What should we do if we acquired Bitcoin, Ethereum, Solana occasionally? Do we have to pay taxes and in what form? As we will see here, the obligation to declare is without appeal and the arsenal of sanctions in the event of forgetting may surprise…
If the industry cryptocurrency may seem young, legislators have been quick to take an interest in the tax issues relating to these new currencies. And they were quick to decree that it was necessary to declare the capital gains realized and to establish levels of taxation.
In France, the choices made by the National Assembly may surprise in more ways than one. The taxation applied to the cryptocurrency sector is complex, sometimes nebula and let’s be honest, somewhat anxiety-provoking, because the penalties provided for seem excessive. In addition, estimating exactly what to declare and how to declare it is sometimes far from straightforward. Fortunately, if you fall into the category of “occasional” users, which you probably are, the procedure is relatively simple.
The regime in force in 2022 is the result of a finance law of December 28, 2018. The rules for individuals have been set out in the General Tax Code, in article 150 VH bis. It turns out that all tokens that we can hold are a priori concerned, not only the Bitcoin.
Be aware, however: the declaration must relate only to the capital gains realized between the purchase and the sale of an asset. digital. We will come back to this in more detail.
The tax system
The first point to be determined is that of the regime to which one belongs.
- Capital gains realized on an irregular, non-systematic basis are considered to be an “occasional” activity.
- Capital gains resulting from a purchase activity with a view to resale of crypto-assets are considered as a semi-professional activity and as such subject to the BIC (industrial and commercial profits) regime.
- The fact of carrying out a large number of transactions of purchase and resale of cryptocurrencies, analogous to stock market transactions, and of realizing major capital gains will lead to a qualification of “professional”. This activity is subject to a particularly excessive tax rate in France, with a rate of up to more than 65% of the capital gain.
- The case law of the Council of State of April 26, 2018 decreed that the revenue from mining were taxed as BNC (non-trading profits) at the rate of 17.2%.
The main concern is that there is no precise criterion concerning these various levels of activity and that a part may therefore fall under the assessment of the tax administration.
Current system for the “casual trader”
In this article, we will deal first and foremost with the most common case: that of the “occasional” user. Is considered as such any person who has been able to buyEthereumBitcoin, Terra Luna, Tezos, from a trading platform like Kraken, Binance, Coinbase, elToro… The user therefore bought from a traditional currency (known as “Fiat”) such as the euro or the dollar.
The occasional user must declare the capital gains realized in two cases:
- He has reconverted all or part of his cryptoassets into fiat currency (or Fiat). For example, the occasional trader had bought 2 ETH in January 2019 using his bank card and then resold 1 of these ETH and recovered the equivalent in euros in November 2021, in order to benefit from the rise in the price of ETH. He must therefore declare the corresponding capital gain.
- He bought a good or a service via a payment in cryptocurrencies and realized a capital gain in the process. For example, the purchase of a reader Blu-Ray in ETH allowed him to make a nice saving because the price of ETH had risen sharply in the meantime.
We have here amounts that are easier to state than to calculate, you might say. In fact, some trading platforms offer to help the taxpayer by generating the appropriate reporting. It is for example the case of Coinbase.
30% capital gains tax
Under the regime in force in 2022, “occasional” capital gains are subject to the following deductions:
- a 12.8% income tax levy;
- a social levy of 17.2%.
That is a total of 30% on capital gains. This rate is commonly referred to as the flat tax. It should be noted – and deplored – that this rate is much higher than in other European countries. Thus, Germany, Belgium, Switzerland and Portugal practice – sometimes under certain conditions such as a duration minimum holding – taxation equal to 0% on these same capital gains! How to understand such a disparity? By the fact that the aforementioned countries are keen to attract crypto investors. It can be deplored that one and the same momentum is not present in France.
A reporting obligation
The “occasional trader” is required to declare all the accounts he may hold on exchanges (trading platforms) such as Binance or Coinbase. The declaration form for capital gains in cryptoassets is the Cerfa 2086. For accounts opened abroad, the form is 3916 bis. It should be noted that the individual must keep the supporting documents ad hoc in order to be able to produce them in the event of a request from the tax authorities.
Exoneration
No amount is to be declared if the amount of the transfers in cryptocurrencies did not generate a capital gain greater than or equal to 305 euros.
Only here, it will be necessary to list all of its assets and calculate if the total of the capital gains realized here or there exceeds this amount of 305 euros while taking into account the variation of the courses at various times. Suffice to say that the operation will sometimes be a puzzle.
What about capital losses? Can they be deducted from the realized capital gains? Yes, over the past year. That being said, if the whole of the operations results in an overall capital loss, this will have no tax reducing effect.
Of course, no declaration of capital gain is necessary if the cryptoasset has not been converted into euros (or other fiat currency). So crypto-to-crypto transactions are not taxable in 2022. And similarly, if you haven’t made a purchase from a crypto wallet, there’s nothing to report.
However, even in this case, it will be necessary to inform the tax authorities of the accounts held on exchanges or on cold wallets (storage of a private key on a sheet or a key USB) for the entire tax household.
An evolution towards the progressive scale
An evolution is planned from 1er January 2023 (article 19 of the 2022 finance law). It opens up the possibility of subjecting the capital gain to the progressive scale of income tax. Thus, a single taxpayer with a taxable income of less than €25,710 will have an interest in opting for such a system, because the capital gains realized will then be taxed at a rate of 0 or 11% depending on the volume income (17.2% including social security contributions).
Penalties
The penalties applied in the event of an oversight or error are significant. Let’s take a closer look:
- failure to declare may result in a fine of €750 for each account or transaction concerned (article 1736 of the CGI);
- if this absence of declaration concerns capital gains from the sale of assets, an increase of 80% of the amounts not declared or erroneous may be applied;
- an omission or error in a declaration may render the taxpayer liable to a fine of €125.
It is to be hoped that these modalities will be both simplified and softened over time.
Interested in what you just read?