Crypto Tax Evasion: What are the Risks in Ireland?
Think Revenue has no idea about your crypto? Think again. Given today's tax deadline, cryptocurrency tax calculator Koinly explains what's at stake.
Bobby Chadha, VP of Product at Koinly, says, "Despite limited guidance from Revenue, crypto is taxed in Ireland. No matter how tempting it is to keep more of your hard earned crypto gains, the penalties for tax evasion are severe."
He adds, "Any time you dispose of a crypto asset, you're liable for Capital Gains Tax at 33% on any gain as a result. Disposals include selling crypto for euros, swapping crypto for another crypto, spending crypto and even gifting crypto - excluding to your spouse or civil partner."
Although Revenue hasn't released any detailed guidance yet, if you're seen to be earning crypto - for example, through mining, staking, being paid in crypto or earning new tokens through DeFi protocols - this is likely to be viewed as additional income and subject to Income Tax at your individual rate of 20% or 40% upon receipt."
Finally, Revenue has stated that Capital Acquisitions Tax of 33% may apply to crypto when you receive a gift of crypto or receive crypto via an inheritance. Although there are lifetime allowances for gifts subject to CAT that may be applicable for you and mean you pay no tax as a result.
But not declaring your gains, or underreporting your gains is illegal - and the penalties for tax evasion are severe with both fines and jail time on the cards. Fines can amount to up to 100% of the tax evaded - on top of your original tax bill. And that's not all, if someone is convicted of tax evasion they can face imprisonment of up to 12 months, or up to five years if they're indicted or later found guilty."
Of course, some crypto investors incorrectly believe they'll get away with tax evasion simply because Revenue won't be able to track it all. But it's not quite so simple.
In 2021, the Irish government implemented the European Union's Fifth Anti-Money Laundering Directive. This directive increases the pressure on financial service companies - including crypto exchanges - to obtain KYC data from customers. It also requires crypto companies operating in Ireland to register with the central bank.
Using the tools available, whether that is an accountant or a crypto tax calculator like https://koinly.io/
Michelle Legge, Koinly