Catherine Murphy (Kildare North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

178. To ask the Minister for Finance if he and or the Revenue Commissioners have evaluated the potential for tax liability concealment and or avoidance as a consequence of the use of the various different types of crypto-asset and or cryptocurrency transactions. [41552/21]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am advised by the Office of the Revenue Commissioners that Revenue operate a risk-based compliance framework, using advanced analytics in a Risk Evaluation Analysis and Profiling (REAP) system to detect non-compliant behaviour. Risks in relation to crypto assets are included in Revenue’s compliance framework. This analytical approach to taxpayer behaviour and risk is continuously evolving and being enhanced in line with current developments.

Ireland operates a self-assessment tax system. The receipt of crypto assets as a form of payment for services or goods rendered will give rise to Income Tax for individuals or Corporation Tax for corporate taxpayers. Value Added Tax (VAT) on the Euro equivalent value of the crypto asset when received should also be considered, if applicable, to the receipt of these assets as a form of payment. The disposal of crypto assets is treated in the same manner as the disposal of all assets for Capital Gains Tax purposes. There are no special rules in Ireland for the tax treatment of crypto assets.   

Under the Taxes Consolidation Act, Revenue have the power to obtain information on crypto asset or cryptocurrency transactions, as is the case for other transactions, where there is reason to believe the transaction is relevant to tax. These powers include obtaining information from the taxpayer, from a financial institution or from any other third party who holds relevant information.

The European Commission is expected to publish a proposal on exchange of information in respect to crypto-assets before the end of 2021. This will be the eighth iteration of the Directive on Administrative Cooperation (DAC) and will be referred to as “DAC8”. We understand that the purpose of DAC8 will be to ensure that EU tax transparency rules keep pace with the evolving economy including in respect to crypto assets and e-money.

The OECD is also anticipated to release a recommended policy framework for crypto-assets reporting standards in the upcoming months. This framework will further strengthen the cohesive approach under the Common Reporting Standards (“CRS”) which calls on jurisdictions to obtain, on an annual basis, information from financial institutions and exchange that information with other jurisdictions.

Ireland actively contributes 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.