Crypto-Assets, non-domiciled persons and taxation will always make for interesting reading. In April 2022, Irish Revenue published new guidance on these points which may surprise and interest both crypto- and tax enthusiasts.
Ireland's open economy has attracted thousands of international finance and technology professionals over recent years. It's likely that some have made investments in cryptocurrencies and similar assets. Irish Revenue now appear keen to ensure that they are taxed on any gains or profits arising.
Under Irish tax law, crypto-assets, such as cryptocurrencies and similar items are subject to Irish tax in the same way as other assets. Investment gains are subject to capital gains tax. Trading gains are subject to income or corporation tax. There is no "special" tax exemption for crypto-assets.
Ireland has a generous tax regime for non-domiciled individuals. Such persons are not taxed on foreign income or gains, unless they bring the proceeds into Ireland (this is called the remittance system). The new guidance highlights that, in order to be treated as a foreign asset, the asset must be "outside" Ireland. Revenue's guidance now states that where a crypto-asset exists ‘on the cloud’, it will not actually be situated anywhere and therefore, cannot be viewed as situated outside Ireland.
While opinions are divided on whether Revenue's approach is correct, it is clear that the question "where is my cryptocurrency?" is now very important from a tax perspective. Non-domiciled Irish residents who hold crypto-assets might be well advised to restructure their holdings to avail of the remittance basis. It's likely that Revenue may also investigate prior disposals, to determine whether the correct amount of Irish tax was paid.