JVTech News Crypto taxes 2024: how to correctly declare your bitcoins and cryptocurrencies?
With the advent of good weather also comes the time for tax obligations. Since the beginning of April, the online tax service has been open, allowing everyone to declare their tax situation. One sector is no exception to the rule, that of cryptocurrencies. Indeed, who says crypto, says tax declaration. And in 2024, some new developments concern these digital assets.
Summary
- Bitcoin, Ethereum and other cryptocurrencies: when to declare them for taxes?
- How to declare your crypto activities for taxes?
- Declaration of crypto accounts abroad
- The declaration of transfer of your cryptocurrencies
- How are cryptocurrencies taxed?
- What changes in the taxation of your cryptos in 2024
Bitcoin, Ethereum and other cryptocurrencies: when to declare them for taxes?
Despite their decentralized nature, cryptocurrencies still do not escape taxes. Since 2020, any French person with virtual assets must inform the tax administration of their activities on the blockchain. This declaration is made during the classic annual income tax return. In 2024, the online service has been open since Thursday April 11. By connecting to it with your tax number, it is possible to declare your cryptos, until the deadlines set according to your department and by residential area:
- Thursday May 23, 2024 for departments no. 01 to 19 as well as non-resident taxpayers in France
- Thursday May 30, 2024 for departments no. 20 to 54 (including the two departments of Corsica 2A, 2B)
- Thursday June 6, 2024 for departments no. 55 to 974/976
Whether you are one of the lucky ones to have made capital gains in 2023 or not, in both cases, it is essential to declare your activities to the tax service. But before you start getting down to it, let's see what exactly you need to tell the tax authorities to avoid some problems.
Declaration of crypto accounts abroad
Before going into complex calculations of crypto capital gains or losses, be aware that the income tax return first requires mentioning your digital crypto accountswhether active or inactive.
However, this only applies to accounts held on cryptocurrency exchanges located abroad. Note that “non-Custodial” crypto cold wallets are not subject to this declaration obligation. So, if you hold a Ledger or Trezor brand wallet, it is not necessary to communicate this information to the tax authorities.
On the other hand, if you have a cryptographic account outside French territory (such as on Binance, Crypto.com, Kucoin, etc.), you must complete this declaration using the combined form n°3916-3916bis – the same form used to declare foreign bank accounts. Filling it is broken down into four stages:
- Frame 1 – Provide information relating to your identity
- Frame 2 – Check “Digital Asset Account”
- Box 4 – Fill in the information for the crypto exchange in question (based on the information about the platforms listed on page 6)
- Box 5 – Indicate whether it is for personal or professional use
This declaration must be repeated several times depending on the number of crypto accounts opened or closed during the year 2023. In the event of a violation, non-declaration of accounts located abroad can result in heavy fixed fines of €750 per undeclared account or €125 in the event of omission informative or an error.
The declaration of transfer of your cryptocurrencies
As for your exchanges from one cryptocurrency to another, these transactions are not taxable in France, even if it is a stablecoin. In other words, if you exchange Bitcoin for Ethereum, these transactions do not concern the tax administration.
However, if you are one of those who took advantage of the year 2023 to record profits on cryptocurrencies, then you must necessarily declare it for taxes. This concerns crypto transfers to a fiat currency such as euros, dollars or other legal tender. To inform the tax service, you must complete the form n°2086. However, individuals who have recorded a transfer of less than 305 euros are exempt from tax.
For the others, the framework of cryptocurrencies in France imposes a tax on capital gains. For example, in the case of a purchase of 1 Ethereum for €2000 and a resale for €3000 in 2023, you will be taxed on the capital gain of €1000. Here is how to complete the form if applicable:
- Line 211 – Fill in the date the cryptocurrencies were sold.
- Line 212 – Indicate the total value of the portfolio at the time of sale: €3,000
- Line 213 – Give the resale price of cryptocurrencies: €3000
- Line 220 – Enter the amount initially spent to purchase the cryptos: €2000
The formula applied to find out the tax amount per transfer applies itself to the online form (Transfer price – Total acquisition price x Transfer price / overall value of the portfolio). To find out your tax, you can refer to tools such as the tax comparator. waltioa French company specializing in cryptocurrency taxation.
What changes in the taxation of your cryptos in 2024
In previous years, all capital gains recorded in cryptocurrency by individuals were subject to the single flat-rate levy (PFU). Set at 30% (12.8% taxes + 17.2% social security contributions), this tax is still current but there is a new feature which allows some to reduce their taxes. Indeed, since January 2023, France has adopted the progressive scaleallowing everyone to adapt their declaration according to their total income.
| Income bracket (in euros) | Tax rate |
|---|---|
| Up to €11,294 | 0% |
| From €11,295 to €28,797 | 11% |
| From €28,798 to €82,341 | 30% |
| From €82,342 to €177,106 | 41% |
| More than €177,106 | 45% |
Concretely, if your income is below the €28,797 bracket, then it is preferable to choose this option in order to pay less tax on your cryptocurrency transfers. To do this, the tax administration indicates:
“NEW: don’t forget to check the 3CN box on declaration no. 2042 C if you opt for taxation on the progressive scale. » can we read on the 5th page of form 2086.
However, if the amount of your annual income is above €28,797, the progressive scale is not advantageous for you. Choosing the progressive scale could even cause you to lose money and make you pay 41% to 45% in taxes, instead of the usual 30% PFU. This is why it is important to carefully consider your situation before checking this option.
If you fail to make the declaration, you risk being fined. The law provides for an increase of 10%. If the error is corrected within 30 days, the sanction may be canceled. This fine can rise to 40% in the event of intentional breach or bad faith.
