Irish tax office has issued guidance containing recommendations on the taxation of cryptocurrency transactions. Now cryptocurrency investors and traders digital currency companies themselves, the tax inspectors will be able to find answers to many (but not all) of their questions.
It should be noted that the tax authorities of many European countries have long been trying to gain access to income from cryptocurrency trading, however, regulations in most cases do not exist.
Released in Ireland guide tax and fees (Tax and Duty Manual) attempts to clarify the issues related to the taxation of cryptocurrencies, and in most cases confirms that the cryptocurrency sector will need to apply the current rules. The document contains instructions on the procedure of tax collection in relation to cryptocurrency transactions. Commission tax office Ireland emphasizes that the published guidelines may be used only for the purposes of taxation, as they do not cover regulatory and other aspects.
In accordance with the new regulations to cryptocurrency transactions can be applied direct taxes such as corporate tax, income tax and tax on capital gains. However, each case must be considered separately, taking into account the individual facts and circumstances. Companies that accept cryptocurrency payments for goods and services must keep a record of cryptocurrency transactions. No special rules have not yet introduced, and taxable income calculated in accordance with applicable tax laws.
Profit and loss of companies engaged in cryptocurrency transactions should be reflected in accounts and taxable under normal rules. In accordance with Irish law Taxes Consolidation Act 1997, some companies operate and open accounts in the «functional currency» other than the Euro. The authors of the new document indicate that cryptocurrencies cannot be considered functional currencies. Consequently, the accounts for taxation may not be the cryptocurrency. Instead, you should use the Euro or the Fiat currency of the country.
The Irish tax authorities have explained the taxation of income in cryptocurrency. They declared that the profits and losses obtained as a result of cryptocurrency trading are taxable and are subject to the law on capital gains for individuals or corporate tax for companies.
From the point of view of VAT bitcoin is the currency
In the absence of a single European guidelines for crypto-currencies for tax purposes, many States parties decided to establish the principles of value added tax (VAT) on the decision of the European court of 2015, recognize bitcoin as legal tender. Now the ranks of countries that prefer to consider bitcoin money, joins and Ireland.
As a result, cryptocurrencies are «means of payment» and are exempt from VAT in accordance with Irish law VAT Consolidation Act 2010. The guidance States that this applies to companies, buying and selling bitcoin and acting as the owners of the cryptocurrency savings. On the other hand, VAT applies to suppliers of goods and services sold for the cryptocurrency. The taxable amount, however, should be calculated in euros.
The Irish Commission IRS emphasizes that the value of bitcoin and other cryptocurrencies may vary on the different trading platforms, however, specific recommendations regarding the definition of a common policy in the manual is not available.
The income generated from mining, beyond the VAT, since from the point of view of VAT, cryptocurrency mining is not an economic activity. It should be noted that in the manual there are no instructions on the taxation of income derived from IPOs tokens (ICO). The document makes no mention of any digital tokens, no token sales.