Tax Treatment of Cryptocurrency
Cryptocurrency is generally classified as movable property or asset in France, subject to taxation.
Capital gains from the disposal of cryptocurrencies are taxable under Income Tax (PFU) regulations.
Crypto mining rewards are treated as non-commercial profits (BNC) and are subject to Income Tax.
Determining Trader Status
As of January 2023, trader classification is not solely based on trading frequency or volume.
Private asset management activities are automatically categorized under the PFU regime.
Professional traders engage in cryptocurrency transactions under professional-like conditions.
Occasional Traders
Occasional traders are subject to a flat levy known as Prélèvement Forfaitaire Unique (PFU) at a rate of 30%.
The PFU consists of 12.8% Income Tax and 17.2% social security contributions.
High earners may be subject to an additional exceptional Income Tax rate at a maximum marginal rate of 4%.
Professional Traders
Professional traders' gains are considered non-commercial profits (BNC) and are taxed accordingly.
BNC taxation involves deducting expenses from gross revenue to calculate net profits, which are then subject to Income Tax rates.
PFU Tax Rates
PFU tax rate comprises Income Tax (12.8%) and social security contributions (17.2%), totaling 30%.
Investors can opt for progressive Income Tax rates instead of the 12.8% tax, particularly beneficial for low-income earners.
Calculation of Capital Gain and Loss - CashOut Method
In France, Capital Gain and Loss is calculated using the PVCT Formula (Plus Values de Cession d’Actifs Numériques):
Capital Gain = Sale Price - (Total Portfolio Acquisition Cost x Sale Price / Total Portfolio Value)
So for example, you buy 1 ETH for €1,500 and 1 BTC for €10,000.
Your total portfolio acquisition price is €11,500.
You sell your 1 ETH for €2,000. That's your sale price.
You have other assets in your crypto portfolio. The total portfolio value including your ETH mentioned already is now €20,000.
So following the formula above.
Capital Gain = 2,000 - (11,500 x 2,000 / 20,000) = €850
Capital Loss
You can offset your capital losses against your capital gains to reduce your net gains and therefore your tax bill.
You can only use capital losses from the same year to offset against capital gains
Mining
Crypto mining rewards are taxed under the BNC regime, with rates reaching up to 45% based on annual turnover.
Purchasing goods or services in Crypto
In most instances, when you spend crypto, you're actually converting your crypto for a given fiat currency at its fair market value on that day.
As such, any perceived gain from spending crypto in France may potentially be subject to the 30% PFU tax.
Staking Rewards
The DGFiP has not released any guidance on the tax treatment of staking rewards yet, although the question has been raised.
As such, it's advisable to speak to a crypto accountant if you have staking rewards in lieu of clear guidance.
DeFi
There is no guidance from the DGFiP on the tax implications of DeFi transactions.
France Financial Year
The France financial year runs from the 1st of January to the 31st of December.
The deadline for your tax return depends on the department (region) you fall into.
For the 2023 fiscal year, they're as follows:
Department | Tax Return Deadline |
Paper declaration | May 22 2024 |
1 - 19 (and non-residents) | May 25 2024 |
20 - 54 | June 1 2024 |
55 - 974/976 | June 8 2024 |
Reporting and Compliance
Taxpayers report crypto transactions using FranceConnect online Required forms include:
Formulaire 2042: the main tax return form to declare all income, mandatory for all tax payers. It's possible to file as a single taxpayer or jointly as a married taxpayer.
Formulaire 2086: this is attached to Form 2042. It's to declare your capital gains and income transactions, so any gains or losses you have from selling crypto for fiat currency.
Formulaire 2042 C: for mining income or other income viewed as BNC.
Formulaire 3916-bis: to declare any cryptocurrency accounts opened outside France.
Please beware, Form 2086 only allows for 20 itemized disposals. If you made more than 20 disposals, be it crypto or otherwise, you should speak to a crypto accountant for advice.