Staking Crypto - Is it Tax Free? (Europe)

[@TheLearningsReport]

Questions? Hit us up - we try to answer them all. If this video helped, please consider using one of our referral links below! 👉 Join Binance (10% Fee Discount): bit.ly/Binance-Account-10 💸 Join Coinbase (Free $10 Bitcoin): bit.ly/Coinbase-Account-ste10

[@brendanmulhall6350]

HI, great videos, under what section on the online form12 do we file the staking? under dividends? under Trading profit or professional income? cheers

[@TheLearningsReport]

@@brendanmulhall6350 hey Brendan, good question, they don't make it clear. Our best guess is "Other Foreign Income" on the Form 12. There may be different rules if it is a company specifically set up for staking crypto but most likely if you have < €5,000 in non-PAYE then Other Foreign Income is probably the best. We have a video on Form 12 which you can check out here: kzbin.info/www/bejne/rmW0h6l-bamdg5Y Let me know if anything is unclear! - Cian

[@brendanmulhall6350]

Thanks ! Appreciate the response. as a paye worker Is it best/normal practice to file the return in 2022 for any income earned from staking in 2021? Or what is the normal process to follow to pay and file for staking earnings for 2021? Cheers

[@TheLearningsReport]

@@brendanmulhall6350 ​ So this is the territory where we need to be careful in terms of offering guidance, because frankly, it seems like revenue are not totally sure how staking returns should be taxed/declared! But yes, to our understanding, your staking returns are likely seen as income, and if less than €5,000 annually, you can declare those on the form 12. You file the Form 12 the year after you made the income. So your example is correct - staking returns received in 2021 would be filed on your Form 12 in 2022 (but you'd PAY the tax in the year you received it i.e. this year) - Ste

[@brendanmulhall6350]

@@TheLearningsReport thanks guys...I appreciate this is just opinion and not advice. Keep up the great work with the videos.

[@shivams417]

Great timing as now eth 2.0 stake is hot topic. Thanks for covering guys really helpful.

[@TheLearningsReport]

Cheers Shiva, thanks for watching. Exactly! I've got a good chunk of Eth staked for 2.0 also 👍 In it for the long haul. - Ste

[@blackmadra]

Great work guys. Loving these vids

[@TheLearningsReport]

Thank you! Glad you're enjoying. - Ste

[@jamiedyer3873]

It would've been good to highlight in the video any potential capital gains aren't going to be the full value again (double taxation). Only the appreciation from receipt to sale will be taxable (potentially). If they go down in value and you chose to sell you should get relief against other capital gains elsewhere. Not as bad as you implied in the video but it would be great if the income side was ignored for sure. If that does come about then any sale will of course be all gain at that stage. In the UK I'd love to see this tested to see if the annual savings interest allowance covers crypto 'interest'. That would mean tax free for most and still benefiting from a cost basis on receipt. Best of both worlds...

[@TheLearningsReport]

Hey Jamie, Thanks for watching and for the comment. Yes, that's true. We mentioned that the market value upon receipt would act as your new cost basis. So, you're basically taxed on two events if there is a gain. Income tax on the rewards you receive and then CGT on any subsequent gain on those rewards from the market value you received then i.e. the amount you paid income tax on. So, it's not double taxation but still very painful. Interesting on the annual savings interest allowance. We don't have something like that in Ireland, however, savings interest rates are so bad it's not really a consideration. Could be a great idea for staking! - Cian

[@mamba101]

Where does it say Revenue states staking is income? I don’t think it’s clear at all, could easily be argued as DIRT or CGT too. I also wonder why you’d be expected to pay tax on an asset that isn’t recognised as a currency in the EU 🤔 it should only be taxable if you exchange for a traditional currency.

[@TheLearningsReport]

Hi Ed - thanks for the note, you make some interesting points. In short, we agree, it's not clear. As we flagged, revenue hasn't issued any specific guidance on crypto so it's very much up to interpretation/argument! From our research, we've come across a couple of other sources who also seem to flag staking income as being liable for 'income tax' as opposed to DIRT or CGT (links below) but of course, no guarantee they're 'right' either. Using the US situation as a guideline might also be helpful, and at time of writing, it seems it falls under income tax there, but will be interesting to see how that situation develops. - Ste koinly.io/guides/crypto-tax-ireland/#income-tax doylekeaney.ie/news/crypto-assets-high-level-irish-tax-considerations/

[@mamba101]

@@TheLearningsReport Thank you for the detailed reply!

[@TheLearningsReport]

@@mamba101 No worries, Ed.

[@carrolltimmy]

Excellent video guys. I've invested in some Defi programs that do yield farming. Rewards are paid every 8 hours. How in the hell are we to track that from income tax viewpoint? It's difficult to actually even see the market value of the rewards

[@TheLearningsReport]

Thanks for watching, Tim! It is difficult and time-consuming to track every transaction, for sure. We recently launched a video on crypto tax software which would be worth a watch for you. Some of the software offerings take the pain out of the tax calculations! Video: kzbin.info/www/bejne/iIvJgqRqdtaUjNU - Cian

[@deanodonnell5702]

Hi lads, I just came across your channel. It’s absolutely fantastic, please release a video on how to pay income tax in Ireland after you’ve staked coins. I haven’t a clue and I only just discovered that I have to pay income tax. Do you Know when you will release that video ? Thanks

[@TheLearningsReport]

Hey Dean, cheers for the comment & suggestion. We'll be doing a video on Form 12 over the coming weeks, and this is where you would declare this income (or Form 11 if you're self employed/your extra income from staking etc. is over €5,000). We don't have an exact date yet but subscribe or keep an eye on the channel for when we do! - Ste

[@spartanfitness1239]

Hey guys great video. In ireland are you only charged income tax (20%/40%) on the staking rewards or also USC and PRSI too?

[@TheLearningsReport]

Hey Spartan, We believe you are also charged USC and PRSI. There is no specific regulation in Ireland regarding crypto staking but we believe it is treated as income so similar to dividends from a company. Frustrating given how high the tax is! - Cian

[@CyberSpark23]

Hi guys, love your videos, they're really helpful! Is there anything the public can do to change revenues view on taxing the purchase of the coins to only taxing the sale of the coin?

[@TheLearningsReport]

Nice one, Charley - appreciate that and thanks for watching. Great question, and in short, we actually don't know! We haven't heard of anything specific, but although not totally related, there is a group on Reddit (or at least they have a thread on reddit) where they're trying to lobby the Irish government to abolish the deemed disposal rule and high ETF taxes that Irish investors need to pay. That may provide some insights as to where to even start! In a way though, I'm not sure if it'd even be lobbying to 'change revenues view' as I guess technically, they haven't really taken a stance yet (they've just made general associations based on what already exists for say stocks etc.). I guess we could try to preempt their future stance on the issue, or wait and see what happens. Your proactive approach sounds preferable! If you find anything from your own research, let us know. Cheers - Ste

[@vai.junior]

Amazing videos guys! Really informative. One question still wasn't answered for me clearly. Can I pay taxes upon withdrawal of the crypto only? For example I invest €1,000 I do many trades, staking etc... and in 5 years it grows to €5,000. Could I withdraw then and add those €4k to my income so I could pay taxes in one go instead of paying early and calculating crazy amount of data?

[@TheLearningsReport]

Hey Valdas, Nice one - glad you enjoyed the video and thanks for watching! So, unfortunately you may have to pay tax even if you don't withdraw. For profits or capital gains, you will owe the tax once there is either a sale or exchange of the crypto even if you don't withdraw and as long as you made a gain over the exemption. We have a video explaining Capital Gains tax here: kzbin.info/www/bejne/fouUhKeniMt4l6c If you don't exchange or sell the crypto and leave it on the platform, you won't owe any CGT. For staking it is different. If it is considered income, you will have to pay that tax in the year and file in your tax return with a form 11 or form 12 depending on whether you are a chargeable individual or not. You would still pay even if you don't withdraw but would only have to do it once a year. A bit of a hassle for sure! Let us know if you have any other questions. - Cian

[@deanodonnell5702]

Hi Lads, if I previously staked last year for a period, but now the value of my crypto is now less than what I initially paid for it when I bought it, do I still need to pay tax on the staked crypto? Im no longer staking, I staked for a few months last year. Thanks in advance.

[@TheLearningsReport]

Sorry for the late response - big summer off! It really depends on how staking income ends up being taxed in Ireland. If it is taxed like a dividend, then you would pay income tax on the value of the staking reward at the time you receive it (not its current value), and then you would be taxed CGT if you then went on and decided to SELL the reward itself. The principal (i.e your staked holdings) aren't taxed directly, it's just the rewards that you receive as a result of staking. Again to reiterate, there are v unclear guidelines from revenue on this, but we can draw some correlations to whats going on in the US and make some educated guesses based on that. hope that helps somewhat?

[@deanodonnell5702]

@@TheLearningsReport thanks, so when will we know how staking income ends up being taxed in Ireland ? If it’s staked like a dividend, I pay 20% on the value at the time it was staked at ? When will I have to pay by this year ? Is there a deadline ? Thanks in advance

[@johnrushe4200]

Hi lads thanks for the helpful video as it's very hard to find any info about taxing crypto in Ireland. First of all is it not absolutely crazy I would have to pay 40% on my staking rewards and then 33% when I sell them, leaves very little return and might make investing pointless? Also say I hodl and don't sell even for years do I still need to pay 40% on my staking rewards every year even though I might not be able afford to do so. Just a bit peed off with your findings, not you! I excepted I have to pay 33% on the sale of my crypto, which is high compared to some countries but also to be taxed on staking rewards as well?

[@TheLearningsReport]

Hey John, Thanks for watching and glad you found it helpful. We're completely with you on the tax front, the rules are very frustrating! Just to confirm our understanding - you would pay the 20%/40% on the staking income and subsequently 33% on any gains. Let's take an example: You earn 10 coins from staking each with a value of €100. If you're in the higher band of 40%, you would pay €400 in tax (or of pocket, let's say). If these coins then raise in value to €200 and you sell them all for €2,000, you would make a gain of €1,000 and pay 33% on that gain which is €330 (ignoring the CGT exemption). So in this example, €730 tax on €2,000 value to you (36.5%). Still high but not quite as bad as 40%+33% on the total. It is a similar treatment for dividends reinvested. The high tax is always a consideration when choosing where to put your money - definitely something a lot of our Irish viewers are frustrated with. Unfortunately, yes, you have to pay the income tax every year. If you can't afford it, you may have to sell some to pay. As we mention in the video, this is our understanding as there is no clear guidance from Revenue. Most likely, Ireland will follow suit with how other countries deem the tax rules. Hopefully, they'll change the rules in the near future! - Cian

[@johnrushe4200]

@@TheLearningsReport Thanks for the example and quick reply Cian, and your right still high but not as bad as expected, much appreciated! One last question which might be helpful for others, if your sell your staking rewards every week or month and there is no real price increase, your only really paying the 20%/40% and little to no CGT?

[@TheLearningsReport]

@@johnrushe4200 Exactly. If the value you sell at is the same value when you received, then yep, no CGT would be due 👍

[@johnrushe4200]

@@TheLearningsReport Thanks lads, great content

[@TheLearningsReport]

@@johnrushe4200 no problem, John!

[@jw8089]

Can we offset some of the tax owed on staking rewards with the withdrawal fee to get from the exchange to the staking wallet/place?

[@TheLearningsReport]

Heya - to clarify, which exchange are you staking through? Some exchanges, such as Binance, don't charge a fee for staking and un-staking your coins. For those that do, you raise a good question. In short, I'm not sure. Offsetting is usually something that comes with Capital Gains Tax, whereas staking (to the best of our knowledge at time of writing) is taxed as income, so I would say unlikely is the answer to your question. However, you could potnetially argue it as an 'expense' or perhaps a 'deductible' ? You'd be getting into tax advisor territory on that one I'm afraid! In short though, how much are you paying for staking & un-staking? For me, the amounts are minimal and wouldn't make a huge difference overall (personal opinion) - Ste

[@blackmadra]

Guys any chance you could do a video on getting crypto loan? As I understand you can use your crypto as collateral and there is no tax to pay. But I'd love to see you guys talk about it!

[@TheLearningsReport]

Interesting suggestion - I like the idea! We have a few upcoming videos in the pipeline but definitely adding this one to the list. Cheers for the shout! - Ste

[@bitcoinwithdinny]

Thanks guys, great to see some Irish lads on KZbin 💪👍

[@TheLearningsReport]

Hey Dinny, Thanks a mill for watching and cool to see your videos too! Not the easiest navigating crypto in Ireland! - Cian

[@bitcoinwithdinny]

No lads, I have a good Facebook community for a couple of years and just started on KZbin 😃🙌 Would love to network and feature you guys on our page, some of my vids do 100k views on fb so in the process of building my KZbin 🙌

[@TheLearningsReport]

@@bitcoinwithdinny Nice one, best of luck with the launch! and absolutely, always keen to chat. Keep in touch! - Ste

[@gerri12121]

Hi Lads, ye should keep making videos there really good. What about airdrops? If you put nothing in other then completing some tasks, and receive say 10k airdrop in some coin. Sell for fiat. Is it say 40% income take on the 10k so 4k. Then CGT on the 6k at 33% so 1980 minus exception of 1270, so 710 CGT. So between both 4710 total tax due?

[@khaoscero]

Cryptocurrencies have not been explicitly defined as assets, let aloe by all countries, let alone for each specific cryptocurrency, let alone its very hard for anyone to prove in which jurisdiction you are holding a crypto - since its unlike existing assets. I assume tax agencies around the world will happily take everyone's money but will not hunt down anyone, since there are no laws yet. Once there are, things are different. Some cryptos work in completely different ways anyway. What about Debase tokens which fluctuate your holding amount per design? What about USING UP a token, for example for gas, traditional assets cannot be used up. Nothing is defined as of yet. And since tokens are just code and can do ANYTHING, I wanna see those laws. (example: in some staking contracts you BURN tokens - is that a capital loss?)

[@TheLearningsReport]

Hey Khaos - cheers for sharing those views! In short, we don't disagree entirely. As we tried to caveat in the video, although it's still vague in many countries, the US in particular is a decent example of a country that is desperately trying to play catch up and regulate it as things develop. That being said, your comment about it not being defined as an asset isn't entirely true. The IRS for example have said that Bitcoin should be treated as an asset in the same way that property is considered an asset. www.irs.gov/pub/irs-drop/n-14-21.pdf In Ireland also, although there hasn't been any 'new' laws introduced to tailor to crypto specifically, crypto is treated similarly to stocks when it comes to taxes. As you said, there are tons of outlier examples and I would say enjoy the chaos while it lasts! No doubt governements will catch up eventually 🤷‍♂️ Thanks for the comment and for watching. - Ste

[@lk10100]

Hi guys - Love your videos - keep up the good work. I've just started to mine helium and I'm making a few assumptions about how this activity will be taxed in Ireland - Just want to make sure these assumptions are correct - The mining rewards are taxable as income tax ( calculated at the value of helium on the day they the rewards were paid into your wallet ? ) and when you sell your HNT any gains from this initial value are liable for capital gains. I presume then that the cost of the helium hotspot should be written off against capital gains ? However if I'm not planning to sell any Helium then I should probably record a loss in the first year from ca capital gains perspective because of the cost of the hotspot? Thanks

[@TheLearningsReport]

Hey Leon - nice one, really appreciate ya following along. So yep, I would share your assumptions on pretty much all the above. The only thing I wouldn’t be sure on, is writing off the hotspot itself (or at least, the entire cost). You could argue that its a deductible expense, but that’d be from an income tax standpoint, not CGT (is my understanding). I’m not sure if it’d be allowable for cgt. I could be wrong, but id see it more as a future deduction against the income you generate from the hotspot itself. But again, what % of the cost price you could deduct, is something I’m unsure on! You pretty much have it sussed otherwise. - Ste

[@aidanrafter5205]

Great videos. You guys should look into staking with Cardano (ADA)

[@TheLearningsReport]

Hey Aidan, cheers for that. Out of interest, is that just a general recommendation for us (thanks if so!) or is it a video you'd like us to do? - Ste

[@aidanrafter5205]

A little of both. I think you guys would really see the amazing staking system Cardano has going on. Head and shoulders above the rest. Rewards every five days without having to lock away your coins. Amazing compound interest possibilities. Thanks for yer videos they are brilliant 👍👍

[@TheLearningsReport]

@@aidanrafter5205 Nice one, love that sort of feedback so thats for the suggestion. Will definitely add it to the list! We've actually been working on our website the past couple of weeks, so will be getting back to videos shortly. Cheers for following along!

[@premier69]

so lets stake and hodle till better laws are in place before withdrawing? I'm not planning on withdrawing for well over a year from now anyway due to my current economical situation i might even wait slightly over 5 years.

[@TheLearningsReport]

Yep, same as yourself - I also have no plans to sell. Actually going to look into a video around the idea of borrowing against your crypto assets (albeit, carefully) and use the strategy that the mega wealthy use to avoid paying CGT entirely. Likely going to take some research, but could be an interesting one! - Ste

[@OBLIVION20201]

I’d like to know, when filing your staking income. What category do you file it under? Foreign Income or Other Income, and what subcategories? Keep up the good work on the channel

[@TheLearningsReport]

Cheers Robbie - we would likely put it under Other Income, but feel free to ping revenue a message to double check what they suggest (but they may have no idea what staking income even refers to 😅) Re: sub categories, are you filing a form 12 or form 11?

[@OBLIVION20201]

@@TheLearningsReport Thanks, it’s just the Income Tax Return on the Revenue website. Would be Form 12 on paper

[@TheLearningsReport]

Sorry, this got flagged as spam for some reason and didn't show up in our notifications. Did you get sorted? I can't recall what sub categories are shown for Form 12, but as long as you're throwing it down as other income, that should cover your bases regardless 👍 - Ste

[@OBLIVION20201]

@@TheLearningsReport That’s no bother Ste, sent a message to Revenue 3 weeks ago now anyway but I’d say they’re just busy with PAYE enquiries.

[@TheLearningsReport]

3 weeks - sounds about right 😂 And yea, always good to have a paper (email) trail for any tax questions, just as a backup in case anything ever gets flagged or queried. But as I said, you shouldn't have any issues 👍

[@michaelli7932]

Very helpful video guys. One question please. For example, staked 1ETH for a year and gained 0.5ETH, paid income tax on that 0.5ETH worth of €2000. Next year decided to sell that 0.5ETH (price dropped and is worth now €1500). Is CGT taxed on the sell price €1500 or I'm in loss of €500 and no CGT to be paid? Also, I assume the same rules apply for mining right? Thanks

[@TheLearningsReport]

Hey cheers. So you need to separate the two events from a tax standpoint. Staking - pay income tax on the amount paid out to you (sounds like you're on top of that) CGT - it depends what your purchase price was. If you paid €500 for it, then even though it's dropped from €2,000 to €1,500, you still have a €1000 gain so you'd pay 33% tax on that €1000 (note - you have a €1270 exemption to play around with, so you may still not owe tax) Mining - to the best of our knowledge, mining income is treated as income from a tax standpoint, but we always suggest confirming directly with revenue if in doubt. - Ste

[@michaelli7932]

@@TheLearningsReport Sorry I meant 0.5eth from staking (no purchase price).

[@TheLearningsReport]

@@michaelli7932 Gotcha. In that case, my understanding is that you would need to calculate what the value of the ETH was each day when it was paid out to you as a staking reward (this gets complicated, because you likely will have received daily payments of ETH) and then you use that value as your cost basis for when you go to sell that ETH down the road. In short, the reason all these crypto tax software companies are popping up is because of this exact issue! It's a minefield. - Ste

[@zahahopper5820]

hi Ste and Cian, another great video, thanks for your work. According to the revenue crypto gift, sale, exchange to another crypto or stable coin is a taxable even (CGT 33%). How about lending crypto for a short time to a company or a private person? is crypto lending = crypto sale??

[@TheLearningsReport]

Hi Zaha, cheers for the comment and positive feedback! So a couple of ifs & buts to this one, but our understanding is that if you 'lend' your crypto out, and you receive interest payments for doing so, you're liable to pay income tax on that as opposed to CGT (Again, we're not tax professionals etc etc but that would be our understanding of it). As you're not 'selling' the asset (i.e. it's still yours and assumably you will get it returned to you at some point, I wouldn't say it's CGT) I've linked a relevant article below (with an anchor link to the section in question) and hopefully that might offer you some further info! tokentax.co/guides/defi-crypto-tax/#defi-lending-income-taxes - Ste

[@zahahopper5820]

@@TheLearningsReport thanks a million, really appreciate it!

[@TheLearningsReport]

You're very welcome!

[@joefitz4752]

is the taxes for options and futures the same as for stocks

[@TheLearningsReport]

Hey Joe sorry for the delay in getting back to you on this. My understanding is that options and futures are taxed at CGT rates also, but going to confirm that with revenue as (like most things tax related) it's not 100% clear.

[@joefitz4752]

@@TheLearningsReport thanks man I’m a big fan of your videos really helping me out seeing that not many creators do irish finance videos

[@TheLearningsReport]

@@joefitz4752 Appreciate it, lad - glad to hear you're finding it useful! Will be in touch 👍

[@arturjegesi1182]

love your videos, keep it up boys

[@TheLearningsReport]

Cheers Artúr, couple more coming this week!