obtain approval from the relevant agency. This is necessary to ensure that senior management has the level of training and integrity appropriate to this particular function.

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

• Maintenance of detailed documented policies that demonstrate the incorporation of and compliance with all legal and regulatory requirements, supported by guidance and accurately reflect operational practices
• Ensure that the policy is easily accessible to all staff and that it is fully implemented and adhered to
• Establish clear procedures for formal policy reviews at least once a year
• Update policy in a timely manner in response to events or emerging risks and ensure that such information is promptly communicated to the staff members concerned
• Ensure that all policies and updates are reviewed and approved by senior management
• Ensure that the policy is subject to review and verification

VASPS REGISTRATION

Cryptocurrency companies intending to operate in Ireland are required to register as VASPs with the Central Bank of Ireland. Currently, the sole purpose of registration is to supervise OSS in accordance with the AML/CFT rules. An application must be made to the Central Bank of Ireland to enter the register. Only applicants who can prove that they are able to comply with the relevant legislation are registered as SAPs.

The Central Bank of Ireland endeavours to process each application in a timely manner. However, in the view of the Bank, the review period also depends on the ability of the applicant to provide all necessary documents and information in a thorough and transparent manner. At present, there are no specific requirements or supervisory fees imposed by this body.

Since the focus is on AML/CFT compliance, it is important that the following restrictions be removed before the application process begins:

• 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 Demonstrating Transaction Workflows
• Information on outsourcing roles and outsourcing service companies

Applicants may request an optional preliminary meeting with the Central Bank of Ireland, which will answer relevant questions about the registration process and the completion of the VASP AML/CFT registration form. Applicants wishing to organize such a meeting must prepare their registration documents and questions in advance and send an e-mail to [email protected].

Key steps in the application process:

• The applicant submits the VASP pre-registration form to the Central Bank of Ireland and sends an e-mail with the completed form to [email protected]
• The Central Bank of Ireland sends the applicant an e-mail containing the institution number, reporting date and instructions on how to obtain and submit the VASP AML/CFT registration form through the Online Reporting System of the Central Bank of Ireland (ONR)
• Applicant submits VASP AML/CFT registration form and all supporting documentation via ONR
• The Central Bank of Ireland acknowledges receipt of the registration application by e-mail
• The Central Bank of Ireland assesses whether the VASP registration contains all the necessary information and documentation for the evaluation phase and notifies the applicant by e-mail; the application evaluation process will not start until the application is completed
• With all necessary information and documentation, the Central Bank of Ireland evaluates the application and may request additional documentation or clarification
• The Applicant complies with further requests for information
• The Central Bank of Ireland evaluates the additional information and provides an update to the applicant, who may again be asked to address further issues or meet specific conditions after registration
• The notice may also include specific conditions that the applicant must meet after the registration is provided, in which case the applicant is given 21 days to satisfy the claims
• If the authority intends to refuse registration, the applicant is also given 21 days to respond to the decision, explaining why registration should be granted
• The Central Bank of Ireland shall notify the applicant in writing of its final decision, which may be one of the following
• Registration – Central Bank of Ireland has decided to provide registration
• Registration with special conditions – The Central Bank of Ireland has decided to provide the registration with specific conditions attached to the registration (conditions will be set out in the letter)
• Denial of registration – Central Bank of Ireland explains why registration is refused

Registration shall take effect on the date of registration or at a later date fixed by the Central Bank of Ireland, which may cancel the registration at any time in the event of a change of circumstances. The Bank may also change the registration by changing, changing or repealing any conditions or by adding a new condition if it is necessary for proper regulation of the VASP, especially to prevent the business from being used for money laundering or terrorist financing.  After receiving the Bank’s notice, the licensee has 21 days to provide the Bank with evidence as to why the proposed changes should not be made.

Applicants for SSA registration must submit the following forms:

• VASP AML/CFT Registration Form (including required information and documentation demonstrating effective AML/CFT policies and procedures)
• The following forms of applications of beneficiaries owners:
• Application for each legal entity or other type of company that is the beneficial owner to the VASP Claimant
• Application for each individual who is the beneficiary of the owner in the VASP claimant
• In order to maintain physical fitness and integrity, the applicant must ensure that all relevant persons proposing leadership positions complete individual questionnaires on physical fitness and integrity, submitted electronically through the ONR

Detailed instructions on how to submit application forms and supporting documentation through ONR are set out in a manual prepared by the Central Bank of Ireland.

The purpose of the physical fitness and integrity regime is to ensure that persons occupying key customer-related positions and positions (referred to in the legislation as controlled functions (CFSs) and pre-decision-making functions (PCFs)), were competent and capable; honesty, ethics and integrity, as well as financial prudence.

When a CF or PCF is transferred to a company not regulated by the Central Bank of Ireland, the SBS must obtain written approval from the Central Bank of Ireland before appointing that person to perform SES and PCP outsourced, must also comply with the Physical Training and Integrity Regime. In addition, if LCA proposes to appoint a person to the CF or PCF outside Ireland, it must obtain prior written authorization from the Central Bank.

However, the Physical Training and Integrity Regime does not apply 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

Offence of conduct in a country other than Ireland which would constitute an offence of the kind described above if such conduct had occurred in Ireland

• If the person is under 18 years of age;
• A person has suspended payments due to his/her creditors, is unable to meet other obligations to his/her creditors or is a person who is insolvent
• The person otherwise is not suitable and the right person

Registered SPEs are required to retain certain records for at least six years, as required by the Central Bank of Ireland. They must be kept either in a registered office or in other premises in Ireland. All changes of address must be submitted in writing to the Central Bank of Ireland.

HOW TO OPEN A CRYPTOCURRENCY COMPANY IN IRELAND

One of the most common types of legal business structures in Ireland is the Private Company Limited by Shares (LTD). It does not require a minimum share capital and can be established by a single founder/shareholder.

Necessary documents:

• Certified photocopies of the passports of directors, secretaries, and shareholders
• Certified confirmation of the address of each director and shareholder
• Company name registration certificate
• Confirmation of registered office address
• Written consent of directors and shareholders

The stages of opening a new company VASP in Ireland:

• Reserving a unique name that should not be offensive, as well as some words are not allowed (at least 3 names should be offered in case any of them are not available)
• Physical office registration in Ireland
• Preparation of a memorandum of association or charter before a notary public in Ireland
• Fill out the application form (A1 form) and submit it to the Company Registration Office (CRO), which will process the application within 5-10 days and therefore issue a certificate of registration (this can be done online through the online company registration environment)
• appointment of at least one director (possibly a shareholder) who should not be resident in Ireland but should live in a country of the European Economic Area (EEA); if all directors are based outside the EEA, then they must acquire EEA residents before the company is established in Ireland
• In addition to the Director, a company secretary (EEA resident) is hired to provide annual reports; if such reports are not submitted within two years, an audit of the company’s financial statements should be conducted and a fine imposed
• Opening of a corporate bank account with a local bank (original registration certificate, company charter and copy of A1 form required)
• Registration of the company with the Tax Office for tax purposes
• Application for registration as VASP

REPORTING REQUIREMENTS

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

Private limited liability companies are required to appoint an auditor and audit their accounts annually. The audited accounts must be submitted together with an annual declaration, which must be made by the company at least once in a calendar year in the CRO.

In order to be eligible for exemption from auditing, a company must meet all of the following conditions:

• The company must be a company to which the Companies (Amendment) Act 1986 applies
• The turnover of the company is less than 8.8 million. EUR
• Assets of the company are less than EUR 4.4 million at the end of the financial year
• Average number of employees up to 50
• A company must not be a parent company or a subsidiary

These conditions apply to both the current financial year and the previous financial year, unless the year in respect of which exemption is sought is the first financial year of the company.

Crypto regulation in Ireland overview

TAXATION

The 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%

The tax liability on chargeable gains from assets are generally included in the company’s Corporation Tax payment. This means the chargeable gain will be calculated at the Corporation Tax rate. Due to the difference between Corporation Tax and Capital Gains Tax, the capital gain needs to be adjusted. An adjusted gain must 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

One of the most notable advantages of the Irish taxation system is a three-year exemption from the Corporation Tax which for the new companies can be reduced to 0% if their Corporation Tax due is 40,000 EUR or less in a single tax year. When the Corporation Tax is between 40,000 EUR and 60,000 EUR, marginal relief is given.

Furthermore, cryptocurrency business may benefit from 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 (e.g. advertising, business plan preparation costs, accountancy fees) are allowable in calculating taxable trading profits 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 and quality-focused lawyers will be delighted to provide you with tailored, value-added support in establishing a cryptocurrency company in Ireland, including registration with the Central Bank of Ireland. From the very start of the process you’ll be backed with the expertise in local legislation, company formation, reporting and tax advice.

Establish a Crypto Company in Ireland

Ireland is one of the most business-friendly countries because of its positive stance on innovation and a favourable tax system, culminating in a three-year corporate tax exemption.

Irish jurisdiction also has the following advantages:

• A stable economic environment where numerous transnational corporations, including one of the oldest BitEx cryptocurrency exchanges, effectively develop their business
• Favourable tax system, including significant tax incentives for start-ups and generous capital benefits for R&D (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

Irish enterprises (establishment, day-to-day management, management and liquidation or dissolution) are governed by the Companies Act 2014, which is part of the Government’s efforts to make the country the most business-like jurisdiction in the world by simplifying processes, business-related.

Types of business entities

In Ireland, virtually any type of legal business structure can be chosen for cryptographic activities if it corresponds to the complexity of the business model and is able to implement appropriate risk management mechanisms.

An Irish company of any type must have a director who is a resident of an EEA country, otherwise it will have to obtain a security bond before registering in Ireland, which costs 25,000 euros. The bond provides that if the company fails to pay a fine or fine for an offence under the Companies Act 2014 or the Tax Consolidation Act 1997, then the amount of cash up to the value of the bond will be paid as collateral for the company’s obligations.

If the CRO issues a certificate that the company is actually involved in at least one of the economic activities in Ireland, neither the EEA resident director nor the bond are required.

Another general requirement is that a qualified secretary should be a resident of the EEA. One of the primary duties of the Registrar is to submit annual reports (if they are not submitted, this will entail a penalty and the need to review the company’s financial statements within two years).

Documents required for the establishment of a limited liability company in Ireland:

• Articles of association
• The application, which includes the names of the directors and the secretary,   the address of the registered office of the company and the address of the central office of the company
• Financial accounting documents (e.g. annual income to be deposited regardless of whether the company is engaged in economic activity or not)
• Certified photocopies of the passports of directors, secretary and shareholders of the company
• Confirmation of address of residence of each director, secretary and shareholder
• Company name registration certificate
• Confirmation of the registered office address to which all official correspondence will be sent
• Written consent of each Director and Secretary for these functions
• Written consent of shareholders
• Registration form VASP AML/CFT

Private Company Limited by Shares (LTD)

One of the most common types of legal business structures in Ireland is a private limited interest company (LLC), which is regulated by Part 2 of the Companies Act 2014. It does not require a minimum share capital and can be established by a single founder/shareholder. The liability of shareholders shall be limited to the amount, if any, of the outstanding shares registered in the names of the shareholders. This means that only the company itself can be held accountable for its obligations and can claim its rights.

The main features of a private company with limited shares (LTD):

• The charter of the company consists only of the charter (the format can be found 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
• It is not necessary to hold an Annual General Meeting (AGM) if all members eligible to attend and vote sign a unanimous resolution confirming receipt of financial statements and resolve all issues that would have been resolved by the AGM
• Mandatory audit is not mandatory if the company qualifies as a small company

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

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

Public Limited Company (PLC)

The structure of the Public Limited Liability Company (PLC) is selected when there is an intention to be listed on the stock exchange to offer its shares to the general public and expand on a large scale. The liability of shareholders shall be limited to the amount, if any, of the shares held by them.

The main features of PLC:

• The Articles of Association include the Memorandum of Association and the Articles of Association (the format can be found here)
• The company name must end with the Public Limited Company (PLC) or Cuideachta Phoiblí Teoranta (CPT)
• At least one shareholder (no limit on the number of shareholders)
• At least two directors
• The Registrar may be one of the Directors
• The minimum issued share capital – 25,000 EUR (at least 25% of it must be fully paid before economic activity begins)
• Registered office in Ireland is mandatory
• Annual General Meeting (AGM) required under all circumstances
• Not eligible to be exempted from auditing or from auditing an inactive company

A Public Limited Company (PLC) can facilitate online participation in AGMs by offering the following methods:

• Voting mechanism (before or during the meeting) that does not require the physical presence of a member of the assembly or the appointment of a representative to physically attend the meeting
• Real-time transmission of the meeting
• Two-way real-time communication allowing participants to speak at the meeting from a remote location

Key requirements for such online meetings are the means to ensure the identification of participants and the security of electronic communications.

The Public Limited Liability Company (JSC) cannot start any business or take advantage of the right of borrowing until the Registrar of Companies (CRO) issues a certificate allowing it to start an economic activity. In order to obtain such a certificate, the company must submit a 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 need to do

It’s relatively easy to establish a crypto company in Ireland, provided that all the required documentation is duly prepared and the company is eligible for obtaining a licence. It usually takes up to 10 days for the CRO to register a new company in Ireland and consequently issue a certificate of incorporation.

To establish a crypto company in Ireland, you should take the following steps:

• Reserve a unique name that must be non-offensive and not contain certain words that aren’t permitted (at least 3 names must be proposed to ensure at least one of them can be reserved)
  • The application fee for reservation of a company name is 25 EUR, and it can remain reserved for a period of up to 28 days
• Determine how many shares a company will release
• 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 for company registration
• Complete an application form (Form A1) and submit it along with required documents to the Companies Registration Office (CRO)
  • The application can be submitted online via Companies Online Registration Environmentwhich we can gladly help you with
  • Form A1 must include details of the company name, its registered office, details of the intended economic activities, information about directors and secretary, their consent to take up these roles, details of the subscribers and their shares as well as a declaration that the company complies with the Companies Act 2014
  • The documents remain retained by the CRO and are made available for public inspection
• Hire a director, a secretary and other staff required by law
• Open a corporate bank account at an Irish bank (original certificate of incorporation, company’s Constitution and a copy of Form A1 are required)
• Register the company with the Office of the Revenue Commissioners for tax purposes
• Apply for registration as a Virtual Asset Service Provider (VASP)

Only licensed crypto companies can engage in economic activities in Ireland. To obtain an Irish cryptographic license, the company must enter the Register of Virtual Service Providers (VASPs), maintained by the Central Bank of Ireland, whose purpose is to enforce AML/CFT rules. The application process starts with the submission of the VASP pre-registration form, and its duration varies depending on the number and quality of applications considered. At present, this body does not impose any specific equity requirements or apply any application or periodic review fees.

All constituent and licensing documents must be submitted in Irish or English. If you need a certified translator, please contact our team and we will arrange such services for you.

Once your company is fully licensed and operating, you should follow initiatives like Techstars and Blockchain Ireland, designed to support entrepreneurs by developing revolutionary blockchain products. Blockchain Ireland is an industry innovative network that supports the development of the blockchain sector, including cryptocurrencies, by sharing information, organizing events and promoting successful stories to create 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 tax regime is determined by the nature of the economic activity, the parties involved and the company’s residence status. A company is considered to be a tax resident in Ireland if it is registered there, if it is no longer considered to be a tax resident in the country with which Ireland has a double taxation agreement. If the company is registered elsewhere but is centrally managed and controlled in Ireland, it is also considered an Irish tax resident.

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

Irish crypto companies are required to follow the general Irish taxation principles and pay the following general taxes:

• Corporation Tax (CT) – 12,5%
• Capital Gains Tax (CGT) – 33%
• Universal Social Charge (USC) – 0,5%-11%
• Value Added Tax (VAT) – 23%
• Stamp Duty (SD) – 7,5%
• Withholding Tax (WHT) – 25%

Irish tax residents pay corporate tax on their profits worldwide (income and capital gains), while non-residents trading through subsidiaries or agencies based in Ireland have to pay income tax to those Irish locations, and a certain income earned in Ireland. Capital gains tax levied on assets is usually included in a company’s tax payments.

In Ireland, cryptocurrency transactions are exempt from VAT, as the European Court of Justice (CJEU) has ruled out that cryptocurrencies like Bitcoin are treated as fiat money for VAT purposes.

For tax purposes, any company offering cryptographic products or services is required to keep records of all transactions involving virtual assets. If the records are stored in a cryptographic wallet or safe on a device such as a laptop or mobile phone, they must be handed over to the Tax Commission at their request. These records must be kept for six years in accordance with the law.

If you want to set up a cryptographic company in Ireland, our trusted and dynamic Regulated United Europe (RUE) team is here to provide guidance to you. We offer comprehensive advice on company formation, licensing and taxation. In addition, we will be happy to intervene if you need accounting services. Rest assured, we guarantee efficiency, privacy as well as careful attention to every detail that affects your business success. Contact us now to book a personalized consultation.