Chapter 1: Capital Gains Tax

Cryptocurrencies in Ireland are subject to Income Tax and Capital Gains Tax.

In specific circumstances, Inheritance and Gift Tax may also apply to cryptocurrencies.

Capital Gains Tax

In Ireland, every time you make a profit from the sale of an asset, including cryptocurrencies, Capital Gains Tax is calculated.

• Cryptocurrency disposals include:

• Selling cryptocurrencies for Euros or another fiat currency.

• Exchanging or converting one cryptocurrency into another.

• Spending cryptocurrencies to purchase goods and services.

• Donation of cryptocurrencies, except to a spouse or civil partner in most cases.

• If you've received compensation or insurance payout for a cryptocurrency.

Capital Gains Tax in Ireland is a flat tax rate of 33%, regardless of your income.

Chapter 2: Capital Gains Tax Exemption

For each fiscal year, there's a threshold of €1,270 below which no taxes are due.

This figure can be reached by deducting losses from gains.

This rule applies to both residents and non-residents.

Chapter 3: Capital Losses

If you incur a loss when disposing of your cryptocurrencies, you can offset that amount to reduce your Capital Gains Tax liability.

In cases where there are no gains, only losses, you can carry them forward to offset against future gains.

You can also transfer eligible losses to your spouse or civil partner to offset against their gains.

An exception to this rule concerns assets acquired and disposed of within four weeks. Losses related to these assets may not be offset against gains in general, unless those gains were obtained from a similar asset also acquired and disposed of within four weeks.

Chapter 4: Lost or Stolen Cryptocurrencies

In the absence of specific guidelines, we consider the general rule for lost or destroyed assets.

In these cases, the asset may be considered eligible for a capital loss equal to its market value at that time.

If the assets have become of negligible value, it may be possible to treat them as a capital loss equal to the market value, demonstrating that the asset cannot be otherwise disposed of.

Chapter 5: Income Tax

No specific guidance has been published on the matter; however, we assume the following types of transactions will be subject to Income Tax:

• Being paid in cryptocurrencies.

• Rewards for mining.

• Rewards for staking.

• Cryptocurrency airdrops.

• Potentially a variety of DeFi activities where new coins or tokens are earned.

• Creation and sale of NFTs as an artist.

The amount of Income Tax you'll pay on cryptocurrencies will be either 20% or 40% depending on your total income for the year.

Chapter 6: Calculating Crypto Income

To calculate the value of your Crypto Income, you simply need to identify the fair market value of the coins or tokens on the day and time you received them, converted to Euros.

Chapter 7: Crypto-to-Crypto Transactions

Cryptocurrency trading in Ireland is taxable. So, if you're trading Bitcoin for Ether or any other cryptocurrency, you'll need to pay Capital Gains Tax.

Your trading transaction is considered a disposal, akin to a sale or spending.

Capital Gains Tax is calculated on the asset you sell in the transaction.

The gain calculation is made using the cost basis of the cryptocurrency disposed of, subtracting it from the fair market value of the asset on the day you traded it for another.

Stablecoins fall under this category.

Chapter 8: Transfer Management

Transfers of cryptocurrencies between your personal wallets are exempt from taxes, but transfer fees associated with these transactions may not be. Although the Revenue Commissioners have not yet provided specific guidance on this, there is a possibility that transfer fees may be considered as cryptocurrency expenditure and thus a disposal.

Chapter 9: DeFi and Liquidity Pooling

DeFi protocols and liquidity pools can operate in various ways.

The tax treatment will vary depending on the operation of the protocol.

In the case of trading on a decentralized exchange (DEX) like Uniswap, it is considered a disposal of cryptocurrencies and falls under Capital Gains Tax.

In the case of adding liquidity to a pool and receiving a liquidity token, it may be considered as a crypto-to-crypto transaction and therefore subject to Capital Gains Tax.

In the case of earning rewards through a token that accrues value (e.g., an LP token), the gain occurs when you remove your capital. This may be considered a disposal and subject to Capital Gains Tax.

In the case of gaining a new token, rather than an LP, it may be considered income and therefore subject to Income Tax calculated on the fair market price of the token in Euros on the day you received it.

Chapter 10: Non-Fungible Tokens (NFTs)

NFTs are treated just like any other cryptocurrency asset. The disposal of an NFT through sale, exchange, spending, or donation will be subject to Capital Gains Tax on any profit.

Chapter 11: Mining and Staking

Mining rewards may be subject to Income Tax.

If you subsequently sell, trade, spend, or donate the mined coins, Capital Gains Tax will also apply.

Staking rewards, whether obtained through direct participation in a PoS mechanism or obtained through third-party staking or DeFi protocols, are likely subject to Income Tax.

Chapter 12: Airdrops

Cryptocurrency airdrops, whether it's participation in an event or performing a specific activity, are likely subject to Income Tax upon receipt. You'll need to identify the fair market value in Euros of any cryptocurrency received through an airdrop on the day of receipt to calculate your income.

Chapter 13: Gifts and Donations

Donating cryptocurrencies in Ireland is taxable. It's considered a form of disposal and therefore subject to Capital Gains Tax.

There's an exception for transfers of assets between spouses or civil partners (including divorced, separated, or former civil partners).

This exception does not apply in the following cases:

• Transfer of stock-in-trade of a trade by the transferor.

• Transfer of an asset to a non-resident.

• Transfer of an asset without a court order.

Chapter 14: Receiving a Gift or Donation

Gifted or donated cryptocurrencies are subject to Capital Acquisitions Tax at a rate of 33%.

Cryptocurrencies must be worth more than €3,000 and must not come from a spouse or civil partner.

Chapter 15: Purchase of Goods or Services in Cryptocurrencies

Spending your cryptocurrencies is subject to Capital Gains Tax because you're disposing of your asset.

Chapter 16: Fiscal Year in Ireland

The fiscal year in Ireland runs from January 1st to December 31st.

However, for declaring Capital Gains Tax, there are two deadlines:

• December 15th, for profits earned in the period from January 1st to November 30th of the same year.

• January 31st of the following year, for profits earned in the period from January 1st to December 31st.

The deadline for Income Tax Return, which includes declaring all gains/earnings (including cryptocurrency incomes) for the fiscal year, is set for October 31st.

Chapter 17: Where to Declare Your Cryptocurrencies

All taxable gains and incomes from cryptocurrencies must be declared in the annual income tax return by October 31st.

This can be done using the Revenue Online Service (ROS).

Alternatively, there are two paper forms:

Form CG1 (Capital Gains Tax and Self-Assessment), for PAYE workers.

Form 11 (Income Tax and Self-Assessment), for self-employed workers or individuals subject to taxation (individuals with: non-PAYE net assessable income of €5,000/year or more, or total gross income of €30,000/year).