- Taxation of cryptocurrencies in France: everything you need to know to be in order
- How do you report your cryptocurrency earnings to avoid penalties?
- Tax benefits of cryptocurrencies: how to optimize your situation in France
- Succession and cryptocurrencies: managing the transmission of your wallet in France
- How do you avoid paying taxes on your cryptocurrencies?
- Penalties for not declaring capital gains and income in crypto currencies
The taxation of cryptocurrencies in France may seem complex, but it is crucial to understand how it works to stay in good standing with the tax authorities.
In this article, you will find everything you need to know about it to know how to report them on your tax form.
Taxation of cryptocurrencies in France: everything you need to know to be in order
➡️ Since January 1, 2019, capital gains on digital assets are taxable for individuals residing in France.
According to article 150 VH bis of the general tax code, the total capital gain realized during the year is taxable if the total of the taxable sales exceeds 305 euros. ⚠️ ATTENTION: this does not remove the obligation to declare.
⚠️ It is important to note that only transfers of digital assets for legal tender, service or property are taxable.
➡️ The taxation of cryptocurrencies in France is based on a single flat tax, called "flat tax".
This tax rate on crypto capital gains was 30% 12.8% for income tax and 17.8% for social security contributions.
This progressive scale is valid from 2023, but will only be applicable in 2024 for the 2023 return.
➡️ It is also essential to declare your crypto accounts held outside France.
The majority of the exchange platforms are not French, so be particularly vigilant on this point.
To report these accounts, you must complete the Cerfa 3916-bis form of your tax return.
👉 Lhe key points to remember: To properly prepare your return, you must declare :
- your taxable transfers of digital assets against state currencies such as the euro or the dollar and generating a capital gain or loss (to be calculated using the appendix Cerfa 2086 of your tax return);
- your purchases of goods and services in crypto operations generating capital gains or losses and therefore taxable from 305 €. (This ceiling corresponds to the SUM OF ALL the transfers for consideration (purchase of goods and services AND conversion against fiat currency) during the fiscal year);
- your revenues from decentralized finance (lending, staking and masternodes);
- your digital asset accounts held abroad.
Legapass is a valuable tool to organize, secure and facilitate the transfer of your cryptocurrency investments. ✅
How do you report your cryptocurrency earnings to avoid penalties?
Declaration of capital gains on digital assets
In France, capital gains realized on digital assets are taxable. To report these earnings:
- add theappendix 2086 to your tax return;
- and indicate the capital gains (or capital losses) that you have realized on your asset sales (boxes 3AN and 3BN).
👉 It is important to report all your taxable transactions to avoid penalties related to non-reporting.
Reporting of digital asset accounts held abroad
The declaration of your crypto accounts held outside France is also mandatory. To do so:
- fill in the Cerfa 3916-bis form of your tax return with the necessary information about your foreign accounts.
⚠️ Failure to comply with this obligation may result in financial penalties.
Calculation of capital gains and losses
To properly declare your earnings, it is essential to calculate correctly your capital gains and losses.
➡️ Use a reliable tool to track your transactions and simplify the calculation of your taxable earnings or use Waltio !
Compliance with reporting deadlines
The deadlines for filing your income tax return vary according to your department and the method of declaration (paper or online).
Make sure you meet these deadlines to avoid penalties related to delay. The closing dates for the 2022 tax return phase are now known :
- May 25, 2023 deadline for online tax return in zone 1 (departments 01 to 19 and foreign residents) ;
- June 01, 2023 Deadline for online income tax returns in zone 2 (departments 20 to 54);
- June 8, 2023 Deadline for online tax returns in zone 3 (departments 55 to 976).
➡️ Reporting your cryptocurrency earnings and digital asset accounts is essential to avoid penalties and meet your tax obligations.
Take the time to understand your obligations and use reliable tools to facilitate your process!
We recommend that you consult a tax expert to help you complete your tax return correctly. ✅
Tax benefits of cryptocurrencies: how to optimize your situation in France
The taxation of cryptocurrencies in France has evolved in recent years, offering tax benefits to investors in cryptocurrencies.
Temporary tax deferral for crypto-crypto transactions
One of the most notable tax advantages for cryptocurrency investors in France is theexemption of transactions between cryptocurrencies.
➡️ Indeed, exchanges between digital assets, such as Bitcoin for Ethereum, are not taxable.
This allows you to diversify your portfolio and take advantage of market fluctuations without worrying about taxes on these transactions.
The 30% flat tax
The taxation of cryptocurrencies in France is simplified thanks to the flat tax of 30%.
➡️ This single tax includes income tax (12.8%) and social security contributions (17.2%).
This tax rate is advantageous compared to other types of incomewhich may be subject to higher marginal tax rates.
Exemption for transfers of less than 305 euros
If you sell cryptocurrencies and your total taxable sales are less than 305 euros over the year, you are exempt from tax and have nothing to declare. ✅
This exemption threshold allows you to make small investments without having to worry about taxes.
Inheritance and cryptocurrencies
Managing the transmission of your digital assets is essential and Legapass allows you to secure and organize your data to facilitate this transmission in case of death.
In France, cryptocurrencies are subject to inheritance tax, just like other assets. It is therefore important to plan the transmission of your digital assets to your heirs, so that they do not find themselves without the ability to access them.
➡️ Protect and manage your digital assets efficiently with Legapass. Find out how to add your passwords to your safe to protect and transmit your digital assets to your loved ones.
To learn more about securing your digital assets, check out our article:
Succession and cryptocurrencies: managing the transmission of your wallet in France
The transmission of your digital heritage in case of death is an important subject. Crypto-currencies are now an integral part of many investment portfolios and are subject to estate taxes in France.
1. Cryptocurrencies and succession
In France, cryptocurrencies are considered assets and are subject to inheritance tax.
⚠️ Heirs must therefore declare these digital assets with the tax authorities and pay estate taxes correspondents.
The amount of inheritance tax depends on the relationship between the deceased and the heir, as well as the value of the inherited cryptocurrencies.
2. Organize and secure your digital assets
The first step to prepare the transmission of your digital heritage is to organize and secure it.
Legapass allows you to store your passwords, private keys and other sensitive information securely with military-grade encryption. ✅
By using Legapass, you can also share information related to the management or even the use of its assets for your relatives.
✅ Remember to add all of this information to your Legapass account so your loved ones know what to do if they need it.
3. Communicate with your heirs
It is crucial to inform your heirs of the existence of your digital heritage and to explain the procedure you have chosen to bequeath it.
Protect and organize your digital assets efficiently to prepare for their transfer with Legapass. Find out how to add your passwords to your safe and our encryption process to secure your data.
Preparing the transmission of your digital heritage in case of death is essential to ensure its proper management by your heirs.
How do you avoid paying taxes on your cryptocurrencies?
It is important to understand the taxation of cryptocurrencies in France to avoid unpleasant surprises and optimize your tax situation.
Find our tips for optimizing the taxation of your cryptocurrency earnings, while remaining in compliance with the law. ✅
1. Respect the annual transfer threshold
If your total taxable sales are less than 305 euros over the year, you will be exempt from tax on these gains.
➡️ Thus, making sure that you do not exceed this threshold when transferring, you can optimize the taxation of your cryptocurrency earnings.
2. Invest in long-term projects
Investing in cryptocurrencies for the long term can allow you to defer taxation on your gains.
➡️ Indeed, as long as you do not sell your digital assets, you are not taxable on potential capital gains.
By adopting a long-term investment strategy, you can benefit from the growth of the cryptocurrency market while deferring your tax obligations.
3. Exchange cryptocurrencies with each other
Exchanges of crypto-currencies with each other (for example, exchanging Bitcoin for Ethereum) are not subject to tax.
➡️ It is important to note that Exchanges of cryptocurrencies for stablecoins (such as USDT, USDC or DAI) are also considered tax-free.
Take advantage of this rule to optimize your exchanges without impacting your tax situation.
4. Keep an accurate record of your transactions
➡️ Keeping an accurate record of all your cryptocurrency transactions is essential to determine your taxable earnings and optimize your tax situation.
➡️ Calculate the capital gain or loss. For each taxable transfer, you have to make the following calculation: transfer price - (transfer price * total acquisition price / total portfolio value).
Now that we've listed the tricks to not having to pay taxes on cryptocurrencies, let's take a look at penalties for non-declaration Of your capital gains, income and digital asset accounts held abroad. 👇
Non-declaration of capital gains and income in crypto currency
If you don't declare your capital gains, income and digital asset accounts held abroad, you could face penalties! ⚠️
Non-reporting of digital asset accounts
In France, the declaration of your crypto accounts held outside France is mandatory.
➡️ If you do not comply with this obligation, the tax authorities may sanction you with administrative fines of up to 750€ per undeclared account.
In the case of proven tax fraud or concealed activities, the penalties can be even more severe, including imprisonment.
Non-declaration of taxable capital gains
In case of non-declaration of your taxable capital gains on your digital asset sales, the tax authorities may also impose financial penalties in the form of increases.
We recommend that you consult a tax expert to help you complete your tax return correctly. ✅
The sanctions you are exposed to
If you make an error or fail to report, you are subject to two types of penalties:
⚠️ 750e fine/per undeclared account + 125e/error.
➡️ If the undeclared account has a value of +50k in crypto: +1500e fineIn addition to the above, the taxpayer will be required to pay an additional amount of tax (10%/40%/60% or 80% based on a purchase price of 0e).
This may be classified as a misdemeanor (when done intentionally).
For tax evasion, you may incur :
- at most 3 million euros ;
- and 7 years in prison.
How far back can the tax authorities go?
In case of error, lack of declaration or control, the tax authorities can trace several years back and demand the documents/evidence, this is called thetax recovery" :
- 3 years in general ;
- 10 years old in case of suspicion of "occult" activities. ➡️ This happens in case of total absence of declaration, absence in the clerk's office of an undeclared activity or of an illicit activity.
⚠️ This applies to missing/erroneous declarations. It does not matter if the result is a plus or a minus, the obligation is the declaration and its absence will lead to the above consequences.
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These surcharges can vary depending on the severity of the omission and the cooperation of the taxpayer. It is therefore crucial to understand your cryptocurrency tax obligations and to comply with the rules established by the French tax authorities.
To avoid penalties for your loved ones, record information related to the management of your digital assets on Legapass. ✅
In conclusion, failure to report your cryptocurrency earnings and digital asset accounts held offshore can result in significant penalties. It is therefore essential to understand your tax obligations and to ensure that you comply with them.
With Legapass, you record your wallet and tax information to ensure a secure transmission of your data when needed.
⚠️ Without this information, your loved ones may never have access to your assets.