The crazy days when cryptocurrencies had virtually no legal framework are over. Valued at over $3,000 billion in November 2021, governments around the world could not remain indifferent to this market. Despite the criticism levelled at virtual currencies, the idea that they too should have a piece of the pie was soon felt. However, the imposition of a legal framework around cryptocurrencies is not only due to financial interests.
Thanks to their anonymity and decentralisation, cryptocurrencies are very often used to launder money or finance illegal activities. The world's governments therefore had to act accordingly. Hence the requirement for anyone owning cryptocurrencies to declare them to the government. This obligation is found in most countries, including France.
Do we have to pay taxes on cryptocurrency in France?
In France, all capital gains made with cryptocurrencies are taxed at a levy of 30%. That is, the 12.8% income tax, combined with the 17.2% social security levy. However, this tax only applies if you convert your capital gain into cryptocurrency, in euros. With one exception. If the amount of your cryptocurrency capital gain does not exceed €305 when converted into euros, you will not have to declare anything. Nevertheless, as long as you do not convert your profits into cryptocurrency, following various transactions for example, you will not be taxed. Despite this, you will still need to declare your cryptocurrencies to the government. By visiting this address, you will know how to go about declaring your crypto accounts thanks to a detailed guide.
How do you declare your cryptocurrencies to the State?
There are various ways to declare your cryptocurrencies.
Exchange platforms
To begin with, if you have accounts on cryptocurrency exchange platforms such as Binance, Crypto.com or Coinbase, you are obliged to declare them. In most cases, these platforms are based abroad. This means that the French tax authorities have no way of knowing whether your accounts are really in your name. Hence the obligation to declare their existence in your annual tax return.
Penalties incurred (platforms)
Article 1736 of the CGI, the French General Tax Code, imposes a fine of €750 on anyone who fails to declare their accounts. In the event of deliberate inaccuracy on your part regarding your declaration, the fine is €125. Fines can range from €250 to €1,500 where the value of an undeclared account exceeds €50,000.
Declare your capital gains
The calculation method imposed by the CGI for declaring capital gains is long and tedious. The same applies to the administrative procedures you are asked to complete when making your declaration. Even though there is a whole range of articles explaining how to go about it, it is nonetheless complex. So if you don't want to spend hours going through all the calculations and paperwork, there is an alternative. The French platform Waltio, renowned for its reliability, can carry out your tax return almost automatically.
Penalties (capital gains)
If you make a mistake in calculating your total capital gains for the year, you may be liable to a 10% tax surcharge. However, if the error is unintentional, and is therefore rectified within 30 days, the increase will be cancelled. However, if you have deliberately made a mistake on your return, the surcharge will be 40% on the sums due. Finally, if it is found that a deliberate error has been made in order to carry out fraudulent manoeuvres, the surcharge is 80%. If this manoeuvre turns out to be an attempt at tax fraud, you risk five years' imprisonment and a €500,000 fine. If your winnings exceed the fine, it can be up to €2 million.
