10% of adults hold it...Ireland 'blocks' crypto tax breaks

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Ireland has completely excluded cryptocurrencies from new tax-advantaged accounts designed to channel $203 billion in household deposits into the investment market.

According to Decrypt, a cryptocurrency-focused media outlet, on August 31 (local time), Irish Deputy Prime Minister and Finance Minister Simon Harris announced that cryptocurrencies, derivatives, and interest-bearing cash would be excluded from the savings and investment scheme set to be introduced next year. Stocks, bonds, funds, exchange-traded funds (ETFs), and insurance-based products will be included as investment targets. Harris stated that he hopes the new accounts will “make a real difference in building the economic resilience” of the nation's citizens.

One new account will be allowed per adult aged 18 or over who is a resident for Irish tax purposes. Taxes will be exempt up to a certain limit, and a low single tax rate will be applied annually to amounts exceeding that limit. There is no minimum deposit or minimum mandatory holding period, but an annual contribution limit will be set. Specific tax-exempt limits and tax rates will be disclosed when the budget is announced on October 6, and accounts are expected to open next year.

The funds targeted by the government are approximately €175 billion, or $203 billion, in Irish household bank deposits. According to the Central Bank of Ireland, direct investments such as listed stocks and bonds account for 2.3% of household financial assets, significantly lower than the European Union average of 7.5%. The proportion of investment funds is also just over 2.2%. In contrast, fund assets held by Ireland exceed €5 trillion.

Despite a significant number of actual holders, cryptocurrencies have been excluded from tax benefits. A Central Bank of Ireland survey revealed that about 10% of adults hold cryptocurrencies, with an average holding of €2,266. Holders were concentrated among young men, and more than half stated they bought cryptocurrencies out of curiosity. Harris also announced Ireland's first national anti-money laundering strategy on the 13th. This strategy includes strengthening verification procedures for transfers related to personal wallets and customer due diligence procedures for businesses dealing with overseas cryptocurrency companies.

Funds included in the new accounts will also not be subject to the existing 8-year deemed disposal tax. This tax rate was lowered from 41% to 38% in the previous budget, and the government plans to further review the system itself. The full details of the new savings and investment scheme will be finalized through the 2027 budget.

[Key Summary of Article]

-Ireland will exclude cryptocurrencies and derivatives from investment targets in its tax-advantaged savings and investment accounts to be introduced next year.

-The government aims to move approximately $203 billion in household deposits, currently tied up in banks, into stocks, bonds, funds, ETFs, and other investments.

-While about 10% of Irish adults hold cryptocurrencies, the government has excluded cryptocurrencies from new tax benefits while strengthening anti-money laundering regulations.

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