the tax declaration is compulsory, here is what you need to know

Do you own Bitcoins or other cryptocurrencies in 2021? In many cases, it must be declared to the tax authorities… but not always. In this file we suggest you explore what the Law says on the matter, the situations in which you must declare your Bitcoins, the few cases in which the declaration to the tax authorities is not obligatory, and the procedure to follow for declare your Bitcoins.

bitcoin

Bitcoins: what you must declare

It actually exists several cases regarding the declaration of Bitcoins and other cryptocurrencies (we will talk about Bitcoin for the sake of simplicity in the rest of this article, but the same rules apply to other cryptocurrencies). But as soon as it is possible to interpret the holding of these assets as the holding of an account abroad, then the declaration of this account is mandatory. This is particularly true if you have an account on online platforms, such as Coinbase, Bitfinex, Kraken, Bittrex or Bitstamp since technically these platforms are companies based abroad.

In application of article 1649A (2nd paragraph) of the General Tax Code, resulting from the finance law for 1990 (law n ° 89-935 of December 29, 1989), modified by law n ° 2018-898 of 23 October 2018, natural persons, associations and companies not having a commercial form, domiciled or established in France, are required to declare, at the same time as their income or income statement, the references of the accounts opened, held , used or closed abroad during the year for which the income or results are declared (year n) ”, can we read for example on annex 3916 of the income tax form.

Bitcoin

Article 150 VH bis of the General Tax Code, which regulates capital gains from digital assets, also specifies that you must declare the capital gains realized during the year if they exceed a total amount of 305 €. The amounts are to be indicated in the income tax return by attaching the annex detailing the realized capital gains or losses, in the “digital assets” section.

To calculate the surplus value, you must do ” the difference between, on the one hand, the sale price and, on the other hand, the product of the total purchase price of the entire portfolio of digital assets by the quotient of the sale price over the overall value of this wallet. The latter are taxed twice, via a single flat-rate deduction of 12.8% to which is added social contributions of 17.2% (ie 30% in total). When bitcoin transfers are not occasional, or carried out as part of a professional or mining activity, another legal framework applies: the tax regime applicable to bitcoin decided by a tax instruction in 2014.

There are then three cases:

  • “Gains from the sale of virtual units of account stored on an electronic medium (in particular“ bitcoins ”), when they are occasional, are subject to income tax in the category of non-commercial profits (BNC ) ”
  • “If the activity is carried out on a regular basis, it comes under the industrial and commercial profits tax system (BIC)”
  • “In addition, virtual units of account stored on an electronic medium enter the basis of the solidarity tax (ISF) defined by article 885 E of the general tax code (CGI) and must therefore appear in the declaration. annual ISF of taxpayers who own it ”

WARNING : Systematically keep a written record of your buying and selling operations so as not to encounter any difficulty subsequently in declaring everything correctly.

Which forms should not be forgotten in your declaration?

Tax declaration

There are three forms to fill out and send to tax if you have realized a capital gain in the past year. First of all the Cerfa form n ° 2042 which is the classic form of income tax return. The correct boxes are 3AN and 3BN. In the Cerfa n ° 2086 you must postpone your buy and sell operations, which allows the administration to confirm your calculation. Finally the form Cerfa 3616-bis is necessary if you have a cryptocurrency account domiciled abroad.

Bitcoins: the cases in which you do not have to declare anything

Within the meaning of the Law, there are several situations in which you are not required to declare your Bitcoins. In all cases, this implies that you have not realized any capital gain in foreign currency during the past year and :

  1. You host your Bitcoins on your computer or on a secure key in France
  2. You have an account with French Bitcoin platforms, including Coinhouse or Paymium
  3. You have an account on a platform that only offers exchange between cryptocurrencies (Binance, Revolut, etc.)

Bitcoin
Credit: Unsplash

It exists an increasingly interesting scenario to avoid having to systematically report your earnings to the tax authorities. The trick is to simply never convert your Bitcoin or other cryptocurrency into currency, and just exchange your Bitcoin for other cryptocurrencies. If it is simply a question of securing your earnings in an uncertain period, it is for example recommended to convert your assets into another cryptocurrency called “stablecoin”, ie indexed on a traditional currency (most often the dollar).

What fines do we risk?

As the Journal du Coin points out, avoiding the obligation to declare your Bitcoin or capital gains accounts exposes you to three types of sanctions:

  • Fixed fine of € 750, or even € 1,500 per year (if the amounts are greater in value than € 50,000) and per unreported account – or even € 10,000 if the account is in a country that has not signed an assistance agreement administrative with France
  • Inaccuracy of the information can also result in a fine of € 125
  • Limitation period of 10 years against 3 years normally
  • 80% increase in all tax reminders resulting from failure to report

bitcoin bank france

We see it, two things must in fact be declared: your Bitcoin accounts abroad, and the capital gains realized during the year after deduction of 305 €. In the first case, Mieux Vivre Votre Argent reminds that the obligation to declare your accounts should have been honored in 2018. If this is not the case, it is still possible to make your declaration as soon as possible, even if you have already returned your 2018 tax return.

Alas, you risk a 10% late penalty, but it will protect you against a tax adjustment and a penalty of 40%. To do this, you must fill in as much detail as possible (it will not necessarily be possible to fill in all the lines) Annex 3916 and send it to your local public finance office.

For capital gains, we told you “The gross capital gain or loss realized on the sale of goods or rights mentioned in I is equal to the difference between, on the one hand, the sale price and, on the other hand, the product of the total price of acquisition of the entire digital asset portfolio by the quotient of the sale price over the overall value of this portfolio ”. You must then integrate this amount into your declaration.

Read also: Bitcoin – cryptocurrency gains soon to be taxed in France at a fixed rate of 30%

Have you managed to declare your accounts or capital gains in Bitcoin? Share your feedback in the comments.

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