Pearse Doherty (Donegal, Sinn Fein)
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352. To ask the Minister for Finance the revenue generated in capital gains tax from the disposal of cryptocurrency assets in 2018, 2019 and 2020; his views regarding the paying and filing of capital gains tax from the disposal of cryptocurrency assets, particularly a cryptocurrency (details supplied) for 2021; and if the Revenue Commissioners are monitoring same. [31122/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that statistics in respect of Capital Gains Tax (CGT), for the most recent years available, are published on the Revenue website in the release 'Summary of Capital Gains Tax Returns'.

These statistics include information on specific asset types, disposals of which give rise to taxable gains. However, gains from cryptocurrencies are not separately identified as an asset category on the relevant returns; as such, the information requested by the Deputy is not available.

Revenue considers cryptocurrencies, including Bitcoin, to be digital assets. Revenue expects that the buying and selling of cryptocurrencies by an individual is normally an investment as opposed to a trading activity. As such, the tax treatment of the gains and losses arising from such an activity generally falls to be considered by reference to CGT, with gains arising on the disposals chargeable to CGT at 33%. A disposal can occur where a person:

- sells or gifts cryptocurrency,

- trades or exchanges cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency),

- converts cryptocurrency to fiat currency (a currency established by government regulation or law), such as Euro, or

- uses cryptocurrency to obtain goods or services.

Losses on the disposal of cryptocurrency investments are allowed as a deduction against other chargeable gains. The first €1,270 of chargeable gains of individuals in a tax year are exempt from CGT.

Where an individual buys and sells cryptocurrency assets in the course of a trade, rather than as an investment, they will be subject to income tax, PRSI and USC on any profits arising on the disposal of those assets. Whether a person is trading or not depends on a number of factors such as the length of time they owned the cryptocurrency asset as well as the frequency and manner in which they are sold.

Where a person trades cryptocurrency assets, they may claim deductions for expenses incurred wholly and exclusively in the course of their cryptocurrency trade (such as transaction fees) and income tax loss relief rules apply where losses are incurred.

A person disposing of cryptocurrency assets is required to file a tax return and pay any tax due on a self-assessment basis. In monitoring tax compliance, Revenue can scrutinise returns received to ensure they comply with legislative provisions.

Ireland is an active contributor to the ongoing work, at both EU and OECD levels, to develop tax reporting frameworks that will provide information to tax authorities on transactions involving crypto assets and e-money and has also been engaged in work to better understand how such transactions are treated for tax purposes in different jurisdictions.

Further guidance on the tax treatment of cryptocurrency transactions can be found on the Revenue website in the Tax and Duty Manual.