# income tax on spread trading profits



## Ursus (24 Jun 2011)

Hello
Can anyone clarify if spread trading/betting profits are  subject to income tax? I know that currently such gains are not subject to capital gains tax.
Thanks.


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## DB74 (24 Jun 2011)

Betting profits are not subject to income tax


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## Ursus (24 Jun 2011)

Its hard to believe really. If someone makes €100,000 a year spread betting the Dow or the FTSE or anything else not a cent is owed to Revenue.... 
Was it always thus in this country or is this a recent rule?


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## mandelbrot (24 Jun 2011)

Ursus said:


> Its hard to believe really. If someone makes €100,000 a year spread betting the Dow or the FTSE or anything else not a cent is owed to Revenue....
> Was it always thus in this country or is this a recent rule?



On the flip side you don't get any relief for losses incurred.


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## Ursus (25 Jun 2011)

I understand. That's capital gains though I think. Still hard to believe no INCOME tax is levied. 

Does anyone know if Spread Trading has always been tax exempt in Ireland or has it something to do with the EU?


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## mandelbrot (25 Jun 2011)

Ursus said:


> I understand. That's capital gains though I think. Still hard to believe no INCOME tax is levied.
> 
> Does anyone know if Spread Trading has always been tax exempt in Ireland or has it something to do with the EU?



No, you haven't understood me, my previous post had nothing to do with CGT.

In order for it to be liable to income tax you'd have to be carrying on an adventure in the nature of trade. 

If you are carrying on a trade, you are assessable to income tax on the profits from the trade, and conversely if you make losses are allowed to deduct these losses from your other income in the year of the loss, and/or carry the loss forward against future profits.

So the question as to whether or not a particular person's profits from spread betting are taxable will depend on whether or not they are deemed to be carrying on a trade - google "Badges of Trade", and you'll see what these are.

Essentially, if you are engaging in full-time financial spread betting as a means of making a living, then arguably you would satisfy the badges of trade and your income would be taxable. 

Whereas if you have a full-time job (which is your main source of income) and dabble in spread betting on the side, as a hobby, then you wouldn't be engaging in a trade and therefore wouldn't be liable to tax on your winnings.

None of this has anything to do with the EU either, in fact AFAIK the tax treatment is different in some European countries (I.e. Taxable as income).


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## Ursus (25 Jun 2011)

And of course when Revenue see someone making hefty profits yearly via spread trading what are the chances that they DON'T see it as an adventure in trade????

I knew it was too good to be true!!

Thanks for that mandelbrot.


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## mandelbrot (25 Jun 2011)

Ursus said:


> And of course when Revenue see someone making hefty profits yearly via spread trading what are the chances that they DON'T see it as an adventure in trade????
> 
> I knew it was too good to be true!!
> 
> Thanks for that mandelbrot.



And how exactly are Revenue going to "see" this? Big brother isn't watching your spread betting account like!

The system is self-assessment, so the onus is on the taxpayer to make the relevant return to Revenue! However, given that the conventional wisdom is that spread betting winnings aren't taxable, I can't see many / anyone doing this!


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## Marc (26 Jun 2011)

Of course the big assumption here is the focus on winnings. 

Spreadbetting is gambling not investing. Exactly the same as spending all day at the racetrack where the "winnings" would also be tax free.

The winner is the spreadbetting firm who get paid on every bet placed for everyone else this is a zero sum game before costs and negative sum game after costs add up all the bets placed and you will come to a zero result minus your costs of playing.

Don't try this as a sensible investment strategy


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## Ursus (26 Jun 2011)

mandelbrot said:


> And how exactly are Revenue going to "see" this? Big brother isn't watching your spread betting account like!
> 
> The system is self-assessment, so the onus is on the taxpayer to make the relevant return to Revenue! However, given that the conventional wisdom is that spread betting winnings aren't taxable, I can't see many / anyone doing this!


 
In all honesty though you are "supposed" to inform them that you have a not insubstantial income coming in that they don't know about. At least that's my understanding when you make an income tax return. Then I presume its up to them to decide if its an "adventure in trade" or not. But if you don't tell them in your return and somehow they DO find out you could be in a wee spot of bother...


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## mandelbrot (26 Jun 2011)

Ursus said:


> In all honesty though you are "supposed" to inform them that you have a not insubstantial income coming in that they don't know about. At least that's my understanding when you make an income tax return. Then I presume its up to them to decide if its an "adventure in trade" or not. But if you don't tell them in your return and somehow they DO find out you could be in a wee spot of bother...



2 words for you- SELF ASSESSMENT. 

It is your responsibility to decide what is income and what isn't. And if it isn't income in your opinion, then it doesn't go on your return.

What they might decide if they audit you is a different matter.


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## Ursus (26 Jun 2011)

I think we all have a fair idea when income is income!  I think it was Ronnie Barker who had the line in one those old BBC comedies that  "income isn't income when its not inc


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## lepotoole (5 Jun 2012)

On a related note: does the location of any winnings matter from the perspective of Irish tax law? More specifically, if I have an a/c with a UK based spread betting company, are winnings made in the UK and if so, does this matter from an Irish tax law perspective?


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## mandelbrot (5 Jun 2012)

lepotoole said:


> On a related note: does the location of any winnings matter from the perspective of Irish tax law? More specifically, if I have an a/c with a UK based spread betting company, are winnings made in the UK and if so, does this matter from an Irish tax law perspective?


 
No it doesn't matter - in order to be taxable it would have to be income from a trade as mentioned above. I imagine it would be income from a foreign trade if the money was in the UK, but the first test would be whether or not it is "income".


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## Dagashi84 (6 May 2018)

Marc said:


> Of course the big assumption here is the focus on winnings.
> 
> Spreadbetting is gambling not investing. Exactly the same as spending all day at the racetrack where the "winnings" would also be tax free.
> 
> ...



Hi I'm new to online trading and I've just discovered spread betting. Your last comment about spread betting not being a sensible investment strategy hit me and I would like to clarify your opinion. From what I understand, the analysis and decision process that goes into making a spread bet are no different from those involved in opening, say, a trade position on the FOREX market. Is there something that I'm missing out or are you saying online trading in general is not a sensible investment strategy?


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## Marc (6 May 2018)

.


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## Dagashi84 (6 May 2018)

Many thanks for your time and information


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