Who says crypto, says tax declaration. Taxpayers who sold digital assets in 2023 must inform the tax authorities when filing their 2023 income declaration, which they must complete at this time. But be careful: even if you have not made a sale this year, certain information must be declared, particularly in the case of an account held abroad.
Do you hold digital assets and are struggling to navigate your 2024 tax return on 2023 income?
From a tax point of view, cryptocurrencies live up to their name. And for good reason: the tax authorities do not consider them as currencies, but like investmentswhich is not without tax consequences.
In fact, when you make a capital gain Following the sale of your bitcoins or your ethers, three possibilities are available to you. If you bought a material good with your cryptos, or if you exchanged your cryptos for euros, you must pay tax, beyond a certain amount. Capital gains made by individuals when selling cryptocurrencies, are exempt from tax if the total transfers in the year are less than 305 eurosrecalls article 150 VH bis of the general tax code.
Tax 2024: this new box to check to avoid a surcharge on your bitcoins and other cryptocurrencies
Beyond that, two choices are available to the taxpayer. The single flat rate levy (PFU), or flat tax, i.e. 12.8% taxes and 17.2% social security deductions. Since January 1, 2023, as provided for in article 79 of the finance law for 2022, it is possible to choose the progressive scale of income tax. An interesting change for taxpayers with little or no tax. Let’s take the example of a taxpayer who is not taxable in normal times: in the event of a capital gain during a sale of cryptoassets, the latter can today only pay the 17.2% social security contributions. But to do this you will need to remember to check the 3CN box in your declaration.
To note: Some trading sites offer exposure to cryptocurrencies through derivative products, called CFDs. In this case, you do not own the cryptocurrency itself. You hold a contract which gives you the difference between the price of the crypto at the end of the contract and that at the time of purchasing the derivative. If the crypto has lost value in the meantime, you lose the difference. These derivative products are taxed in the same way as shares held in a securities account.
On the other hand, if you have made a capital gain during an operation from one crypto to another crypto, you are not subject to tax. Only capital gains in euros will be taken into account by the tax authorities. To protect their gains from high volatility, some savers choose to convert them into stablecoins, cryptos which have the particularity of being stable, because they are indexed to a traditional currency, such as the dollar.
Tax: how to prevent your bitcoins from being taxed
But then, how do you know what you need to declare? We’ll explain it to you.
step 1: declare your accounts
Cryptocurrency is a global market. If there are platforms and brokers made in Francemany investors go through foreign platforms and intermediaries, such as Binance, Kraken, Coinbase, Bitpanda… Whether or not they have resold crypto in 2023, crypto-savers must report the accounts held to the French tax authorities, used or closed abroad during the year 2022. To do this, complete document 3916-3916bis. A declaration must be completed for each foreign account you hold. On form 2042, there is also an action to take in the case of foreign accounts opened, held, or closed last year, namely to check box 8UU. On the other hand, accounts held on French platforms, such as Coinhouse or Paymium, are automatically declared.
Step 2: calculate the net gain
If you sold digital assets in 2023, the first step to reporting income from these sales is calculate the added value or the total loss in value over the year 2023. To do this, you must complete a specific document, the form 2086.
And the calculation is not so obvious, because, unlike traditional investments, the capital gain is not strictly speaking obtained by subtracting the capital losses from the gains. The exact formula to apply is:
Capital gain or loss = sale price total acquisition price x (sale price/overall value of the portfolio).
Let’s imagine that you acquired bitcoin for 1000 euros. A few months later your portfolio is valued 5000 euros. You decide to sell some for a value of 2000 euros. Result, your added value will be: 2000 1000 x (2000/5000) = 1600 euros.
The problem? This is because you must repeat this operation for each new transfer of assets carried out during the year. In other words, if you carried out 1 crypto-euro arbitrage per week in 2023, you must now carry out 52 calculations. And to make matters worse, form 2086 only includes 5 boxes…
By adding all these capital gains (and capital losses if the resale price is lower than the purchase price), you obtain the amount reported on your main income tax return (the usual form 2042).
Step 3: fill in the boxes
In the event of a net gain, the added value is entered in the box 3AN. Unless it is lower 305 euros. In this case, you are exempt from taxes, and box 3AN must remain empty, in accordance with article 150 VH bis of the general tax code.
To prove that you are within your rights, filing declaration 2086 remains necessary. In the event of losses, the amount of your total loss is indicated in the box 3BN. the current time, this capital loss cannot be carried forward over the following years, as may be the losses on transferable securities.