Ireland Releases Crypto Tax Guide

In Europe, cryptocurrency regulation is a hotly debated topic. Some countries are trying to use cryptocurrency proceeds in the absence of special regulations, some are doing everything to ensure that the cryptocurrency industry flourishes in a safe and secure environment.

Ireland Revenue has published guidance with recommendations aimed at eliminating uncertainty surrounding the taxation of digital transactions. Investors and traders, cryptocurrency businesses and tax advisors can now find answers to many of their questions.

Crypto assets must be treated in accordance with “normal” tax rules.

The “Tax Guide” issued by the Irish authorities attempts to clarify issues related to the tax treatment guidelines for various cryptocurrency transactions. The Irish Revenue Commissioners, the government agency responsible for customs and taxation, stress that the consultation document published this month should only be used as a reference for tax purposes as it does not cover statutory and other aspects.

Direct taxes

Taxes such as corporation tax, income tax and capital gains tax should be calculated in accordance with the current tax legislation, as per standard rules.

Profits

Profits and losses of a company transacting in cryptocurrency should be accounted for and taxed according to “normal rules,” the document says. Accounting departments are not yet allowed to use cryptocurrency for accounting and tax purposes, butare required to keep records in euros or other fiat currency. 

VAT

The Irish regulator clarifies the VAT taxation of crypto transactions. In his view, digital tokens such as Bitcoin should be treated as “negotiable instruments” and are therefore exempt from VAT under the Irish VAT Consolidation Act 2010. Guidance notes that this applies to companies that buy and sell crypto assets and act as owners of crypto holdings. 

On the other hand, value added tax is assessed by the supplier of goods or services sold for cryptocurrencies. And the taxable VAT amount must be calculated again in euros at the time of delivery.

Mining is not considered an economic activity for VAT purposes..

It is worth noting that no guidance has been given regarding the taxation of income, profits and other taxes associated with Initial Coin Offerings (ICOs).