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Cryptocurrency tax guidance extended to cover employee share schemes

Inland Revenue is extending its guidance on cryptocurrencies to cover their use in employee share schemes.

This follows three other public rulings issued in June and July that detail the tax implications when crypto-assets are used to pay salary and wages, bonuses or when an employer issues its own crypto-assets and offers them to an employee.

Public Rulings Director Susan Price says similiar to the other rulings, Inland Revenue is simply laying out the tax implications for when crypto-assets are used as remuneration, rather than sanctioning their use.

“As far as we’re aware, there’s no widespread use of cryptocurrencies as a form of remuneration, nor is there an increasing demand.

“Our guidance is mostly in response to queries from our customers who want to know how the use of crypto-assets can be applied to exisiting tax laws so that’s all we’re providing here.”

The latest guidance states that when crypto-assets are issued to employees in the form of a “share” in the company that is issuing them, they may be part of an employee share scheme package.

It’s anticipated that the share could be created as part of an initial coin offering or some other sort of token generating event. The ruling explains how a crypto-asset can qualify as a share. However, Inland Revenue considers that most such assets will not have features of shares and so will fall outside of the employee share scheme rules.

“Similar guidance is being produced by other tax authorities around the world as we all work out how crypto-assets can be incorporated into existing tax laws.

“We will review our position in three years’ time as is usual practice with the issuing of rulings,” Susan Price says.

The recent public rulings on crypto-assets can be viewed here:

Read more about Inland Revenue’s general approach to cryptocurrencies here:

Media contact: Gay Cavill 029 201 4585