Bitcoin and cryptocurrency trading in Ireland
So many countries on the Coincub rankings are addressing the advertising of cryptocurrency-related services – the UK, Spain, and Singapore – and Ireland is in this camp. The country has had runaway success with crypto facilitation, and an enthusiastic response from its population. The government is keen to maintain the country as a financial center. It has a booming blockchain community, a high number of ICOs (many devoted to environmentally or ecologically related projects), and a healthy number of Bitcoin nodes. It stays at 17 in the ranking as the government ponders bringing the promotion of crypto services within a more stringent code of conduct, as expected of mainstream financial products such as shares.
Law and crypto trading in IrelandLegal - existing crypto legislation
Investing or trading in cryptocurrencies is legal in Ireland. The country is keen to support new technologies and trends overall in the financial sector.
Crypto trading relies on guidance provided by the Central Bank of Ireland, which is responsible for the regulation of the financial services industry. However, EU directives and money laundering laws bear strongly on crypto trading activity.
Similar to interest or share dividend income from traditional investments, income from the staking or lending of cryptoassets would be subject to income tax rather than CGT.
If you want to trade crypto, there are a number of well-established, worldwide crypto exchanges operating in Ireland to choose from that make it easy and straightforward to buy, sell and invest.Legal - forthcoming crypto legislation
Taxing cryptocurrencies in Ireland
As with the UK and many other countries, there are no taxes on buying or holding cryptocurrency in Ireland. Cryptoassets will be income-taxable only when you trade or sell them for the purpose of gain. Bitcoin and altcoins are exempt from VAT but any gains will be subject to tax at 33 percent. Many of the well-established crypto exchanges are based outside of Ireland, and transferring cryptoassets from one person to another may be subject to stamp duty. This is dependent on a number of factors that you’ll need to check with a specialist first.
Any gains while trading cryptocurrencies will be subject to the prevailing Capital Gains Tax (CGT) allowances and considerations. CGT is currently charged at a rate of 33%, but the first €1,270 profit a year is exempt.
Tax when moving residency
As with any income, your crypto will come under the tax laws of the country you become legally resident. If you set up a business to trade crypto, that business will come under the tax laws of the country it operates from.
Tax on mining
Mining is highly technical and beyond the scope of most individuals but it falls within standard Irish income tax law. Cryptocurrency mining is considered to be an activity aimed at making a profit and tax is payable on gains you make from it. For the record, mining incurs huge energy bills in an already expensive country, so weighing up the cost is important. Keep in mind, however, that mining costs are allowable against gains.
Crypto financial services in Ireland
Nearly all consumer retirement organizations view crypto as too volatile to add to an individual’s retirement plans. However, cryptocurrencies are offered as the basis for a retirement portfolio by known financial organizations. As you might expect with such high potential gains and movements, the fees are correspondingly high and you need to make sure you find out what they are.
A leading U.S. banking corporation is gearing up to provide crypto custody services out of Dublin in response to demand. However, the general attitude of financial institutions is to advise caution. Custody of crypto assets by mainstream banks is a growing service in some countries but by no means all. Such custodial services allow account holders to service a variety of crypto assets.
Plenty of contrasts in attitude towards DeFi and blockchain exist, but this is common to many countries. The Irish establishment is looking to promote some of the advantages of blockchain technology – there was even a blockchain week supported by the government – but DeFi is not on the menu at present.
Using crypto in Ireland
Ireland has a growing list of places you can spend your bitcoin including pubs, bars, and shops. Some directly accept bitcoin and other popular cryptocurrencies, while others accept crypto backed vouchers. As in many countries around the world, dentists are avid bitcoin acceptors so you can have a gleaming white smile while you spend them. Leading world brands such as Microsoft, Starbucks and a host of online retailers also accept crypto as payment.
Unfortunately, you can’t avoid being eligible for tax on your crypto by gifting it to someone, but you can make tax-efficient gifts to a recognized charity. Receiving a crypto as a gift would be subject to a capital acquisitions tax (CAT).
Crypto regulation in Ireland
Remember, as a beginner or experienced trader it pays to do some research and only deal with crypto exchanges that are established and carry insurance to protect your investment. In the event of unforeseen circumstances, it will be easier to get funds back from an exchange if they have longstanding insurance and protection measures.
There is a chance that you will be able to claim a loss if your crypto assets are stolen, but only if they were eligible for tax when they were stolen. You’ll need to show that they really have been stolen – not just mislaid or lost – and that they were trading stock. In these cases you can claim the loss in the year they were stolen.
Identification and verification are needed on almost all leading exchanges, and you’ll have to keep clear records of your transactions for tax purposes, although most exchanges are able to offer these records as part of the service. Tax bodies will be able to ask for records of your trading for tax assessment.