Capital gains, tax system, qualification as a private person or professional… Taxation of cryptocurrencies was changed in France at the beginning of 2023.
Since January 1, taxation of cryptocurrencies has developed on three major axes in France. A few provisions should make it easier for investors, and even please some.
The first change concerns capital gains on cryptocurrencies. In fact, if an investor makes a taxable sale, he must declare this for tax. Among the taxable transfers, we distinguish between transfers of cryptocurrencies against fiat currencies (legal currencies such as the euro or dollar) or the purchase of a good or service with a cryptocurrency.
Until now, French people who made capital gains on cryptocurrencies in euros were subject to a specific regime. In fact, since 2019, capital gains exceeding 305 euros per year are subject to a single flat tax (PFU) (“flat tax”) of 30%, i.e. 12.8% tax and 17.2% social deductions. This also applies to price losses: if a user has lost money selling cryptocurrencies, this must also be disclosed.
A choice in taxation
But there has been a change since January 1. Article 79 of the Finance Law for 2022 provides that taxpayers “can choose to be taxed either at the flat rate of 12.8% or at the progressive income tax”, the Ministry of Economy states.
A choice that could prove interesting in certain cases. If a person is not liable for tax, he thus only has to pay 17.2% in social security contributions.
“And if (she) falls within the range of 11% of the scale, (she) will bear only 28.2% of tax and social security contributions. Additional benefits, the paid CSG (9.2%) will be deductible from your income, that is taxable at 6.8%, while what is included in the PFU is not”, underlines an article Que Choisir cited by the ministry.
Individual and professional investors
The second change concerns the qualifications of investors. Until now, some individuals who achieved significant capital gains could be considered professional investors according to criteria set by Bercy. The latter was then subject to the Industrial and Commercial Profits Scheme (BIC) with a tax rate of up to 66.2%.
However, Bercy has clarified the vagueness surrounding these qualifications. Transfers “carried out on a non-professional basis will therefore systematically fall under the PFU scheme”, clarifies the Ministry of Economy.
“If you sell cryptocurrencies as part of the management of your private wealth, you automatically fall under the PFU. It does not matter whether you make sales occasionally or regularly, you will be subject to this scheme, even if you manage a large amount of transactions and large sums”, the article underlines.
Third change: Professional traders’ earnings will be taxable as non-trading profits (BNC) and no longer BIC. They will thus be “subject to the tax scale and social contributions less a reduction of 34% (micro-BNC scheme) or costs related to the activity (controlled declaration scheme)”.
On the other hand, no change on the side of the capital gains of cryptocurrency mining, which also falls under the BNC regime.
“The taxable result of this activity is determined in accordance with the general rules applicable to non-commercial profit, specifying that the acquisition value used for the calculation of the taxable result is zero when bitcoins have been freely allocated per fee”, according to Article 92 of the General Tax Act.
To find out how to declare your capital gains, BFM Crypto has created a detailed guide on this topic. Specifically, a user must follow all transactions in cryptocurrencies carried out during the declaration year and be able to calculate the valuation of his portfolio or portfolios during the taxable transfer. Taxpayers can get help from tax specialists specializing in cryptocurrencies or private companies dedicated to this issue.