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An Irish Tax Guide for eToro Investors

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Have you considered turning some of your disposable income into profit? Maybe you’ve dabbled in trading and investments… or you’d like to?

I know what you’re thinking; successful trading and investing takes specific skills, knowledge, training and careful analysis and while that might have been the case for some time, now, thanks to the emergence of social trading platforms, trading and investing is easier than ever for aspirational Irish investors.

Take eToro for example. If you’re not familiar with the eToro platform, it’s an online social trading and investment company.

Still not sure what I’m talking about?

In a nutshell, eToro have created a model that aims to disrupt the traditional money management system. It’s no longer necessary to rely on common financial institutions if you want to get started with trading and investing.

The best thing about eToro is that you don’t need any previous knowledge to make a lot of money. All you need is about $500 to start and you’re well on your way. See, eToro makes trading accessible to the average Joe. You don’t need to know anything about Forex markets or general investing. Once you’ve signed up, you can choose to trade of your own accord or copy professionals.

 

 

 

You can view traders connections, portfolio and detailed statistics. If you feel confident in a trader, you can click the copy function. This will automatically copy all their future transactions from that point on. Whatever they do in terms of investing and trading will happen with your money too meaning if they make 10% profit, so do you!

But that’s not the only nifty feature eToro has to offer. You also have the option of using their virtual trading feature. This allows you to try out the platform without having to use real money. You can familiarise yourself with how the platforms works and practice trading risk free. 

 

Need a hand filing your eToro tax return?

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Tax obligations associated with eToro

If you’re earning money via eToro, you are of course obligated to pay tax on your earnings. In fact, even if you’re not earning anything, you must still file your taxes.

But what tax rules apply to social trading via a platform like eToro? Well, first of all, eToro doesn’t collect taxes for any government authority. It’s your individual responsibility to calculate and pay the applicable taxes for Ireland.

There are two types of tax that will apply if you decide to begin trading – IT, USC and PRSI apply to trading income and capital gains tax applies to the disposal of shares.

The first thing we’ll look at is capital gains tax or CGT i.e. tax on capital gains you’ve made on things like the sale of stocks, bonds or property.

Taxation on the sale of online stocks and shares is no different to that of regular investments and property. It doesn’t matter how you trade them, you must pay the standard capital gains tax. CGT is 33% of your profits. You can think of it this way, if you, an individual sell a share via eToro and you make a profit, you must pay 33% on the gain you make. For example, if you buy a share for €10 and sell it for €20, you’ve made a gain of €10, you must then pay 33% on that gain. 

Income tax, USC and PRSI  

In most cases, only CGT will apply to your eToro income. However, if you also earn a dividend from an eToro investment, you'll be subject to Income Tax on that dividend. This income will be taxable under normal Income Tax rules. Income Tax rates are currently 20% and 40%.

eToro income will also be subject to Universal Social Charge (USC). USC is tax payable on an individual’s total income. Standard rates for USC for 2019 are 0.5% of the first €12,012; 2% of the next €7,862 @ 2%; 4.5% of the next €50,672; and 8% of any remaining balance.

PRSI is due on what is referred to as “reckonable income” and includes trading, professional and investment income. PRSI rate currently stands at 4%.

In the case of individuals earning significantly larger amounts, income earned via eToro will be subject to the highest rate of 52% - Income Tax + USC + PRSI.

 

 

Taxback.com have got you covered…

Now that you know what rules might apply to you, you’re probably wondering how we can help you reduce your tax bill.

Well, let’s take accountancy fees for example; when it comes to trading income, you’ll be eligible for a trading deduction for things like accountancy or legal fees that is if they are exclusively for the purpose of trade. With CGT on the other hand, accountancy fees may be allowable against sales proceeds from the disposal of assets as well as any brokerage fees. Knowing what’s what when it comes to paying taxes can save you money.

But thanks to Taxback.com, you don’t have to worry about any of that! We’re here to make sure you get the most from your tax relief with as little hassle as possible. You no longer have to worry about making time to work through the facts and figures. Contact us today and let our team of certified tax experts guide you through the process.

Need a hand filing your eToro tax return?

Contact Us Today

About The Author

Stephanie Meagher - Content Creation Specialist @ Taxback.com

After graduating with a BA in Creative and Cultural Industries, I worked as a freelance content creator and blogger, that is before joining the Taxback.com team! When I'm not busy writing, I can be found enjoying the company of my four pugs or blogging about horror movies and podcasts.

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