everything that changes since the beginning of January

Capital gains, tax regime, qualification as an individual or professional… Cryptocurrency taxation changed in France in early 2023.

Since January 1st, the taxation of cryptocurrencies in France has evolved along three main axes. A few provisions should make it easier for investors and even please some.

The first change concerns capital gains from cryptocurrencies. This is because if an investor makes a taxable sale, he must claim it for tax purposes. Among taxable transfers, we distinguish transfers of cryptocurrencies against fiat currency (legal currencies such as euros or dollars) or the purchase of a good or service with a cryptocurrency.

Until now, French people who made capital gains from cryptocurrencies denominated in euros were subject to a specific regulation. Since 2019, capital gains exceeding EUR 305 per year are subject to the unified flat tax (PFU) (“Flat Tax”) of 30%, ie 12.8% tax and 17.2% social deductions. This also applies to capital losses: If a user has lost money when selling cryptocurrencies, this must also be declared.

A choice in taxation

But since January 1st there has been a change. Article 79 of the Finance Law of 2022 provides that taxpayers “can be taxed either at the flat rate of 12.8% or at the progressive income tax rate,” according to the Economy Ministry.

A choice that could prove interesting in certain cases. So if you are not liable for tax, you should only pay 17.2% social security contributions.

“And if (she) falls in the 11% category of the scale, (she) pays only 28.2% of taxes and National Security. Added benefit, the CSG paid (9.2%) is deducted from your income as of 6.8 is taxable %, while that included in the PFU is not,” stresses an article Que Choisir cited by the ministry.

Private and professional investors

The second change concerns the qualifications of investors. Previously, some individuals who made significant capital gains could be considered professional investors under the criteria set by Bercy. The latter were then subject to the Industrial and Commercial Profits Scheme (BIC) with a tax rate of up to 66.2%.

However, Bercy has clarified the vagueness of these qualifications. Therefore, transfers that “are not carried out professionally are systematically covered by the PFU regulation”, specifies the Ministry of Economy.

“If you sell cryptocurrencies as part of managing your private wealth, you automatically fall under the PFU. It doesn’t matter whether you make sales occasionally or regularly, you are subject to this regulation even if you manage a large volume of transactions and large amounts,” the article underlines.

Professional traders

Third change: Professional traders’ income will be taxable as non-trading profits (BNC) and no longer as BIC. They are therefore “subject to the tax scale and social security contributions, subject to the deduction of a 34% reduction (micro-BNC scheme) or the costs linked to the activity (scheme of controlled declaration)”.

On the other hand, nothing changes on the side of capital gains from cryptocurrency mining, which also falls under the BNC regime.

“The taxable result deriving from this activity is determined in accordance with the common law rules applicable to non-commercial profits, specifying that if the bitcoins were allocated free of charge, the acquisition value used for the calculation of the taxable result is zero”, pursuant to Article 92 the general tax code.

To find out how to declare your capital gains, BFM Crypto has prepared a detailed guide on the subject. Specifically, a user must track all cryptocurrency transactions made during the year of declaration and be able to calculate the valuation of his or her portfolio or portfolios during the taxable transfer. Taxpayers can get help from tax specialists specializing in cryptocurrencies or from private companies dedicated to this problem.

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