Cryptocurrency is taxed in almost all countries today, with France being no exception. However, the tax rules surrounding cryptocurrencies in France as outlined by the General Directorate of Public Finances, or Direction Générale des Finances Publiques (DGFiP) in French, differ quite a lot from other European countries. If you wonder how crypto is actually taxed in France, this guide is for you! In this complete cryptocurrency tax guide for France, we will explain everything you need to know about how DGFiP classifies cryptocurrency, how much tax you must pay on cryptocurrency in France, and how traders and investors in France can report their crypto taxes correctly with Coinpanda.
This guide will be updated regularly since the tax treatment of cryptocurrency is a constantly changing landscape. At Coinpanda, we are following the development of crypto taxes very closely including in France. All updates will be listed below so that you can quickly see if anything has been updated since your last visit:
- February 25, 2022: Cryptocurrency tax guide for France published!
More specifically, these are the topics and questions we will address in this guide:
- Do you pay taxes on crypto in France?
- How is cryptocurrency taxed in France?
- France cryptocurrency tax rate
- How to calculate capital gains in France
- Which transactions are taxed?
- How to reduce your tax liability
- France crypto tax forms
- How to file your crypto taxes in France
- Deadline for reporting taxes in France
- Cryptocurrency tax software
Let’s start with the most important question of all…
Do you pay taxes on crypto in France?
In France, cryptocurrencies are taxed when you convert a crypto asset to fiat. Trading, exchanging, or swapping one crypto asset for another crypto asset is, however, not taxed. How much tax you need to pay depends on if you are seen as a casual investor by DGFiP or if the activity is classified as professional trading.
You must also declare any cryptocurrency received from activities like mining or staking. Crypto received from such activities is also taxed, and special tax rules apply if you are considered to be carrying out mining or staking as a commercial operation.
In the next section, we will go into more detail about how cryptocurrency is actually taxed in France according to DGFiP.
How is cryptocurrency taxed in France?
Cryptocurrencies were for the first time legally classified in May of 2019 under the Action Plan for Business Growth and Transformation law, also known as PACTE. The legal definition of bitcoin and other cryptocurrencies in France is:
“Any digital representation of a security which is not issued or guaranteed by a central bank or by a public authority, which is not necessarily attached to a currency having legal tender and which does not have the legal status of a currency, but which is accepted by natural or legal persons as a medium of exchange and which can be transferred, stored or exchanged electronically.”Art. L54-10-1 of the French Monetary and Financial Code
As stated by the General Directorate of Public Finances (DGFiP), cryptocurrencies such as bitcoin or ethereum are considered movable investments for tax purposes. The DGFiP goes on to say that cryptocurrencies are not actual currencies and that the only legal tender in France is the Euro. However, the DGFiP makes it clear that it is completely legal to use cryptocurrency to pay for products or services.
So how is cryptocurrency taxed in France?
Earnings from cryptocurrencies are subject to capital gains tax in France. The taxation of capital gains, according to Art. 150 VH of the French General Tax Code, depends on if the cryptocurrency was acquired from investments or from other activities such as mining.
Crypto acquired from investments
The first thing to establish is whether exchanging, trading, or investing in cryptocurrencies is carried out occasionally or on a regular basis. Why is this important? Because it determines the tax treatment and how much tax you must pay on your crypto earnings.
If the General Directorate of Public Finances considers your cryptocurrency trading activity to be carried out on a regular basis, you will be taxed according to industrial and commercial profits. This means your capital gains will be subject to progressive income tax rates. On the other hand, conducting cryptocurrency trading occasionally will be considered individual capital gains and is subject to flat-rate taxation. The flat-rate taxation is also referred to as single flat-rate levy or prélèvement forfaitaire unique (PFU) in French.
|Classification||Taxation||Tax rate (2021)|
|Individual capital gains||Flat-rate taxation (PFU)||30%|
|Commercial profits||Progressive income tax rates||0% – 45%|
The French tax law does not specifically state how to decide whether the activity is carried out on an occasional or regular basis, but in Conseil d’Etat n° 417809 it is clearly stated that this will be judged on a case-by-case basis instead. Here are some of the factors that the DGFiP will consider when separating occasional traders from professional traders:
- The amount invested
- The total trading volume
- The frequency of transactions
If you have further questions related to if you are likely to be considered as an occasional or professional trader, we recommend contacting the General Directorate of Public Finances directly or consulting a tax advisor in France.
Crypto acquired from mining
Cryptocurrency acquired from mining activities is classified differently than cryptocurrency acquired as an investment for tax purposes. In Conseil d’Etat n° 417809, it is specifically stated that bitcoin and other crypto assets earned from mining will be taxed as non-commercial profits and not as capital gains.
In the next section, we will look at how much tax you must pay on cryptocurrency in France in more detail.
France cryptocurrency tax rate
Since cryptocurrencies are considered movable investments, how much tax you must pay depends on whether the crypto trading activity will be taxed as individual capital gains or as commercial profits.
Let’s break down the different tax rates in more detail.
Individual capital gains tax rate
On January 1st, 2018, a single flat tax known as prélèvement forfaitaire unique (PFU) was introduced on capital gains in France. This new taxation on movable investments includes both social security contributions and income tax. The flat tax rate is calculated this way:
|Prélèvement forfaitaire unique (PFU)||Tax rate|
|Social security contributions||17.2%|
The total capital gains tax rate for cryptocurrencies in France is therefore 30% for the 2021 tax year.
PFU is called a flat rate because the tax rate does not depend on the total taxable income from capital gains or regular income. PFU applies to both movable investments, like cryptocurrency, and capital gains from the sale of securities. Other financial products affected by flat-rate taxation is life insurance, the ‘Housing savings plan’, and the ‘Housing savings account’.
You do also have the possibility to opt for crypto gains to be taxed according to the progressive income tax rates. This can be done by ticking box 20P in Formulaire N°2042 when you are filing your tax return. This can potentially reduce your tax burden but depends on several factors like your other income and which tax bracket you fall within. If you are considering this, we highly recommend discussing this with a tax advisor first.
Commercial profits tax rate
If you are considered a professional trader, all earnings from selling cryptocurrency for Euro or other fiat currency will be subject to progressive tax rates similar to your employment income. The progressive tax rate varies between 0% and 45%, and a surtax of 3% is added to the portion of the taxable income exceeding 250,000 EUR for single persons and 500,000 EUR for married couples.
The table below breaks down the progressive tax rates for personal income for the 2021 tax year:
|Total compensation||Employee social contributions||Net taxable compensation||Personal income tax (Single)||Personal income tax (Married)|
How to calculate capital gains in France
Now that we have covered how cryptocurrency is taxed in France including the applicable tax rates, you might ask yourself how do I actually calculate capital gains for cryptocurrencies according to the single flat tax?
Profits from cryptocurrency is only taxed when sold for any government issued currency like Euro or US dollar. This has implications for how to calculate purchase price and the resulting capital gains which must consider both your total portfolio value and the effective acquisition cost at the time you sold the cryptocurrency.
The general formula for calculating capital gain is:
capital gain = selling price – purchase price
To calculate the capital gains, you need to first establish the purchase price for the cryptocurrency sold for fiat currency. The purchase price is also referred to as the cost basis.
The purchase price must be calculated as the fraction of the effective acquisition cost of your cryptocurrency holdings relative to the value sold divided by total portfolio value.
While this might be difficult to wrap your head around, we can define the formula more easily this way:
purchase price = (value sold / total portfolio value) * effective acquisition cost of portfolio
Still confused? Don’t worry! We will explain how this works with a practical example next which should make it much easier to understand how to calculate the purchase price.
Raphaël has been investing and trading cryptocurrency in 2020 and 2021. He did not sell any cryptocurrency for EUR in 2020 and did not pay any tax this year. In 2021, however, Raphaël cashed out half of his cryptocurrency portfolio and received EUR to his bank account. That means he is required to report his cryptocurrency income and pay tax according to the individual capital gains tax rate when filing his taxes in 2022. Here are all his transactions from the past two years:
- 2020-07-10: Bought 1 BTC for €8,000
- 2020-08-15: Exchanged 0.5 BTC for 14 ETH
- 2020-10-07: Exchanged 5 ETH for 30 LTC
- 2021-02-18: Sold 0.5 BTC for €20,000
- 2021-04-12: Sold 7 ETH for €15,000
In January of 2020, Jacob decides to sell his entire investment. He sells 0.6 BTC and receives $7,000 in exchange. His transactions can be seen in the below table:
|Type||Date||Taxable event?||Selling price|
Since crypto to crypto trades are not taxed in France, the second and third transaction will be considered interim and we don’t need to do any calculations for these transactions. For both sell transactions, however, we need to calculate the following:
- Value of cryptocurrency sold (already known – 4th column in table)
- Total portfolio value – at the time of the transaction
- Effective acquisition cost of portfolio – at the time of the transaction
Just before Raphaël sold 0.5 BTC for EUR, his portfolio consisted of 0.5 BTC + 9 ETH + 30 LTC. Let’s assume that the total market value of his portfolio on February 18th, 2021 before selling 0.5 BTC was €45,000. The effective acquisition cost can be found directly as €8,000 since he has only bought crypto with fiat on one occasion. We have now all the required information to calculate the cost basis for 0.5 BTC sold:
Cost basis = (€20,000 / €45,000) * €8,000 = €3,556
We can now calculate his capital gains easily as:
Capital gains = €20,000 – €3,556 = €16,444
Next, we need to repeat the previous calculations also for his second sell transaction. His portfolio consisted of 9 ETH + 30 LTC before he sold 7 ETH for EUR. Let’s assume that the total market value of his portfolio on April 12th, 2021 before selling 7 ETH was €23,000. The effective acquisition cost is found as €8,000 (original acquisition cost) – €3,556 (used cost when selling BTC) = €4,444.
Cost basis = (€15,000 / €23,000) * €4,444 = €2,898
Capital gains = €15,000 – €2,898 = €12,102
All calculations and resulting capital gains are summarized in the below table:
|Type||Date||Taxable event?||Selling price|
Raphaël has therefore realized a total profit of €28,546 in 2021. Of this profit he must pay 30% tax according to single flat tax which equals €8,564.
Most crypto investors and traders in France prefer to use cryptocurrency tax software to do all the required calculations automatically for them. Coinpanda is one of very few tax solutions that supports tax calculations for France today. You can import transactions automatically from over 500+ exchanges and download specific tax forms for France that you can submit with your tax return.
It is 100% free to create an account and see if the software works for you!
Which transactions are taxed?
We have already established that the general principle is that only transactions for converting cryptocurrency to fiat currency are considered taxable events in France. Below, we will summarize the tax status for some typical scenarios cryptocurrency traders might encounter.
Buying cryptocurrency with fiat currency (Ex: EUR → BTC)
Buying cryptocurrency with fiat is not considered a taxable event in France. Note that it’s important to keep track of all your purchases and complete transaction history so that you can calculate your effective acquisition cost and cost basis when you later sell the assets.
Buying crypto and paying with another crypto (Ex: BTC → SOL)
Buying one cryptocurrency and paying with another cryptocurrency is considered an interim transaction by the DGFiP and is therefore not taxed. This is great news for all French crypto investors since this applies also to converting cryptocurrency to a stablecoin such as USDT.
Selling cryptocurrency for fiat currency (Ex: DOGE → EUR)
Selling cryptocurrency and receiving government issued fiat currency in return is considered a taxable event, and you must calculate the capital gains as explained previously. If you are seen to carry out cryptocurrency transactions occasionally, you will pay the flat tax rate of 30% on your net gains.
Single flat tax / Commercial profits tax
Cryptocurrency mining rewards
Cryptocurrency received from mining is taxed in France. Unlike income from selling crypto assets which is taxed as capital gains are mining rewards taxed as non-commercial profits. There are also different tax rules for professional miners carrying out commercial activities.
Gifting cryptocurrency to a friend or family member is not taxed in France. However, the receiver will be taxed when he or she later decides to sell the crypto for Euro or another fiat currency.
How to reduce your tax liability
There are several ways you can minimize your taxable gains and therefore reduce the tax liability. In this section, we will look at some of the most common practices for reducing your crypto taxes in France.
1. Hodl your coins
If you never sell your coins, you don’t pay any tax on your profits either. Less stress, and less tax. No wonder why so many crypto investors are determined to never sell their coins!
2. Convert to stablecoins instead of fiat currency
Since you are only taxed when converting your cryptocurrency to any government issued fiat currency, converting your crypto to stablecoins instead can reduce your tax burden significantly. This might be a relevant strategy if you want less exposure to the volatility of the crypto market and prefer to have some fiat currency pegged stablecoins such as USDT or USDC in your portfolio.
You can even hold stablecoins indefinitely without paying any tax on your capital gains, but keep in mind that if you one day spend your stablecoins for goods or services, you will need to pay taxes on your profits.
3. Deduct cryptocurrency losses
If you sell a cryptocurrency and receive less than the calculated purchase price, you will have realized a capital loss on the asset. In France, capital losses can be used to offset capital gains of the same year. This means that you will only pay tax if you have a net positive capital gains during the tax year.
Unlike securities such as stocks, capital losses for cryptocurrencies cannot be carried forward to future years if your total loss exceeds your total gains.
4. Trading fees
Most exchanges charge trading fees when you buy, sell, or trade cryptocurrency. Trading fees are considered costs that can be deducted from the sales price when selling cryptocurrency for fiat currency.
Not only that, but you can also include trading fees from interim crypto to crypto trades in the effective acquisition cost of your portfolio. This means that all trading fees are fully deductible. Great news for all French crypto traders!
If you have a large number of transactions, deducting the trading fees can make a significant impact on your total tax liability. A crypto tax solutions like Coinpanda does this automatically for you.
France crypto tax forms
You are required to report all capital gains from the sale of cryptocurrency in addition to other income such as mining rewards in your annual tax return, or déclaration des revenus in French.
Formulaire n°2042 is the main tax return where you must declare all income from employment, gains and losses from securities or other financial products, and your gains, losses, and income from cryptocurrency.
There are three tax forms you must attach to Formulaire n°2042 when reporting your crypto taxes:
- Formulaire n°2086 – Capital gains and income transactions
- Formulaire n°2042 C – Capital gains and income summary
- Formulaire n°3916-bis – A list of cryptocurrency accounts outside France
On Form 2086 you will need to list all transactions realizing either a capital gain or capital loss during the tax year. This form is limited to 20 transactions, so you might need to consult a tax advisor if you have more taxable transactions than this.
When you have calculated your net capital gain or loss, simply fill in this value on Form 2042-C on line 3AN if you made a net gain, or on line 3BN if you made a net loss. Coinpanda will automatically generate Form 2042-C for you so that you can directly see which value you should fill in.
How to file your crypto taxes in France
Once you have all your tax forms ready, the last step is to actually file your taxes before the tax deadline.
To file your taxes online in France you need to first log in to your FranceConnect account. From this portal you will have access to all the required forms and information about how to file your taxes.
All French taxpayers are required to file their taxes online today unless there are special circumstances making this impossible.
Deadline for reporting taxes in France
The deadline for reporting cryptocurrency taxes in France is the same as the deadline for your ordinary tax return. Similar to other European countries, the financial year is the same as the calendar year and runs therefore from 1st of January until 31st of December.
There are three deadlines for the tax return in France which depends on which department you belong to:
- 26th of May, 2022: departments 1 to 19 and non-residents
- 1st of June 2022: departments 20 to 54
- 8th of June, 2021: departments 55 to 976
Cryptocurrency tax software
Figuring out your crypto taxes might feel overwhelming at first, but hopefully, it’s a bit clearer after reading this guide. So far, we have explained everything you need to know about how cryptocurrency is taxed in France, but you might still be wondering how to actually do all the required calculations so that you can report your taxes correctly and avoid penalties from the French tax authority.
Calculating your crypto taxes using crypto tax software
The best option for most people is likely going to be using cryptocurrency tax software to do the calculations for them. If you want to save both time and money, here is how you can use Coinpanda to sort out your crypto tax situation and generate all the required tax reports automatically:
1. Sign up for a 100% free account
It is 100% free to create a Coinpanda account and you don’t need to enter any credit card information to get started. The free plan lets you explore and use all features for free.
2. Connect all your exchange accounts and wallets
Coinpanda supports more than 500+ exchanges, wallets, and blockchains today. You can easily import all your transactions by connecting your exchange accounts with API keys or by uploading a CSV file with the transaction history. If you find that Coinpanda doesn’t support an exchange you have used, reach out to us so we can add the integration (usually within a few days).
3. Wait for Coinpanda to crunch all the numbers
Get yourself a cup of your favorite beverage and wait for Coinpanda’s sophisticated calculation engine to crunch all the numbers for you. Coinpanda will automatically calculate the cost basis, proceeds, capital gains, and taxable income for all your transactions according to single flat tax (PFU) in France!
4. Check for any reported warnings
Coinpanda will automatically display a warning if it appears that one or more transactions are missing. If you see any warnings, you should first double-check that you have in fact connected all your wallets and exchange accounts.
Do you still see any warnings? Fear not! We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through live chat.
5. Download your tax reports and tax forms
When you have successfully imported all transactions, the final step is to download the tax reports and tax forms you need to file your taxes. You can download a special tax report for France in addition to Formulaire 2042. Coinpanda’s tax plans start at $49 and you have lifetime access to all reports after upgrading.
Prélèvement forfaitaire unique (PFU)
At the time of writing, Coinpanda is one of very few crypto tax solutions today that can calculate cost basis correctly for France according to rules for flat-rate taxation, or prélèvement forfaitaire unique (PFU) in French.
It is 100% free to create an account and see if the software works for you!
Sign up for a free account today and save both time and money!