The following statements do not constitute tax advice, investment advice or any other advice on financial services, financial instruments, financial products or digital assets. They are intended to provide general information. The following statements do not constitute an offer to enter into a contract to buy or sell financial instruments and financial products or an invitation to submit such an offer and to buy or sell any digital asset. Cryptocurrencies are subject to strong fluctuations in value. A decrease in value or a total loss is possible at any time. Loss of access to data and passwords can also lead to complete loss.
While nearly 8% of French people have already invested in a cryptocurrency or NFT in 2021, the tax on capital gains of this market was updated in early 2022 in France. Find out in this article which cryptocurrency tax you must pay in 2022 and what will change in cryptocurrency legislation in France in 2023.
Are cryptocurrencies taxable?
Bitcoin, Ethereum, Litecoin: the market capitalization of digital currencies today represents a colossal market, exceeding $ 3 trillion in November 2021. If these virtual currencies make it possible to sell and buy goods and services securely thanks to blockchain technology, the purchase-resale of crypto currencies has become an investment of choice.
However, since January 2019, cryptocurrencies are considered digital assets.
However, owning cryptocurrencies doesn’t necessarily mean you have to pay tax on them. It is indeed the capital gains realized on the sale of these virtual currencies that are taxable. For example, if you buy €2000 of Bitcoin and resell them for €3000, then you will have to declare that €1000 of profits to the tax authorities and pay tax on it.
However, you will only need to report winnings from the sale of digital currencies if they exceed €305.
The tax on cryptocurrencies depends on your status as a seller: private or professional.
If you make sales of cryptocurrencies on a personal basis, then you will be subject to the Single Lump Sum Levy (PFU), also known as the “flat-tax”. In this case, you will pay a one-time flat rate of 30% on the capital gains from the disposal of cryptocurrencies made (provided you have realized more than €305 in capital gains). This rate is divided into two separate taxes: 12.8% tax and 17.2% social security contributions.
If you are a professional trader, you are in this case subject to the tax on Industrial and Commercial Profits (BIC). Your tax rate then rises to 60% if your marginal tax rate (TMI) is 45%, and more than 65% if you are subject to high income tax.
It is also this high rate, as well as the problem of definition between public and private seller, that pushed parliamentarians to update the law on the taxation of crypto currencies from 2023.
Taxes on cryptocurrencies: what changes in 2023
In 2022, any person who sells cryptocurrencies on a regular basis is considered a professional investor. However, it is quite possible to buy and sell digital currencies throughout the year, on a regular basis, as part of the management of your private wealth. This problem of definition has an important consequence, since private investors carrying out transactions of disposals of regular crypto currencies, are thus considered professionals and must submit to the regime on BICs.
In fact, in 2023, only professional traders and people using tools similar to these professionals will be subject to the non-commercial profits tax (BNC) – the capital gain on the sale of crypto will no longer be subject to the BIC regime. Other sellers will be de facto subject to the PFU at 30%.
Mining is the action of generating virtual currency, but also the verification of crypto transactions on blockchains. This verification, carried out by multiple operators around the world, guarantees the security of transactions and is the basis of blockchain technology. “Miners” are paid in cryptocurrencies. Wondering how to report your winnings as a “miner”? Be aware that any profit made by mining activity is subject to the BNC regime, non-commercial profits.
What are the tax exemptions on cryptocurrencies?
The following are not subject to tax:
- Exchanges between digital assets. For there to be taxation, the cryptocurrency transaction must indeed be carried out for a fee, that is to say in exchange for a non-virtual currency, a virtual currency with compensation (i.e. financial compensation), a good or a service.
- Capital gains of less than €305.
While the advent of digital currencies revolutionizes our ways of investing, but also of creating art with NFTs, the taxation on cryptocurrencies in France is also evolving in 2023. Taxation on this market should thus be clearer and easier, especially for private sellers.
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