what you need to know about filing income for your cryptos

Whether you are an individual or a professional, BFM Crypto explains how to best prepare your cryptocurrency income tax return for the year 2024.

The 2024 tax reporting period for 2023 income opens this Thursday, April 11. BFM explains how to best prepare your cryptocurrency income tax return for the year 2024.

• When should I declare my cryptocurrencies?

The time taken to complete the form will depend on your department of residence. Online filers from departments 1 to 19 will have until Thursday, May 23 to send their declaration, those from departments 2A to 54 have until Thursday, May 30 and those from departments 55 to 95 and the DOM have until Thursday, June 6.

• I am an individual and I hold cryptocurrencies on a platform, what should I declare?

A taxpayer who holds cryptocurrencies in a foreign account or platform must declare this account to the tax authorities in form 3916-BIS, even if his account is closed during the tax year being declared. This regardless of the amount he holds on the platform. A user will have to fill out as many forms as the number of platforms they are on. He faces a fine of 750 euros per undeclared account. These are articles 344 G decies and 344 G undecies of annex 3 of the General Tax Code which detail the operation of these declarations.

Furthermore, even if the foreign account is hosted by a platform having obtained the status of PSAN (digital asset service provider) registered with the Financial Markets Authority (AMF) (such as Binance or Coinbase), the taxpayer must declare it on form Cerfa n°3916-bis.

Conversely, there is no need to declare your cryptocurrencies when they are on:

• A French PSAN account registered with the AMF, such as Coinhouse.
• A wallet (physical or virtual wallets, hot or cold), such as Ledger or MetaMask.

• What does a taxable transfer of cryptos consist of?

If a taxpayer makes a taxable transfer, he or she will have to declare each transfer for tax purposes. Among the taxable transfers, we distinguish:

• Transfers of cryptocurrencies against a traditional currency, such as the euro or the dollar (for example, if you sell your bitcoins for euros)
• Purchasing a service or good with cryptocurrencies (for example a car purchased with bitcoin)

Conversely, exchanging cryptocurrencies for other cryptocurrencies (or stablecoins) does not need to be declared.

• I am an individual: what do I have to declare?

All these operations must be declared one by one via the Cerfa 2086 form, calculating whether the user has made a capital gain or a capital loss. Indeed, this also applies to capital losses: if a user has lost money while selling bitcoin, this must also be declared.

Between 2019 and 2022, a tax regime was imposed on individuals: if the total taxable transfers over the entire year were greater than 305 euros, they were subject to the single flat tax (PFU) of 30%. , i.e. 12.8% tax and 17.2% social security contributions. This also applies to capital losses: if a user has lost money while selling cryptocurrencies, this must also be declared.

But for the 2024 tax return, individuals may have the choice of a special regime. “Whatever their amount, capital gains now automatically fall under the PFU regime. However, taxpayers can opt for the application of the progressive scale of income tax instead of the flat rate of 12.8%. The contribution of 17.2% for social security contributions remains payable in both cases,” specifies Bercy.

• I am a professional: what must I declare?

For the 2024 tax declaration, the gains of professional traders will be taxable as non-commercial profits (BNC) and no longer BIC (with a tax amount of up to 66.2%) as was still the case the case last year.

They will be “subject to the tax scale and social security contributions, less a 34% reduction (micro-BNC regime) or costs linked to the activity (controlled declaration regime)”.

• How to calculate taxable transfers?

A user must make a calculation on all cryptocurrency transactions carried out during the reporting year, to find out whether they have made a capital gain or a capital loss:

Example proposed by Adrian Felden, business manager at Waltio at BFM Crypto: on January 1, a taxpayer buys 1000 euros of bitcoin and 600 euros of ether (i.e. 1600 euros in total). After an increase in the price in February, his bitcoin portfolio is worth 2100 euros and that for ether 900 euros. The overall valuation of the taxpayer’s portfolio is therefore equal to 3000 euros (2100 + 900 euros). The taxpayer, following this increase, decides to sell 600 euros of ether (this amount therefore constitutes the sale price).

To calculate the taxable capital gain, it is appropriate to subtract from the sale price the total acquisition price of the client’s digital asset portfolio on the date of the sale, which will have been multiplied beforehand by the ratio between the price of transfer of these digital assets and the overall value of the taxpayer’s portfolio on the date of the transfer.

Or a taxable capital gain of:

600 euros – (1.600 euros x (600 euros / 3.000 euros)) = 280 euros

• Special cases

– Gains on mining: they are subject to the BNC regime.

– Gains on staking cryptocurrencies: “They should logically come under BNC for the year of collection and, in the event of sale, they will be subject to capital gains tax (flat-tax of 30 %). If the staking income is not declared upon receipt, the cryptos obtained as a reward should be considered as acquired free of charge upon transfer,” underlines the specialized company Waltio.

– Earnings on NFTs (non-fungible tokens): there is still a legal void. The tax regime “will depend on the qualification given to an NFT: is it a digital asset in the same way as cryptocurrencies? A movable property? A work of art? According to the qualification retained, the tax regime will be different each time. Pending clarification, the majority interpretation is to consider that an NFT is a digital asset like a crypto”, specifies Waltio.

– Cryptocurrency donations. “For the person giving cryptocurrencies, the donation will be tax exempt. For the person receiving the donation, it is possible to have to pay gift tax (depending on the relationship, if it is an association…)”, explains the company.

– Earnings on airdrops: “If you receive an unanticipated airdrop, it is likely that you do not have to pay tax. If you received an early airdrop, you may be subject to BNC tax. In In all cases, taxation must be analyzed on a case-by-case basis and it is recommended to consult an expert on the subject in case of doubt,” the company finally specifies.