France Crypto Tax Guide 2023

Cryptocurrency is subject to Income Tax in France. The General Directorate of Public Finances has set out guidelines on how cryptocurrency buying, trading and mining is taxed. In this guide we take a closer look at how the crypto tax rules work to help occasional traders avoid notices, audits and penalties. We'll also explain how to calculate your crypto tax, the forms you need, and tips on how to reduce your tax bill.

This guide is regularly updated

One last thing before we start - the rules on crypto tax are in constant flux. At Koinly we keep a very close eye on the DGFiP's crypto policies and regularly update this guide to keep you informed and tax-compliant.

15 February 2022: Updated to include Dac8 directive for crypto assets.

24 May 2021: Welcome to your France cryptocurrency tax guide!

Yes, cryptocurrency is taxed in France

In France, cryptocurrency is viewed as a moveable asset by the General Directorate of Public Finances, or DGFiP. Capital gains from the disposal of movable assets (e.g. securities, bonds) are taxed as ordinary income.

You won't pay tax when you buy crypto, swap crypto for crypto, hold crypto, or move your crypto between wallets.

You'll only pay tax on crypto:

• If you convert your crypto into fiat currency.
• If the total gains from all disposals exceed €305 in one financial year.
• If crypto is acquired through mining, or any other form of labour

Income Tax in French is called impôt sur les plus values.

How is Cryptocurrency taxed in France

Cryptocurrency is taxed in the same way that movable property is taxed. How your crypto is taxed depends on whether you're an occasional investor, or a miner, or a professional trader.

As per the French tax authority, capital gains from the sale of digital assets, bitcoins or other cryptocurrencies, are taxed as:

• Occasional traders - Flat Tax of 30%
• Professional traders - BIC tax of 45%
• Crypto miners - BNC Tax of 45%

Occasional trader tax rate

Occasional traders must pay a type of Income tax called a Single Fixed Levy (PFU) or 'Flat Tax' as it's known in France. This is a flat rate because it does not take into account your tax bracket and your benchmark tax income.

The Flat Tax applies in particular to income from financial investments such as crypto, investment income like dividends, securities and life insurance.

The Flat Tax rate on crypto is 12.8% + 17.2 for social security contributions. This gives an overall tax rate of 30% in 2021.

High earners may also need to pay an exceptional income tax, at a maximum marginal tax rate of 4%.

The option for the income tax schedule

While Flat Tax is the default it is possible to opt for taxation at the progressive income tax scale. You will have to choose this option when filing your annual income tax return by checking box 20P of the 2042 return. This is a strategy best discussed with your accountant or financial advisor.

Crypto losses

Crypto capital losses can be applied to gains made in the same financial year. They cannot be carried forward.

No tax on crypto-to-crypto

In good news, France does not tax crypto-to-crypto trades.

Tax on crypto to fiat

Instead the DGFiP will only tax cryptocurrency when the crypto is converted into fiat currency if the overall capital gain exceeds 305€.

When will you not pay tax on crypto in France?

The sale of cryptocurrency for Euros or other legal currencies is what triggers a taxable event in France. Cryptocurrency owners who hold onto their crypto-assets without converting them into fiat currency therefore do not have to pay taxes.

Secondly, total capital gains, including those from crypto disposals, up to €305 per year are tax-free.

Crypto mining tax in France

In France, crypto mining falls under the regime of non-commercial profits (BNC), within the framework of article 92 of the general tax code. Mining profits attract a BNC Tax of 45%.

Crypto miners who raise turnover less than 70,000€ might be eligible for Micro BNC tax benefits.

The rules for commercial miners is different.

Tax deadline

The French tax year runs from 1 January to 31 December. Online reporting is possible from Thursday, April 8, 2021.

The reporting deadlines are set according to your department:

• May 26, 2021: departments 1 to 19 and non-residents;
• 1 June 2021: departments 20 to 54;
• June 8 2021: departments 55 to 976.

How to report crypto tax in France?

The DGFiP wants to know about gains made from crypto sales, crypto income and mining.

You'll need to declare this in your annual tax return - impôt sur le revenu(IR) - in the same way you need to report your regular income, net gains and net losses.

Once you, or your accountant have calculated your French crypto tax (we have an app for that!), the easiest way to file your taxes is online via your FranceConnect account.

In fact, the online income tax declaration is now mandatory for everyone. Only persons who are technically or otherwise unable to complete an online form may continue to submit a paper form.

In France, to report your crypto tax you'll need 3 forms to complete an individual tax return, attached to Form 2042:

Fill in Form 2042: Income Tax Return. Married persons file a joint tax return, with no option to file separately after the year of marriage or before the year of divorce. 

Attach to Form 2042:

1. Form 2086 to declare capital gains.
2. Form 2042 C to declare mining income.
3. Form 3916-bis to declare cryptocurrency accounts opened outside of France.

Form 2086

Taxpayers who declare capital gains need to attach an appendix: Form 2086 to Form 2042. Here you will list all the capital gains or losses realised during the financial year.

Note that form 2086 only allows for 20 itemised disposals. If you made more than 20 disposals, be it crypto or otherwise, navigating this limitation might be a challenge best left to your tax professional.

Download Form

Formulair 2086 (Appendix)

WHO NEEDS TO FILE THIS?

Any French resident who has earnt income or made capital gains from crypto.

WHAT INFORMATION IS NEEDED?

This form requires you to enter your crypto income tax information.

Formulaire 2042

Fill in line 3AN of Formulaire 2042 C in the event of an overall capital gain or line 3BN in the event of an overall capital loss.

Download form

Formulaire 2042 C

WHO NEEDS TO FILE THIS?

Anyone who has traded in cryptocurrency in the last financial year and made a capital gain or loss.

WHAT INFORMATION IS NEEDED?

This form requires you to enter all your crypto income totals (income and gains).

Formulaire 3916-bis
Individuals, associations and companies not having the commercial form domiciled or established in France are required to declare, at the same time as their income or income statement, the references of the digital asset accounts opened, held, used or closed with companies, legal entities, institutions or organizations established abroad.

Declare each foreign exchange using Form 3916-bis. Fill out a 3916-bis declaration by foreign exchange (if in 2020 you had 3 foreign exchanges, you will therefore have to fill out 3 3916-bis forms).

DOWNLOAD FORM

Formulaire 3916-bis

WHO NEEDS TO FILE THIS?
Anyone who has traded in cryptocurrency in the last financial year trading crypto for foreign fiat currency.

WHAT INFORMATION IS NEEDED?
Declaration of crypto currency accounts opened abroad: declare each foreign exchange.

What happens if you don't report your crypto activities?

Failure to report is punished with a fine of 750€ per unreported account, or 125€ for omission or inaccuracy, up to a limit of 10,000€ per declaration. These amounts of 750€ and 125€ are respectively increased to 1,500€ and 250€ when the value of the accounts exceeds 50,000€ at any time during the year.

Who can help you calculate your French crypto taxes?

Crypto tax reporting is fairly new, and a road less travelled for most accountants. That doesn't mean the taxman is going to cut you any slack. Here are 4 ways you can tackle your crypto taxes and keep in the General Directorate of Public Finances good books. We'll start with the easiest and most accurate method first.

1. Use a crypto tax calculator like Koinly to create a report of crypto activity. Send the report to your accountant to complete your tax return. Super accurate, super easy.
2. Use a crypto tax calculator like Koinly to create a report of crypto activity. Add the necessary data to your tax return and file it yourself. Accurate, and easy, if you know what you're doing.
3. Get your accountant to work out your crypto activity by supplying transaction histories, statements etc. Let them work it out and file for you. Not very accurate, lots of admin.
4. Work out your activity yourself, and file yourself. (Best of luck to you.)

Now that you know how to go about calculating and submitting your taxes, let's explore France's bitcoin & crypto tax rules in more detail.

How are cryptocurrencies taxed in France?

Here's a breakdown of the most common crypto scenarios and the type of tax liability they result in:

Taxable crypto scenarios

Tax Free crypto scenarios

Calculating your crypto taxes (example)

Let's look at how capital gains are calculated by way of an example.

1. Francois bought 1 BTC for 1000€ on 1st July 2020.
2. He traded it for 20 ETH on 5th July 2020. The market value of 20 ETH at this point was 1500€.
3. He also received 0.15 ETH (worth 10€) from Coinbase as a signup bonus.

To calculate the crypto taxes for Francois we are going to use Koinly which is a free online crypto tax calculator.

After entering the 3 transactions into Koinly manually, this is the output:

We can see the gain/loss on each transaction clearly. Navigating to the Tax Reports page also shows us the total capital gains.

As you can see, Francois will have a taxable capital gain of 500€ along with taxable income of 10€ from cryptocurrencies.

The good thing about crypto tax software is that whether you have 10 transactions or 10,000 - it is equally easy to generate your tax reports! You can sign up for a free Koinly account and view your capital gains in a matter of minutes.

Minimising Your Tax Liability

Deducting Trading Fees

The first step towards minimising your tax liability is ensuring that transaction and trading fees are recorded as part of your crypto's cost basis. Koinly does this automatically.

Holding crypto

You pay no tax if you hold your Bitcoin, Litecoin, Ether, Ripple, or other altcoins. It's only once your sell your crypto for any fiat currency that you will be taxed.

Lost, hacked or stolen crypto

If you lose your private key or your crypto is stolen, you may be able to claim a Capital Loss, although there is currently no crypto currency tax exemption on capital losses. If this ever changes, to claim a Capital Loss, you would probably be required to provide evidence such as:

• The wallet address that the key belongs to
• When you acquired the key and when you lost it
• The cost of acquiring the stolen/lost cryptocurrency
• The fact that the wallet was controlled by you
• The amount of cryptocurrency at the time that you lost the key
• That you possess the hardware where the wallet is stored
• The transactions to the wallet from an exchange which is linked to your identity

Bonus: Use cryptocurrency tax software to automate your reports

While the task of preparing your crypto taxes can seem quite daunting - especially if you traded on multiple exchanges - there are tools like Koinly which can make your life really easy.

Here's how it works with Koinly so you can see for yourself:

Step 1: Connect your exchanges and wallets

Most exchanges have API's that can allow Koinly to download your transaction history automatically. You can also import CSV or excel files with your transaction history if you prefer that (or if your exchange does not have an API).

Step 2: Preview your capital gains

Koinly does a number of things under the hood in order to calculate your capital gains and income.

First it fetches the market rates at the time of your trades, then it matches transfers between your wallets and exchange accounts and finally it calculates your capital gains.

The default cost basis in France is the Weighted Average Acquisition Price (PMPA).

All this is automated so the only thing you have to do is head over to the Tax Reports page to see a summary of your gains:

Note that you can also use the Dashboard to stay on top of your taxes as you carryout trades. This can help you make good tax-friendly trades and avoid surprises at tax time! It also helps with record-keeping.

Step 3: Download your tax reports

The final step is to download your tax reports. The tax report you want is called the Complete Tax Report.

The information on this website is for general information only. It should not be taken as constituting professional advice from Koinly. Koinly is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. Koinly is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.