Cryptocurrency taxes: deciphering its taxation system!

If you have ever dealt with cryptocurrencies, you should definitely know that its digital assets can generate great profits. This profit is, of course, taxable.

The tax system applicable to virtual currencies depends on the activity in question. For example, if you have received capital gains from the sale of cryptocurrencies, the applicable tax treatment will not be the same as if you were mining cryptocurrencies.

Here is everything you need to know about the various taxation systems that apply to any cryptocurrency-related activity! Read everything to understand!

Tax regime specific to the sale of cryptocurrencies!

If you have started trading cryptocurrencies, selling and trading digital assets, it is normal that your profits will be subject to the tax system.

Any capital gains derived from the discontinuation of digital assets are subject to taxation in BIC, an acronym for Industrial and Commercial Income, under the 2019 Finance Act.

The lowest capital gain for the year when cryptocurrencies are discontinued is taken into account to calculate your tax. If the latter exceeds 305 euros, the amount of profit must be subject to a lump sum deduction at a flat rate, i.e. a general tax of 30%, which includes:

  • 17.2% of social security contributions;
  • 12.8% Income tax collection.

To do this, you need to fill out Form No. 2086, available on the government website “Impot.gouv”, declaring annually your income (capital gain or loss) received from the sale of digital assets.

Please note that only the cessation of the use of bitcoins in exchange for legal fiat currency is subject to taxation. If you exchange your cryptocurrency for another cryptocurrency, it is not taxed. On the other hand, any profit received from the occasional use of cryptocurrency is not subject to systematic taxation.

The tax regime is related to cryptocurrency mining!

Mining is a key activity for creating a cryptocurrency. This process has nothing to do with digging up dirt to retrieve treasure. This term refers more to the fact of creating new virtual units that can be bought, sold or traded by other users.

Mining still requires advanced computer equipment and a lot of energy, but the main advantage of this activity is that it is profitable.

Mining is considered a profitable professional activity, the tax classification of which falls under the BNC tax regime “Non-commercial profit regime” in accordance with the General Tax Code. If you perform this activity on a regular basis, you will need to be self-employed in order to be in good standing with the law.

If you are involved in cryptocurrency mining, you will also have to file a profit and loss statement every year, noting the profit from this non-profit activity. When bitcoin units are distributed for free through mining, taxation is zero!

Please note that taxable mining profits are calculated based on your total turnover. If you can’t find your way between your cryptocurrency-related activities and your taxes, know that there are several simulation sites that will allow you to estimate the total value that will be taxed quickly and for free!

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