decryption of its tax system!

If you have ever dabbled in cryptocurrency, you should definitely know that its digital assets can generate big gains. These benefits are, of course, subject to a tax system.

the taxation system applied to virtual currencies depends on the activity in question. For example, if you have generated a capital gain on the sale of cryptocurrencies, the tax regime applied will not be the same as if you lend yourself to crypto mining.

Here’s everything you need to know about the different taxation systems applied to any activity related to cryptocurrencies! Read all to understand!

The tax regime specific to the sale of cryptocurrencies!

If you have gotten into cryptocurrency trading, selling and trading digital assets, it is normal that your profits will be subject to a taxation system.

Any capital gain realized on the cessation of digital assets is subject to taxation at the BIC, an acronym for “Industrial and Commercial Profits”, according to the 2019 finance law.

For calculate your tax, it is the lowest capital gain of the year on the cessation of cryptocurrencies that is taken into account. If the latter is greater than €305, the sum of the profits must be subject to the single flat-rate deduction, i.e. an overall tax of 30% which includes:

  • 17.2% social security contributions;
  • 12.8% “income tax” levy.

To do this, you must complete form 2086 available on the government site “Impot.gouv”, declaring, on an annual basis, your income (capital gains or losses) realized on the sale of digital assets.

Note that only the cessation of Bitcoin, which is done in return for a legal fiat currency, is subject to taxation. If you exchange your cryptocurrency for another cryptocurrency, it is not taxable. On the contrary, everything profit made from occasional use of cryptocurrency is not systematically taxable.

The tax regime linked to cryptocurrency mining!

Mining is a key activity for generating cryptocurrency. This process has nothing to do with digging up dirt to extract treasure. This term refers more to the fact of creating new virtual units that can buy, sell or trade other users.

Mining still requires state-of-the-art computer equipment and a lot of energy, but the main advantage of this activity is that it generates profits.

Mining is considered againful professional activity whose tax classification falls under the BNC taxation “Non-commercial profits regime”, according to the General Tax Code. If you carry out this activity on a regular basis, you will need to have self-employed status to be in good standing vis-à-vis the law.

If you mine cryptocurrency, you will also have to file an income statement each year, highlighting the profits from this non-commercial activity. When Bitcoin units are awarded for free through mining, thetax is zero!

To emphasize that taxable profits from from mining are calculated from your overall turnover. If you can’t find your way between your cryptocurrency-related activity and your taxes, know that there are some simulation sites that will allow you to make a quick and free estimate of the overall cost that will be taxable to you!

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