SHARE
COPY LINK
For members

MONEY

Do you pay tax on cryptocurrency in France and if so, how much?

Cryptocurrency is big business in France but the rules on the taxation of income from the currency differ to other countries.

Do you pay tax on cryptocurrency in France and if so, how much?
(Photo: Justin Tallis / AFP)

Bitcoin. Ethereum. Tether. Mining. Binance. To the uninitiated, cryptocurrency can sound like a different language. But, in France, it’s big business, with an estimated 3.4 million people reportedly holding at least some “crypto”.

In May, France became the first major European nation to give approval for cryptocurrency exchange Binance to operate in the country.

But this does not mean the country is operating a light touch on cryptocurrency regulations – a fact Changpeng Zhao, Binance’s CEO and founder, recognised at an event in Paris in April to launch a government-backed programme for “Web3” start-ups.

As cryptocurrencies become more mainstream, more and more people may be looking to get on board. But, is it taxable? How is it taxable, and how much tax do you have to pay?

First things first: yes, cryptocurrency income is taxed. It’s income. It’s taxable.

The tax rate applicable for capital gains and income from crypto assets depends on whether you’re a professional trader, an occasional investor or a miner.

France’s Direction Générale des Finances Publiques (DGFiP) says that capital gains from the sale of crypto assets like bitcoins are currently taxed at the following rates:

Occasional investors – flat tax rate of 30 percent, made up of 12.8% income tax and 17.2% for social security contributions

Professional traders – BIC tax regime of 0-45 percent.

Crypto Miners – BNC tax regime of 0-45 percent.

The flat rate for occasional investors applies to individuals with financial investments in crypto assets, and other investment income like dividends and life insurance, not to professional traders. 

The DGFiP will only tax capital gains from crypto when crypto is converted into euros or any other fiat currency, if the total capital gain exceeds 305€ per year.

That means those who only dabble in crypto pay less than those who make their living from it.

The difference between an occasional investor and professional trader lies in how often you “dabble”. 

The more you play the crypto market, the more likely you are to be regarded as a professional trader – in which case the variable rate of 0 percent to 45 percent applies.

The point at which an occasional investor and professional trader isn’t obvious – that decision is made on a case-by-case basis – but the DGFiP’s working out on this calculation is based on the total investment amount, trade volumes, and how often you sell cryptocurrency. 

The more often you do this, the more likely you are to be considered a trader.

Mining, meanwhile, falls under the non-commercial profits regime of the general tax code. For more details, click on the government website, here.

As for declaring any crypto accounts you may have, there’s a special section on your annual French income tax declaration. Transfers into legal tender currency (but not another cryptocurrency), as well as purchases of goods or services using crypto, are taxable.

The overall amount of the capital gain (or loss) for the year must be entered in the annual income tax return, along with the details of the transactions

Fines for failure to declare a single bank account or investment scheme are hefty – from €1,500 to €10,000, with €3,000 being a fairly common penalty. These amounts are applied to each account you fail to declare.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

PROPERTY

What to expect from your 2023 French property tax bills

The annual demands for property taxes have begun arriving at households across France - and many people will notice quite a difference to last year's bill.

What to expect from your 2023 French property tax bills

Every year in September and October the French tax office sends out bills to households across France relating to property taxes – these are separate to income tax bills, which arrive over the summer.

The autumn bills are usually made up of three parts; taxe foncière, taxe d’habitation and the redevance audiovisuelle.

However, system changes to all three parts mean that for some people bills will be be much lower than last year, while others will have nothing at all to pay.

Here’s what changes;

Redevance audiovisuelle – this was the TV licence and was charged at €138 per household, with some exceptions for pensioners or people who had no TV.

This year, it has been scrapped for everyone (including second-home owners) so most people’s bills are €138 less than last year.

Taxe d’habitation – this is the householder’s tax, paid by the inhabitant of the property – whether you rent it or own it. This is gradually being phased out, a process that started in 2019. It has been done based on income, with those on lower incomes having the charge scrapped first until it is gradually scrapped for everyone – with the exception of very high earners and second home owners.

So depending on your income level, you may have already had the tax phased out, or it may be phased out for you this year, or you may be paying a reduced rate this year.

These two changes are part of a tax giveaway from president Emmanuel Macron, and at the bottom of your tax bill you will find a note explaining how the charges have changed this year, and what you would have paid without the reductions.

It will look something like this;

Taxe foncière – this is the property owners’ tax and is paid on any property that you own – if you own the home you live in you may need to pay both taxe d’habitation and taxe foncière and if you are a second-home owner you will also pay both.

In contrast to the other two taxes, however, this one has been going up in many areas.

In fact, it’s connected to the taxe d’habitation cut – local authorities used to benefit from taxe d’habitation, so the phasing out has left many of them short of money. In some areas, they have reacted by raising taxe foncière.

This tax is calculated based partly on the size and value of the property you own (which is why if you do any major renovations or add a swimming pool you need to tell the tax office) and partly on the tax level decided by your local authority. 

This means that the actual rate varies quite widely between different parts of France, but in some areas it has gone up by 20 percent.

You can find more about how the tax is calculated, and how to challenge your bill if you think it is excessive, HERE.

SHOW COMMENTS