how to properly declare your income in cryptocurrencies

Since April 7, you can declare your income to the tax service. If nothing really changes for the whole operation, the particular case of cryptocurrencies still raises many questions. Capital gains, accounts abroad, legal uncertainty about NFTs, we explain everything you need to know before sending your declaration.

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If you got into cryptocurrency in 2021 and are feeling a little lost on your tax return, this article is made for you. Indeed, if France is not at the stage of the United States which allows to pay its taxes in Bitcoin and other digital currencies, the latter are indeed taken into account by the state at the time of the declaration.

However, the handling changes from year to year in an attempt to match the current state of the market, which doesn’t really help matters. However, as we know, making an error in your tax return can have serious consequences, which may in particular lead to the payment of a fine. To avoid the worst and above all to save you time, we have summarized everything you need to know about taxes and cryptocurrencies.

Taxes and cryptocurrencies: what should be declared?

Let’s start with the most important. No matter what your cryptocurrencies have brought you, the slightest transaction must be declared to the taxman. Purchase, resale, capital gain or not, no distinction or exception is to be made. Just like your more traditional income, the state needs to be made aware of your activities in the crypto market.

Next, it is necessary to know how much exactly your cryptocurrency assets brought you in 2021. Indeed, if this figure does not exceed 305 €, then you will not be taxed: this money will stay warm in your wallet. On the other hand, if your income exceeds this level, then you will have to paya tax equivalent to 30% of this added value.

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Note that this figure will remain the same in 2023, but may be subject to progressive scale depending on the case. Same observation for income from a physical good purchased with cryptocurrencies. In reality, the only exception is that of sums stored in a stablecoin or any other digital asset, which will not be subject to tax.

To sum up: if your resale of cryptocurrencies then conversion into fiat currency exceeds €305, then you must mention it in your declaration.

What about NFTs?

The case of NFTs is slightly more complicated. Widely popularized in 2021, non-fungible tokens still benefit from a legal vagueness. Indeed, it is very difficult for the French administration to classify the type of income generated by the latter. Sometimes considered works of art, other times digital assets, NFTs can be a real headache when it comes to your tax return.

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The first thing to know is therefore that up to 5000€ of income, you can benefit from a tax exemption. Whatever happens, you will not be taxed if the transaction was made in cryptocurrencies. Nevertheless, we advise you to be assisted by a tax expert in the event that your winnings reach several thousand euros, in order to be sure not to make any mistakes.

Finally, other special cases should be noted. For example, le lending et le staking, practices which consist in placing its digital assets on investment platforms, operate on a case-by-case basis. For centralized platforms, such as Binance, the tax will be 30%. On the other hand, your income from decentralized platforms, like Uniswap, will not be taxed.

How to report cryptocurrency income

Once all these checks have been carried out, it is time to move on to the declaration stage. To do this, you will first need to download the Cerfa 2086 form. If you prefer to declare your income online, be aware that your final capital gain will be calculated automatically by the platform on form 2042. We remind you that the government has recently proposed an application dedicated to taxeswhich you can download by going to this link.

Finally, be aware that the State obliges its nationals to mention any overseas accounts. So be sure to add them to your statement. This may be your case if you use Coinbase, Revolut, Binance or even ZenG platforms. Do not hesitate to contact the tax services in case of doubt in order to be guided in your approach.

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