Since 2019, the tax regime applicable to the sale of digital goods is as follows: profits from the sale made by natural persons in France are subject to a specific tax regime: a rate of 12.8% plus social security contributions. This regime applies only to transactions involving the conversion of digital assets into legal tender or the purchase of goods or services with digital assets, and not to exchanges of digital assets without compensation.
This regime does not apply to natural persons who regularly buy and resell digital goods, as this is a commercial activity and the income must be declared in the industrial and commercial profits (BIC) category.
Definition of habitual or occasional exercise
The criteria for the regular or occasional exercise of the activity are determined on a case-by-case basis according to the circumstances of each operation. Casual mining earnings acquired for free in exchange for participation in the operation of the system are taxed at the progressive income tax scale in the non-commercial profits (BNC) category.
New qualifying criterion for earnings from 2023
Since 2023, capital gains realized by natural persons domiciled in France on the sale of digital assets (e-currencies, tokens, contracts) are taxable in France. However, digital asset donations are not subject to capital gains tax. This means that a donation of digital assets is not subject to tax.
Tax deduction for exchanges without compensation
Uncompensated exchanges between digital assets are not taxed immediately. Such exchanges are considered filler transactions and are therefore subject to tax deferral. This means that if you trade one digital asset for another digital asset, you do not have to pay taxes immediately on the value of those digital assets.
However, your tax exemption ends when you sell these digital assets for cash or for a good or service. At that time, you will have to pay taxes on the capital gain realized on this sale.
Annual tax threshold set at 305 euros
The annual tax threshold for capital gains realized on the sale of digital assets is set at €305. Taxpayers who make sales of digital assets for a total amount of less than €305 are exempt from tax on those sales. If this threshold is exceeded, the capital gain is taxable starting from 1 euro.
Summary of the main tax changes in 2023:
- The habitual character becomes a professional character;
- Recurring transactions will no longer be taxed in BIC but in BNC;
- Possibility to opt for the progressive IR scale in case of occasional sales;
- The changes concern operations carried out from 01 January 2023.
Finally, covered digital assets include electronic currencies, tokens, contracts, and other digital assets governed by the Monetary and Financial Code. These assets can include cryptocurrencies such as Bitcoin or Ethereum, as well as non-fungible tokens (NFTs) used in decentralized applications (DApps) and digital marketplaces.
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