Cryptocurrencies are taxed in almost all countries in the world today with Ireland being no exception. In Ireland, cryptocurrency attracts both Capital Gains Tax and Income Tax according to the latest eBrief issued by Ireland’s Revenue in April of 2022. In this complete tax guide, you will learn everything you need to know about how crypto is taxed in Ireland, how much tax you pay on your crypto gains, how to calculate your crypto taxes, how to reduce your tax bill, how to file your crypto taxes to Revenue, and how to use a crypto tax calculator to generate all the tax reports you need.
Just a heads up! This guide is quite extensive due to the complex nature of cryptocurrency taxes. While we recommend reading this guide from A to Z the first time to make sure you don’t miss out on anything important, you can also use the menu navigation on the right side to jump to any specific crypto tax question later.
We are also updating this guide regularly based on the latest tax guidelines and statements from Revenue in Ireland. All updates will be listed below so that you can quickly see if anything has been updated since your last visit:
- August 5, 2022: The first version published
More specifically, these are the topics and questions we will address in this guide:
Let’s start with the most important question of all…
Do you pay taxes on crypto in Ireland?
Cryptocurrency attracts Capital Gains Tax (CGT) on profits made from selling, exchanging, trading, or otherwise disposing of crypto assets. This means that crypto investments are treated similarly to other investments such as stocks, shares, and real estate from a tax perspective. The Capital Gains Tax rate in Ireland for the 2022 tax year is 33%.
Cryptocurrency received from activities such as mining and staking are in most cases subject to Income Tax rather than Capital Gains Tax and is therefore taxed in the same way as your ordinary income.
In the next section, we will look closer at how crypto is actually taxed in Ireland.
How is crypto taxed in Ireland?
The Irish Central Bank considers cryptocurrencies, digital currencies, virtual currencies, and tokens to be digital money and of the same asset type. This means that all different crypto assets, whether it’s a native blockchain coin or a DeFi token, are considered equal for tax purposes by Revenue in Ireland. From a pure tax perspective, crypto is also considered equal to other assets such as land, buildings, shares, and equities.
Here is what Revenue says about disposals of crypto and CGT in the latest guidance:
The sale, transfer, or redemption of crypto-assets is most likely to be a disposal for CGT purposes unless, based on the facts and circumstances, there is a trade of dealing in crypto-assets being carried on.Revenue, eBrief Part 02-01-03
In general, all transactions where a crypto asset is disposed of are subject to CGT in Ireland. This includes also trading one cryptocurrency for another cryptocurrency whether it’s on a centralized exchange like Binance or on a DEX such as Uniswap. The gain subject to CGT is calculated as the sales proceeds less the costs of the asset and must be calculated for each asset separately. For Irish taxpayers, crypto profits are taxed at the ordinary CGT rate of 33% for 2022. There is also an annual tax-free allowance of €1,270 so that only the profits exceeding this amount are taxed.
While disposals of crypto assets attract CGT, cryptocurrency received from mining, staking and other similar activities attract Income Tax instead:
Where a non-incorporated business makes a trading profit or loss on crypto-asset transactions this must be reflected in their accounts and will be taxable in accordance with normal IT rules.Revenue, eBrief Part 02-01-03
While this statement doesn’t make it perfectly clear which exact crypto activities are subject to Income Tax, it is our understanding that tokens or coins received from various activities are in general taxed as income.
There is also a third type of tax that some people in Ireland need to consider. Any crypto assets received as either gift or as inheritance are subject to Capital Acquisitions Tax (CAT) and are taxed at the same rate as CGT of 33%.
Tax rates Ireland
The two types of taxes crypto investors in Ireland need to consider are Capital Gains Tax (CGT) and Income Tax. To understand how much taxes we need to pay, we must first know the applicable tax rates.
Capital Gains Tax rate
The capital gains tax rate in Ireland for the 2022 tax year is 33%. The same rate is applied to profits from all assets that attract CGT including shares, equities, and cryptocurrency.
Income Tax rates
There are two income tax bands in Ireland for each tax category. The income tax rates in the two bands are 20% and 40% for the 2022 tax year.
|Tax Rate||Individuals without dependent children||Individuals qualifying for Single Person Child Carer Credit||Married couples|
|20%||€0 – €36,800||€0 – €40,800||€0 – €45,800|
Transactions taxed as Capital Gains Tax
Now that we understand the basics of how crypto taxation in Ireland works, it’s time to look at the different transaction types that attract Capital Gains Tax. While reading this section, keep in mind that the key point to consider is that a CGT event is triggered every time a crypto asset is disposed of.
Let’s break it all down:
Selling cryptocurrency for fiat currency
If you sell cryptocurrency and receive a fiat currency in return, you have to pay CGT tax on the profits. There are no differences if the currency received is EUR, USD, GBP, or any other fiat currency for that matter.
Note that you are only taxed if the total chargeable amount during the tax year exceeds the personal allowance of €1,270.
Capital gains tax
Selling crypto for another crypto
In the latest guidance issued by Revenue, it’s clearly stated that exchanging a crypto asset for another crypto asset is not different than selling crypto for fiat from a tax perspective. The same rules apply because a crypto asset is disposed of in both cases.
Further, the guidance states that the sales proceeds should be accounted for in Euro by looking up the fair market value of the cryptocurrency received using a “reasonable effort”. This statement means that Revenue will most likely accept price values used from both reputable exchanges and price aggregator sites alike.
Capital gains tax
Paying for goods and services
If you have used crypto to pay for any goods or services, this will be considered a taxable disposal in the eyes of Revenue. The same rules apply whether you are paying for a physical good such as coffee, a car, or a house, or if you are paying for an online service such as a Spotify or Coinpanda subscription.
From a tax perspective, this is no different than selling crypto for fiat as mentioned above, and the transaction will therefore attract CGT.
Capital gains tax
Selling crypto received from mining, staking, etc
Cryptocurrency received from activities such as mining and staking does not attract Capital Gains Tax at the time the coins were received in your wallet in most cases. However, selling the coins received in the future is considered a CGT event and you need to work out the proceeds, cost basis, and resulting capital gains.
This is because as long as crypto is disposed of, it will be considered a Capital Gains Tax event. How and when the crypto was acquired does not change this fact, so it’s important to keep good records of all transactions to work out your capital gains in the future when the coins are sold or otherwise disposed of.
Capital gains tax
Transactions taxed as Income Tax
Now that we have looked at the various scenarios that attract Capital Gains Tax, it’s time to look at when you have to pay Income Tax on your cryptocurrency in Ireland.
Cryptocurrency mining rewards
If you are mining crypto as a hobby and you are not considered to be conducting a business from the Revenue’s perspective, all coins received from mining less allowable expenses are subject to Income Tax.
Allowable expenses may include costs such as hardware and electricity costs. If you are an active miner and not sure about which costs are considered allowable expenses, we recommend consulting with a tax professional in Ireland or contacting Revenue directly regarding this.
Cryptocurrency staking rewards
Crypto received in the form of staking rewards, whether it’s from a decentralized staking protocol or on a centralized exchange, is subject to Income Tax in Ireland similar to most other countries. This includes also crypto received as interest from DeFi or other lending activities.
From a tax perspective, airdrops are considered equal to both mining and staking rewards and are therefore subject to Income Tax in Ireland.
Salary paid in cryptocurrency
Today, some employers are giving the option to their employees to have their salaries paid out in cryptocurrency instead of Euro. Crypto received as payment for salary is considered a normal salary in the eyes of Ireland’s Revenue and is therefore taxed equal to ordinary income paid in Euro directly.
Capital gains calculations Ireland
Capital Gains Tax on the sale, gift, or exchange of a crypto asset is calculated in the same way as done for other taxable assets such as stocks. This means that we can rely on the already published guidance for calculating CGT in Ireland when working out the capital gains on cryptocurrency.
Let’s first break down some commonly used jargon in simpler terms:
If you sell a cryptocurrency for a higher price than what you originally paid for it, you have made a capital gain.
On the other hand, if you sell a cryptocurrency for a lower price than the original acquisition price, you have made a capital loss.
The proceeds are the value of the asset sold, calculated in Euro at the time of the disposal. This is also referred to as the selling price.
The cost basis is what you originally paid for the asset that is being sold. This is also referred to as the purchase price.
The date of the transaction where you bought the asset that is later sold.
With that out of the way, we can now look at the general formula for calculating capital gains:
capital gain = selling price – purchase price
The selling price is simply the value of the crypto asset sold at the time of the transaction in Euro. This value can be found directly from the exchange or from other price aggregator sites. If you have sold crypto and received fiat such as USD or GBP in exchange, the selling price is simply the fiat value converted to Euro.
The purchase price, on the other hand, can be more challenging to calculate and there are different rules that we must adhere to. Revenue has stated clearly that when disposing of shares acquired on different dates, the oldest shares are treated as being sold first. This is also known as the First-In First-Out (FIFO) rule and is the same cost basis method used in most other countries including the USA, Australia, and Germany.
If you are not able to establish the purchase price, a conservative approach is to consider the value to be zero. However, this means that you need to pay tax on the full amount, and therefore more tax than you actually should.
Owen bought 4 ETH for €600 in 2020. One year later he buys another 2 ETH for €2,000 in April of 2021. Owen owns now 6 ETH which he has paid a total of €2,600 for.
In February of 2022, Owen decides to sell 5 ETH while keeping 1 ETH as a long-term investment. He sells 5 ETH and receives €15,000 in exchange. His transactions can be seen in the table below:
To calculate his capital gains, Owen needs to first calculate the acquisition price using the FIFO method. The acquisition price, or cost basis, of the 5 ETH sold then becomes €600 + 1 / 2 * €2,000 = €1,600. We can now find the capital gain directly as €15,000 – €1,600 = €13,400.
The resulting table will look like this:
After deducting the personal exemption of €1,270, Owen is left with a taxable gain of €12,130. Of this amount, he needs to pay 33% tax which equals €4,003. Since this disposal happened during the first tax period, Owen needs to pay his tax before the deadline of December 15, 2022.
Shares sold within four weeks of acquisition
There are special tax rules for shares that are sold within four weeks after acquiring shares of the same class. The first rule to consider is that instead of selling the oldest shares first using FIFO, you need to consider the last acquired shares first using the Last-In First-Out (LIFO) method.
The second rule to consider is that any losses from shares sold that were bought within the prior four-week period cannot be used to offset other gains. Revenue states that these losses can only be used to offset gains made on a subsequent disposal of same-class shares acquired within four weeks after the original disposal that resulted in a loss.
To understand these rules better, we will look at two examples next.
Patrick bought 0.5 BTC for €20,000 on January 15, 2022. Two months later, he bought 1 BTC for €35,000 on March 20. Two weeks after this date, Patrick sold 1.2 BTC for €45,000. Since the disposal occurred within the four-week period following the last acquisition, Patrick needs to use the LIFO cost basis method when working out his capital gains instead of FIFO had he waited more than four weeks before selling.
Using LIFO, we find the resulting capital gains as €45,000 – €35,000 – 0.2 / 0.5 * €20,000 = €2,000.
Assuming that Patrick would have sold the 1.2 BTC in May of 2022 instead, he would have used FIFO instead of LIFO when working out the cost basis. In this case, the resulting capital gains would become €45,000 – €20,000 – 0.7 / 1 * €35,000 = €500.
As we can see, the resulting capital gains are different when FIFO or LIFO cost basis method is used, and it’s therefore important to consider the four-week rule applicable in Ireland.
Lucy bought 50 Solana tokens for €5,500 on February 10, 2022. The day after she bought another 10 SOL tokens for €1,200. Two weeks later, she sold 40 SOL for €3,800. Another three weeks after the disposal she decided to buy 30 SOL for €3,500. Four months later she sold her entire Solana holdings of 50 SOL for €8,000 on July 20, 2022. All her transactions can be seen in the table below:
For Lucy to work out her capital gains for 2022 she needs to consider all the tax rules discussed earlier. Firstly, when she sold 40 SOL on February 25, she needs to calculate the cost basis using LIFO instead of FIFO since the disposal date is within the four-week period following the acquisition of shares of the same class. The cost basis is then found as €1,200 + 30 / 50 * €5,500 = €4,500. Now we find the capital loss directly as €3,800 – €4,500 = -€700.
Because all shares were sold within four weeks of acquisition, Lucy cannot use the loss to offset her capital gains from other assets directly. Instead, she can only offset any future gains from the disposal of same class shares acquired within four weeks after the disposal on February 25. The 30 SOL bought on March 18 falls within the four-week period, so if she makes a capital loss when selling the 30 SOL in the future, which happens on July 20, she can use the loss from February 25 to offset this gain.
To offset the capital gains correctly we need to consider each disposal on July 20 separately in this case. First, Lucy disposed of 20 SOL which are the remaining Solana tokens acquired on February 10. We find the cost basis to be 20 / 50 * €5,500 = €2,200. Next, the proceeds are found as 20 / 50 * €8,000 = €3,200. Now we can find the resulting capital gains directly as €3,200 – €2,200 = €1,000. Because the shares disposed of were not acquired within the four-week period after the loss on February 25, Lucy is not allowed to offset these gains.
Next, we need to consider the second disposal on July 20. The cost basis for the remaining 30 SOL sold is €3,500 which we find directly from the transaction on March 18. The proceeds are found as 30 / 50 * €8,000 = €4,800. Now we can find the resulting capital gains directly as €4,800 – €3,500 = €1,300. Because these shares were acquired within the four-week period after the loss on February 25, Lucy is allowed to offset the gain using the loss on February 25. Because all the shares acquired on March 18 are sold on July 20, Lucy can use the entire loss on February 25 to offset her gains on July 20. The resulting net capital gains on July 20 therefore become:
+ €1,000 gain – from shares acquired on February 10
+ €1,300 gain – from shares acquired on March 18
– €700 offset – the loss realized on February 25
= €1,600 net gain
|Type||Date||Amount||Price||Cost Basis||Profit/Loss||Offset||Net P/L|
Now we find the total capital gains from Solana in 2022 to be €1,600. If Lucy only realized capital gains from Solana during the 2022 tax year, her total taxable gain after subtracting the personal exemption of €1,270 becomes €330. Considering a Capital Gains Tax rate of 33%, her total tax bill ends up being €109 for the 2022 tax year and is due to be paid on or before December 15, 2022.
As we have seen now, it’s certainly not a straightforward task to work out all capital gains calculations manually. This is especially due to the complex rules for offsetting gains with losses applicable in Ireland.
A cryptocurrency tax calculator like Coinpanda has full support for calculating crypto taxes for Irish crypto investors according to the tax rules by Revenue. All you have to do is sign up for a free account, connect your exchange accounts and wallets, and Coinpanda will calculate your capital gains for all cryptocurrency transactions automatically!
How to pay less tax
There are several ways to minimize the tax burden if you are from Ireland and report your taxes to Revenue. Here are the most common and effective ways to keep more of your crypto profits when filing your taxes for the 2022 tax year:
Most exchanges charge trading fees when you buy, sell, or trade cryptocurrency. You are also paying transaction fees in the form of gas when swapping cryptocurrency on a decentralized exchange such as Uniswap or Pancakeswap. Trading fees, or any other costs directly associated with the transaction, are considered costs that can be deducted from the sales price and are therefore fully deductible.
If you have a large number of transactions, deducting the trading fees can make a significant impact on your total tax liability. Most crypto tax solutions like Coinpanda do this automatically for you.
Deduct cryptocurrency losses
In Ireland, you can offset your capital gains with capital losses – as long as the losses are deductible according to the four-week rule discussed earlier. To be on the safe side, you can make it a habit to wait a minimum of four weeks from buying a crypto asset and until you sell the same asset later. By doing this, you will never have to worry about your losses not being fully deductible against your gains.
However, if you end up selling the same asset within four weeks after the acquisition, you need to consider the detailed calculations very carefully in order to offset your gains correctly. However, the best option for most people is going to be using Coinpanda to do all the complex calculations automatically.
If your total losses exceed your total gains during the tax year, or if you don’t have any gains to offset at all, you can carry forward the remaining loss to future financial years.
How to calculate crypto taxes in Ireland
Calculating and reporting your crypto taxes to Revenue can seem like a daunting task at first. Luckily, there are certain tools that can be used to make the process a lot simpler.
Calculating your crypto taxes manually
Here are the steps you must take to calculate your crypto taxes manually:
- Download the transaction history from all exchanges where you have bought, sold, received, or sent any cryptocurrency. This includes also transactions from or to your own wallets.
- Calculate the cost basis for every individual transaction where cryptocurrency is disposed of
- Calculate the proceeds and resulting capital gains for all transactions that are considered taxable disposals by Revenue in Ireland
- Identify all transactions subject to Income Tax in Ireland
- Summarize the calculations to find the total taxable amount during the financial year
Calculating your crypto taxes using crypto tax software
The best option for most people in Ireland is likely going to be using cryptocurrency tax software to automatically do the required calculations. If you want to save both time and money, here is how you can use Coinpanda to sort out your crypto tax situation and generate all the required tax reports automatically:
1. Sign up for a 100% free account
It is 100% free to create a Coinpanda account and you don’t need to enter any credit card information to get started. The free plan lets you explore and use all features for free.
Sign up with Coinpanda for free now!
2. Connect all your exchange accounts and wallets
Coinpanda supports more than 500+ exchanges, wallets, and blockchains today. You can easily import all your transactions by connecting your exchange accounts with API keys or by uploading a CSV file with the transaction history. If you find that Coinpanda does not support an exchange you have used, reach out to us so we can add the integration – usually within a few days.
3. Wait for Coinpanda to crunch all the numbers
Get yourself a cup of your favorite beverage and wait for Coinpanda’s sophisticated calculation engine to crunch all the numbers for you. Coinpanda will automatically calculate the cost basis, proceeds, capital gains, and taxable income for all your transactions! This might take anywhere from 20 seconds to 5 minutes depending on how many transactions you have.
4. Check for any reported warnings
Coinpanda will automatically display a warning if it appears that one or more transactions are missing such that the cost basis calculations will not include the total purchase price. If you see any warnings, you should first double-check that you have in fact connected all your wallets and exchange accounts.
Do you still see any warnings? Fear not! We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through the Live Chat.
5. Download your tax reports and tax forms
When you have successfully imported all transactions, the final step is to download the tax reports you need to file your taxes in Ireland. Coinpanda’s tax plans start at $49 and you have lifetime access to all reports after upgrading.
Ireland tax deadline
There are two different periods for CGT purposes each year. The first period runs from January 1 until November 30. If you made a profit from the disposal of crypto assets during this period, the tax due must be paid on or before December 15 of the same year. The second period runs from December 1 until December 31. The tax due for this period must be paid on or before January 31 the following year.
The responsibility for identifying, registering, and paying the appropriate tax rests with the individual taxpayer. The tax return where you declare all gains from crypto subject to CGT is due on or before October 31 the following year. If you submit the tax return using the Revenue Online Service (ROS), it is possible to request an extended filing deadline.
Records of your transaction history
Keeping good records of your crypto transactions is an essential part of investing in cryptocurrency. Not only is it necessary to do this for calculating your taxes correctly, but there are also requirements from Revenue that all Irish taxpayers must adhere to.
The general rule is that the same record-keeping provisions are applicable for crypto assets as for all other taxable assets. In case you get audited by Revenue, you must provide the tax agency with complete records of all your transactions. According to Irish tax law, you must retain the records for a minimum of six years.
Revenue states that you must keep anything that is used to calculate either Capital Gains Tax or Income Tax. The general advice is to keep the following information for all crypto transactions:
- The date of the transactions
- Which cryptocurrency was sold or bought
- The value of the cryptocurrency in Euro at the time of the transaction
- What the transaction was for and who the other party was (such as an exchange or a wallet address)
Many cryptocurrency exchanges keep these records for a limited time only, so you should make it a habit to periodically export and save this information. It is vital to keep good records to make it easier to work out your capital gains and meet your tax obligations. Coinpanda’s tax product can create a capital gains report with all of this information for you.
How to file your crypto taxes to Revenue
All taxable gains and income from cryptocurrencies must be reported in the annual tax return similar to how you report regular employment income. The easiest way of filing your taxes is using either the Revenue Online Service (ROS) or myAccount.
If you have other questions related to reporting your taxes, we recommend consulting with a tax professional in Irland or contacting Revenue directly from their website.