Taxpayers taking profits on bitcoins are required to complete tax formalities.
The mere possession of cryptocurrency is not taxable. On the other hand, the gain is taxable as soon as digital assets are exchanged for goods, services or currencies, even if these currencies remain housed on a platform.
Taxpayers are only exempt from capital gains tax when the sum of the sale prices is less than 305 euros per household during the year.
Otherwise, when this net income (gains minus losses on digital assets) derives from occasional transactions, it is taxed in the case of individuals at the flat tax or Prélèvement Forfaitaire Unique (PFU) rate of 30%, without the possibility of opting for the progressive scale. Capital losses are neither deductible from other income nor can they be carried forward to the following year.
There is a significant administrative burden for such operations for French tax residents.
For each digital asset account opened, held, used or closed abroad, a form n° 3916-bis must be attached to the annual income tax return.
In addition, form 2086 is required for the detailed calculation of capital gains or losses on disposals, which also provides information on the overall value of the portfolio at the time of disposal.
These relatively complex calculations allow the 2042 C form to be completed.
Operations carried out on dedicated platforms are easily traceable for the tax authorities. Failure to comply with reporting obligations is punishable by fines and tax increases of up to 80% depending on the offence.
Keep in mind: The extreme volatility of Bitcoin's price will generate significant capital gains. Lucky investors should take into account the tax and administrative costs resulting from their gains.
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