Are cryptocurrencies taxable?

This question is attracting growing interest as more and more people get involved in the world of crypto-currencies, known as crypto-assets or digital assets, as the ACPR officially calls them. 

Historically, there have been debates and controversies about how to treat cryptocurrencies fiscally in France. Initially, cryptocurrencies were considered virtual assets with no tax value. Over time, many countries, including France, recognised that cryptocurrencies could generate capital gains and introduced tax regulations to regulate them. 

Taxation of cryptocurrencies in France 

According to the French tax authorities, cryptocurrencies are considered to be movable property and are therefore subject to capital gains tax. This means that when you sell cryptocurrencies, you may be subject to tax on the profits made. The tax regime depends on whether your transactions are occasional or regular. 

Taxation on capital gains from the sale of cryptocurrencies: 

LCapital gains from the sale of digital assets, such as bitcoin or other cryptoassets, are taxed as industrial and commercial profits (BIC), if the sales are made on a regular basis. For private individuals, gains made on an occasional basis from the sale of crypto-currencies are taxed accordingly. 

Under Article 150 VH bis of the French General Tax Code, the overall capital gain made during the year is taxable if the total of sales exceeds a specified amount. Gains are subject to a single flat-rate levy, comprising a percentage for income tax and a percentage for social security contributions. 

Transfers for legal tender and purchases of goods or services are also taxable. This means that when you sell your cryptocurrencies against an official currency, such as the euro, or when you use your cryptocurrencies to buy goods or services, these transactions are considered taxable. You must therefore declare these transactions and include them in your tax return. 

Taxation of cryptocurrency mining activities: 

Under article 92 of the French General Tax Code, cryptocurrency miningProcess allowing to solve a mathematical or computing challenge imposed by a blockchain’s Proof of Workconsensus. Mining activity requires a variable calculation power depending on the blockchain’s algorithm alongwith difficulty is subject to the non-commercial profits regime (BNC). The taxable income from this activity is determined in accordance with the rules of ordinary law applicable to non-commercial profits. If cryptocurrencies have been allocated to you free of charge, they are not taxable. 

To declare your cryptocurrencies correctly, it is essential to keep an accurate record of all your transactions, including purchases, sales and exchanges. You’ll also need to keep evidence of your transactions, such as account statements and trade confirmations. It is advisable to consult a tax expert and refer to the tax authorities’ guidelines to ensure that you declare your cryptocurrencies correctly, in accordance with the latest provisions in force. 

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