in France they don’t give a sh!t if how much crypto you earn/ have or how you get those crypto, once you exchange it to fiat and withdraw it, it is tax as income
Using losses to reduce your gain
When you report a loss, the amount is deducted from the gains you made in the same tax year.
If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.
So, when you withdraw crypto to fiat, it would then be liable for CGT, otherwise you can do whatever you want with your crypto?
Also, just say my principal investment in BTC is £1000. If at some point I’ve doubled that value to £2000 and I cash out £1000 so as to make sure I can’t lose money, is that capital gain? Even though it’s actually just the amount I originally put in? And if so, any further withdraw to fiat going forward would be considered capital gain?
There is no parliamentary law that specifies the taxation of btc at present.
I read this article earlier that applies to U.S/irs but probably relevant to almost any country at this point in time.
With three hard forks in less than twelve months a real possibility, many bitcoiners are wondering about their implications. Often left out of the debate are tax consequences. The Internal Revenue Service (IRS) hasn’t offered much clarity since its announcements in 2014, and even those were of little help.
Unwanted and Free? They’ll Tax it!
Seemingly having more to do with deductions in tax reporting, Haverly v. U.S., 513 F.2d 224 (7th Cir. 1975) involved an elementary school principal’s reception of unsolicited textbooks. He donated them to the school’s library, and then claimed charitable deduction.
The court held even unwanted gifts of value are still income and must be included as part of calculating its gross. Haverly was cited recently by Forbes contributor Tyson Cross as a tax precedent regarding forks.
Another issue is determining fair market value for the asset.
Mr. Cross makes the point, “Bitcoin Cash had been trading on futures markets for weeks prior to its hard fork in August.” Exchanges and markets are for price discovery, for figuring an asset’s value. There’s not a central price authority. Still, “there is no way to tell whether the IRS will accept the use of futures markets to establish [fair market value], or what taxpayers should do if there is no futures market at all,” he continues.
Prices, of course, fluctuate, and notoriously so for cryptocurrencies. The issue of when to start or stop in the valuation determination scheme can get tricky. Is the event triggered by having access to the forked coin in a wallet? What if a user’s wallet service doesn’t provide for the newly created coin? What if a taxpayer’s coins are kept on an exchange unwilling to acknowledge the fork?
“Under the doctrine of constructive receipt, an item of income becomes taxable as soon as it is credited to the taxpayer’s account or otherwise made available to the taxpayer so that he or she can claim it at any time,” Mr. Cross explains. All that matters to the IRS is that taxpayers “could claim it.”
Ambiguity Leads to Less Compliance
Even the Treasury Department is asking for more definitive guidelines issued by the IRS. A press release scolds, “None of the IRS operating divisions have developed any type of compliance initiatives or guidelines for conducting examinations or investigations specific to tax noncompliance related to virtual currencies.”
Indeed, during its legal fight with popular bitcoin exchange, Coinbase, an IRS agent’s affidavit spoke to the small number of taxpayers trying to comply.
Agent David Utzke declares how “The IRS searched” filings for three years of Form 8949, used to report capital gains, and results show “2013, 807 individuals reported a transaction on Form 8949 using a property description likely related to bitcoin.” Similar numbers of compliance follow the next two years, he lists, with an actual drop in filings the final year, as “802 individuals” bothered to report at all.
Whatever the case, 1-for-1 forks, spinoffs, or splits are made unnecessarily complicated by government ambiguity.
“One thing the IRS has made clear about cryptocurrencies: It considers bitcoin to be property, not currency. In some ways, this is a feature, not a bug — 60% of profits count as long-term capital gains and 40% as short-term, queueing up possible savings,” Fisher Investments stresses.
With more people drawn to bitcoin on price surges alone, it’s equally important they seek out professional tax advice.
Have a question, I have a client who would like to pay me my fees for my professional services on a deal in bitcoins, will I be liable for any income tax on that payment?
If you cash out that BTC you receive for fiat, then wouldn’t you be liable for capital gains tax?
2 things are guaranteed in life death and taxes so yes you will pay tax.everything is transparent on the ledger so they will discover how much u made. HMRC will heavily look into this because of the ridiculous gains it’s a tax collectors wet dream. Or pay no tax and they will then take the house and the car and possibly sling you in jail if settlement is not reached
In the UK you are able to be taxed on any gains or deals that are done directly with Cryptocurrency. However, the current uk position is that as Crypto is so volatile it is considered akin to be gambling and therefore it is not subject to capital gains. Expect this to change in the near future.
I suggest reading the recent government announcements on crypto. No definite position on gains from Crypto. If they are going to tax you on gains, are they then willing to give a tax rebate on losses? Of course not.
Currently, no clear guidance on this and my “interpretation” is, due to the volatility you are likely to loose as well as win, thus gambling.
There is no Capital gains on Gambling in the UK currently.
The hole in that (from the tax-man’s point of view) is when crypto is spent without converting to fiat - like buying a house or car directly with bitcoin - just like when @peter did with his lambo. Or is it the conversion from crypto to fiat or other goods?
it apply when you convert to fiat or spend crypto
and is reported in different section depend on the amount and tax rate is different too
In the uk check out this link. I am sure it will soon close…
sigh… the tax man always wins
At the moment he doesn’t. Until he issues some very clear guidelines. And this only pertains to the UK at the moment. For how long who knows.
Tax can always be back dated if you think they are going to miss out on massive sums of money then you are naive . Either offshore it or get a Monaco passport which is possibly your best bet but you will need a few million to purchase a property
This is the thing Sparky, right now I am down on my initial investment. It has been a gamble. This is currently the view of HMRC. Now when does my gamble become a trade? Just because I am lucky? You can see what has happened to the market and everything is down.
You can bet your bottom dollar if I put my losses in against my tax, they will not give me a rebate. So even the Tax man can not have his cake and eat it. This is not on the cards.
If they do want to consider it as capital gains they would have to accept the opportunity that your investment goes down and they loose tax income as well. Also consider this, HMRC has enough of a job chasing normal tax evasions than chasing ones that are hard to tell if its gambling or not.
Currently, in the UK, there are no clear guidance and time will tell if they tighten it up. My thinking is that if you have made capital gains through a lucky gamble as of right now they have no comeback on you. This position will change and my expected 2.3 million from ICX when it moons 28% will immediately go to the tax man!!
- I buy some LTC on Bitstamp
- Transfer LTC to Binance
- Sell LTC for ETH
- BUY some ICX with ETH
So starting with the value of LTC at Event 1, Events 3 and 4 are the taxable events? Keeping track of the value of the coins at the time of each of the events will be fun…
and is it regardless whether I am a professional trader or not? If I am not a pro couldn’t I just say I was throwing money at the exchanges to see what sticks? (gambling)