Cryptocurrency transactions are subject to Income Taxes in France. The General Directorate of Public Finances (DGFiP) has set out strict guidelines on how cryptocurrency buying, trading and mining is taxed. This guide breaks down everything you need to know about personal-level crypto taxes and how you can avoid notices, audits and penalties later on. We'll also explain how to calculate your crypto taxes, 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.
First Published 24 May 2021: Welcome to your France cryptocurrency tax guide!
How is Cryptocurrency taxed in France
In France, cryptocurrency is viewed as movable property by the Direction générale des Finances publiques, or DGFiP . This means that cryptocurrency sales, transfers and income from mining are all taxable. How your crypto activities is taxed depends on whether you're an occasional investor, or a miner, or professional trader.
Non-professional, or 'occasional' traders must pay a type of capital gains tax called a Single Fixed Levy (PFU), of 'Flat Tax' as it's known in France.
Occasional trader tax rate
In France the Flat Tax realised by individuals during an occasional sale of cryptocurrencies is liable to income tax at the rate of 12.8% (to which is added social security contributions at the rate, to date, in May 2021, 17.2%).
This gives an overall tax rate of 30% in 2021.
Crypto gains cannot be offset
The bad news? Crypto gains cannot be offset by related business expenses: without the possibility of tax deduction, nor of abatement, nor of progressive scale taxation, nor of deduction or carryforward of loss over the following year.
No tax on crypto-to-crypto
In good news, France does not tax on crypto-to-crypto trades. Instead the FDGFiP will only tax cryptocurrency gains when they’re converted into fiat currency.
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.
The way you trade cryptos is crucial
There appears to be a different tax treatment for occasional cryptocurrency investors and those for whom cryptocurrency investing or dealing is their professional activity.
- Occasional traders - flat tax of 30%
- Professional traders - BNC or BIX tax of 45%
- Crypto miners - BNC or BIX tax of 45%
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 for occasional traders. Cryptocurrency owners who hold onto their crypto-assets without converting them into fiat currency therefore do not have to pay taxes.
You won't pay tax on crypto gains:
- If you trade, swap or sell crypto, for more crypto.
- If the sum of the transfer prices does not exceed 305€.
So when might you pay tax?
Since January 1, 2018, the global value added of all taxable operations realised by non-professional cryptocurrency investors during the year is subject to a flat tax of 30%. The sale of cryptocurrency for euros or other legal currencies is the operation that generates the obligation to pay tax.
You'll only pay the tax on crypto:
- If you convert your crypto into fiat currency.
- If the value of the conversion exceeds 305€.
What category of tax will you pay if you need to?
When private individuals sell crypto for fiat, the type of tax they'll need to pay is income tax.
Individuals who are engaged with crypto mining and gain on the sale of crypto currencies obtained by mining activities will fall under the BNC tax regime.
Professional traders will need to declare under the BIC tax regime.
How mining crypto in France attracts tax
Cryptocurrency miners are taxed differently according to whether their revenue is above or below 70,000€ (approximately US$85,000). If their revenue for a given year is no more than 70,000€, they are simply taxed according to the income tax scale, but after a flat 34% abatement.
For example, if a miner receives 50,000€ in a cryptocurrency for his or her mining activities, he or she will be taxed only on the basis of 33,000€ after the abatement is applied.
If a cryptocurrency miner’s revenue is above 70,000€, he or she no longer qualifies for the flat abatement and must instead itemize deductions. Furthermore, he or she is not taxed according to the income tax scale, but according to the corporate tax scale.
In either case, for tax purposes, the cryptocurrency mined is valued at the point in time when the miner receives it. However, if the cryptocurrency is not immediately converted into fiat currency, any value added may be taxed later when it is converted.
How will the DGFiP know about crypto accounts?
If you have an account with a European digital currency exchange, then it's likely that the Direction générale des Finances publiques already has your data.
When the European Union’s Sixth Anti-Money Laundering Directive comes fully into force on June 3 2021, every company that provides financial services to cryptocurrency customers and businesses will have to comply with much tougher regulations about when and how they identify customers. Data is made available between EU member states in a bid to stamp out money laundering and illegal activities.
Tax deadline - 26 May - 8 June 2021
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 should you report your crypto tax in France?
The Directorate General of Public Finance wants to know about your crypto activity in terms of income and profits made from crypto trades, swaps and sales. 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, gains and losses.
Once you, or your accountant has 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:
- Form 2086 to calculate the taxable capital gain.
- Form 2042C to declare mining income.
- Form 3916-bis to declare crypto currency accounts opened outside of France.
To your annual income tax declaration form (Formulaire 2042) you must attach an appendix: Form 2086. Here you will list all the capital gains or losses realised on the occasion of each taxable sale made during the financial year.
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.
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.
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).
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).
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.
It's advised to keep records
Most tax offices around the world require residents to keep detailed records of cryptocurrency transactions for 5 years. France is no different. It's advisable to keep the following records:
- the date of your crypto transactions
- the value of the cryptocurrency in Euro at the time of the transaction (which can be taken from a reputable online exchange.)
- what the transaction was for and who the other party was (even if it’s just their cryptocurrency address).
Koinly can help with record keeping. By synching your wallets and exchanges to your Koinly account you will have one central dashboard from where to record and view all of your crypto activity. Portfolio tracking is available on a FREE Koinly plan.
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.
- 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.
- 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.
- 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.
- Work out your activity yourself, and file yourself. (Best of luck to you.)
How to use a crypto tax app like Koinly to calculate your French tax
Don't get stuck in the busywork. Don't get it wrong. Don't rely on your accountant to know where to look. Use Koinly. Here's how easy it is:
- Sign up for a FREE account.
- Select your base country and currency.
- Connect Koinly to your wallets and exchanges. Koinly integrates with Binance, Bitwala, CoinSpot, CoinJar, Kraken, Swyft, and 300+ more. (See all)
- Let Koinly crunch the numbers. Make a coffee.
- Ta-da! Your data is collected and your full tax report is ready!
- To download your crypto tax report, upgrade to a paid plan from $49 per year.
- Send your report to your accountant, or complete your tax submission yourself, using the figures from your Koinly report.
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 summary of how your crypto activity is likely to be viewed by the DGFiP:
- Tax type 1: Income tax: selling crypto to fiat for more than €350, fiat income from crypto mining, exchanging crypto for Euro.
- Tax type 2: Tax free crypto events include: getting paid in Bitcoin, buying cryptocurrency, selling or swapping crypto for crypto, selling Crypto to fiat for under €350, getting paid in crypto, paying for stuff with crypto, gifting crypto to friends & family, moving crypto between wallets, token address changes, crypto income from crypto mining, stablecoins.
Here's a breakdown of the most common crypto scenarios and the type of tax liability they result in:
Tax Type 1: Crypto income tax
Cryptocurrency interest income, staking income, mining income, airdrops and hard forks are taxed as income only when the crypto is exchanged for any fiat currency, and the value of the exchanges exceeds 350€.
Selling crypto over 350€
In France, crypto income is only taxed when a) the crypto is exchanged for any fiat currency, and b) of the value of that exchange is greater than 350€.
Marcine buys 0.1 Bitcoin in July 2019 for 1,000€ and exchanges it in August 2019 for 1,800 worth of Euro. As she has sold her crypto for fiat, and the profit exceeded the 350€ tax-free cap, Marcine has effectively added 800€ to her annual income. She will be taxed on this gain, according to her income tax bracket.
Exchanging crypto for Euros or other FIAT currency
Converting cryptocurrencies into fiat currencies (e.g. Euro or USD) or into other cryptocurrencies is regarded as a sale.
Futures / contracts / options trading with crypto
In futures trading, you are not actually buying or selling any crypto. Instead you are speculating on the rise or fall of the price of a crypto asset in the future. When the future arrives you will either make a profit or a loss (P&L).
Note: If you are using Koinly to calculate your taxes then you can control how the P&L is taxed on the Settings page.
Tax Type 2: Tax Free crypto activity
The major thing to remember is that crypto trades are tax free under 2 conditions: when the trade is crypto to crypto, and when a trade price is less than 305€.
Getting paid in Bitcoin
Whether you are freelancing or working for a company that pays employees in crypto, in France you won't be taxed on receiving crypto asa salary or payment.
You will only be taxed if, or when, you exchange your crypto for any fiat currency.
Like in most parts of the world, there are no taxes on buying or hodling cryptocurrencies in France. However, keeping accurate records of the purchase is very important so that you can calculate the cost basis of the transaction when you decide to sell or 'dispose' of your crypto.
Koinly is not just a crypto tax calculator but a crypto portfolio tracker too - the perfect tool to keep a hold on your crypto purchase and sale dates.
Selling or swapping crypto for crypto
Tax is only applied to crypto trades once the crypto is sold for fiat. All other activities are tax free.
In January 2019, Pierre buys 10 ETH for an amount of € 1,300. His portfolio in January 2019 = 10 ETH.
In May 2019, he exchanged 5 ETH for 10 BTC. This transaction is considered interim and is therefore not taxable.
In May 2019 his portfolio = 5 ETH / 10 BTC. In 2019, he has no tax declaration to make related to his income
Selling Crypto to fiat for under €350
In France, if you sell bitcoins or any other cryptocurrency for any fiat currency, AND, the sales does do not exceed 350€, the trade is tax exempted.
Paying for stuff with crypto
Buying goods and services with crypto is not taxable in France, as the taxable event is only when crypto is sold for any fiat currency.
Gifting crypto to friends & family
Giving Bitcoins or other cryptos to your family or friends as a gift is regarded as any other gift in France. The activity is only taxable once the recipient exchanges the gifted crypto for Fiat.
As the giver, you will pay no tax in this scenario.
Transferring crypto between own wallets
Moving crypto between different wallets or accounts is not a taxable event and doesn't trigger income tax. Having said that, it's important to keep track of these movements. Try an automated crypto tax software like Koinly to keep track of your cost-basis.
Let's say Sam buys 4LTC for 1000€ on Coinbase. She later moves the funds into her private LTC wallet. A few days later she transfers the LTC from her private wallet to her Binance account and sells it for 2000€, making a profit of 1000€.
If Sam wants to use Koinly to generate her crypto tax report, she will have to connect all three wallets. If she doesn't sync her private wallet but only syncs the Coinbase and Binance account, Koinly won't be able to identify that the funds she transferred into her Binance account are the same funds she purchased on Coinbase. However, once Sam adds her private wallet address, Koinly can match the transfer by tracing it from Coinbase to her wallet and then from her wallet to Binance. This will help in producing an accurate tax report.
If she no longer has access to her private wallet, she will have to make some manual changes using the Koinly web interface. She will have to mark the transfer from Coinbase as Ignored so that Koinly doesn't realize gains on it and she doesn't have to pay taxes twice. She would then change the value of the incoming transaction to Binance to match the cost-basis of the outgoing transaction from Coinbase.
Trading with stablecoins
A stablecoin - like TrueUSD or EURB, is simply a class of cryptocurrency that offers price stability. That's because stablecoins are backed by a reserve asset, usually a stable fiat currency like USD or EUR. The sale of a stablecoin will attract tax if the value exceeds
There is no major advantage or disadvantage between trading with fiat and trading with a stablecoin when it comes taxes. Like with all disposals, stablecoins will attract tax only if they are traded for fiat, and if the profit realised exceeds 350€
Interest from DeFi / Lending / Masternodes
Lending your cryptocurrency and getting interest on the same generates taxable income. This income wont be taxed unless the crypto is disposed within 10 years of purchase.
Token address change / mainnet launch
When a cryptocurrency changes its underlying tech for ex. when EOS went from the ETH blockchain to the EOS mainnet or when DAI changed its contract address and named the old coin SAI - there are no tax liabilities.
Calculating your crypto taxes (example)
Let's look at how capital gains are calculated by way of an example.
- Francois bought 1 BTC for 1000€ on 1st July 2020.
- He traded it for 20 ETH on 5th July 2020. The market value of 20 ETH at this point was 1500€.
- 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.
Accounting methods used in the calculations
To include the income from your bitcoin sales in your tax return, you can use the FIFO method. This means that you first sell the bitcoins that you bought first.
Minimising Your Tax Liability
Deducting Cryptocurrency Losses & Trading Fees
The first step towards minimising your tax liability is figuring out what losses and expenses you can offset against your taxable income.
You pay no tax if you hold your Bitcoin, Litecoin, Ethereum, Ripple, or other altcoins. It's only once your sell your crypto for any fiat currency that you will be taxed.
Hacked or stolen cryptocurrency
However, you should record any losses as you can set off these losses with any future crypto profits within one year. In order to claim this loss, you need to be able to provide certain evidence. This includes:
- 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 whet exemption rules don't apply to the capital gains made on disposal of mined cryptocurrency.
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. You can easily configure the accounting method used for the gains (it supports FIFO, LIFO, HIFO, Spec ID and a number of other methods). The default in France is FIFO.
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.