Capital gains, tax regime, status as a natural or professional person… The taxation of cryptocurrencies changed in France at the beginning of 2023.
Since January 1, taxation on cryptocurrencies has evolved along three main axes in France. Some provisions should make it easier for investors and even delight some.
The first change concerns capital gains on cryptocurrencies. Indeed, if an investor makes a taxable sale, he will have to declare it to the taxes. Among the taxable transfers, the transfers of cryptocurrencies against fiat currency (legal currencies such as the euro or the dollar for example) or the purchase of a good or service with a cryptocurrency stand out.
Until now, the French who made capital gains on cryptocurrencies in euros were subject to a specific regime. From 2019, in fact, capital gains exceeding 305 euros per year are subject to the single flat tax (PFU) (“flat tax”) of 30%, or 12.8% tax and 17.2% social deductions. This also applies to capital losses: if a user has lost money by selling cryptocurrencies, this must also be disclosed.
A choice in matters of taxation
But there has been a change since January 1st. Article 79 of the 2022 Finance Law provides that taxpayers “may choose to be taxed either at the flat rate of 12.8% or at the progressive income tax scale”, indicates the Ministry of Economy.
A choice that could prove interesting in certain cases. Therefore, if a person is not taxable, he would only have to pay 17.2% of social security contributions.
“And if (she) falls in the 11% bracket of the scale, (she) will only pay 28.2% in tax and social security contributions. As an added bonus, the CSG paid (9.2%) will be deductible from your taxable income to 6.8%, while that included in the ELT is not”, underlines an article Que Choisir cited by the ministry.
Individual and professional investors
The second change concerns the qualification of investors. Until now, some individuals who achieved significant capital gains could be considered professional investors, according to the criteria established by Bercy. The latter were then subject to the industrial and commercial profits regime (BIC), with a tax of up to 66.2%.
However, Bercy clarified the vagueness surrounding these qualifications. Thus, transfers “carried out on a non-professional basis will systematically fall under the ELT regime”, specifies the Ministry of Economy.
“If you sell cryptocurrencies as part of managing your private wealth, you will automatically fall under the ELT. It doesn’t matter if you sell on an occasional or regular basis, you will also be subject to this regime if you manage a large volume of transactions and large amounts”, underlines l ‘item.
Professional traders
Third change: professional traders’ earnings will be taxable as non-trading profits (BNC) and no longer BIC. They will thus be “subject to tax and social security contributions, after deduction of a 34% reduction (micro-BNC regime) or of the costs relating to the activity (controlled declaration regime)”.
On the other hand, there is no change on the side of capital gains made from cryptocurrency mining, which also falls under the BNC regime.
“The taxable income arising from such activity is determined in accordance with the common law rules applicable to non-commercial profits, it being understood that the purchase value used for the calculation of the taxable income is nil when the bitcoins have been allocated free of charge”, to the pursuant to article 92 of the general tax code.
To find out how to declare your capital gains, BFM Crypto has produced a detailed guide on this subject. Concretely, a user must track all cryptocurrency transactions made during the reporting year and be able to calculate the valuation of his or her wallets during the taxable transfer. Taxpayers can get help from tax specialists specializing in cryptocurrencies or private companies dedicated to this issue.