Since 2019, a specific regime for the declaration of digital assets has been in place. Over the past few years, tax legislation on cryptocurrencies has been tightened in order to better regulate and monitor transactions that had been shrouded in legal and tax uncertainty.

However, holders of digital assets are generally unfamiliar with the laws that govern them. It is important to inform yourself properly before embarking on the cryptocurrency adventure, so as not to make mistakes in your income tax returns and to avoid penalties that could be very heavy.

1- The Taxation of Cryptocurrencies

First of all, you should know that the legislative rules are different for professional traders and occasional traders.

A habitual trader is thus subject to so-called “standard” taxation, which applies to professionals.

An occasional trader, for their part, must declare their cryptocurrency gains on their annual income tax return. Two forms are involved:

– Form no. 2086, to declare your cryptocurrency losses or gains.

– Form no. 3916 bis, on which you must declare your cryptocurrency accounts abroad. You will thus declare your Kraken, Binance or Coinbase accounts, etc. on it.

To access these two forms when you declare your income online, you must go to step 3 of your income tax return and click on the “déclarations annexes” (additional declarations) tab. You will then reach a new page allowing you to select forms 2086 and 3916 bis. You can then click on “valider” (confirm).

You will then have easy access to the forms. Click on “suivant” (next) to display them on the left of your screen. All you then need to do is click on each tab to declare your cryptocurrency income.

a- Form No. 3916 bis

All cryptocurrency accounts you hold abroad must be declared. All accounts opened on foreign exchanges are therefore covered by this tax legislation. Most accounts of this type are foreign. Indeed, there are very few commonly used French exchanges. After declaring your cryptocurrency account(s), you must declare your gains or losses, where applicable.

b- Form No. 2086

Although it has always been compulsory to declare your cryptocurrency gains, the legal framework for doing so used to be relatively unclear. Thus, in 2018, the procedure involved filing form no. 2048-M, and the process was the same as for declaring a miscellaneous item (for example, a collectible piece of furniture put up for sale), which was not suited to the reality of cryptocurrencies.

In 2020, a legal framework was put in place. Better suited to the cryptocurrency sector, form no. 2086 came into being. From then on, it became compulsory to declare one’s cryptocurrency gains as well as losses.

Exchanges of one cryptocurrency for another are not taxable and must not be declared on form no. 2086 (for example: 1 BTC for 15 BTH). Conversely, exchanges of cryptocurrencies for goods, services or fiat currency are taxable and must therefore be declared on form no. 2086 (for example: you exchange 1 BTC for €38,000, or you pay in a shop with your Binance Visa card).

Although it is legally regulated, the cryptocurrency sector is still little understood. That is why administrative guidance has been published in the BOFiP, the official tax bulletin (BOI-RPPM-PVBMC-30, updated on 23 April 2024). It provides numerous clarifications on the subject and on the regime now applicable. In addition, you can seek advice from a tax lawyer who will guide you in completing the various forms, taking your particular situation into account so that no mistakes are made. All your gains must be declared. Furthermore, you must be able to explain the source of each sum and hold every corresponding supporting document.

To complete your form no. 2086, you have three options:

– Fill it in yourself

– Use an online tool to help you

– Be advised and assisted by a tax lawyer.

Whichever option you choose, always be precise when completing your form. A tax audit may indeed occur, especially if large amounts are at stake in your cryptocurrency accounts. That is why all your assets must be justifiable and explainable, down to the last decimal! Completing form 2086 is difficult, so stay focused and do not hesitate to seek help from a tax lawyer or an online tool (for large portfolios, however, online tools appear insufficient, as they are not fully suited to the requirements of a tax audit).

Under current French legislation, you do not need to complete this form if you merely hold cryptocurrencies, that is, if no transactions are carried out on your accounts. The same applies if you exchange your cryptocurrencies for another cryptocurrency.

Finally, a third form must be completed to declare your cryptocurrencies: form 2042-C. It is used to declare the capital gain or loss realised on your various disposals of digital assets. You must fill in boxes 3AN or 3BN.

These various forms, to be completed at the same time as your income tax return, enable the tax authorities to calculate the amount of your tax and to know which exchanges you use.

2- The Amount of Tax

The tax rate is 31.4% of the net gain realised (30% before the increase in the CSG (contribution sociale généralisée) provided for by the 2026 Social Security Financing Act (LFSS 2026); option available for the progressive scale). Thus, depending on the amount of the investments you have made, you will be taxed on the capital gains of the previous year. So, if you buy 1 ETH for €300 and sell it for €1,000, your net gain will be €700. You will pay 31.4% tax on this €700, i.e. €219.80 in tax!

3- What Are the Risks if You Do Not Declare Your Cryptocurrencies?

Even though it remains time-consuming and tiresome, declaring your cryptocurrency income is compulsory, so it is best not to neglect it in order to avoid any tax reassessment involving surcharges, fines and, in the most extreme cases, prison sentences.

If you have not made your declaration, you will therefore be penalised:

– A fine of €750 for each of your undeclared accounts.

– Next, each of your errors or omissions will cost you €125 in penalties. Bear in mind, however, that the tax authorities now grant a right to make mistakes. But where accounts hold assets above €50,000, the penalty of €750 will be doubled, as will the €125 fine, i.e. €250 for each of your errors.

– Finally, although rarer, it is still possible for the most serious cases to face a prison sentence of 7 years and a fine of 3 million euros. Taxpayers who do not respond to requests for supporting documents and explanations may face this type of sentence and fine. The same applies if the tax authorities uncover fraud worth more than €100,000.

In addition, the taxpayer risks a 40% surcharge if the tax authorities establish that they acted in bad faith and that the error or omission identified on their return was deliberate. Be aware that it can rise to 80% if the taxpayer has engaged in fraudulent manoeuvres.

This obligation to declare your cryptocurrency income must therefore be fulfilled with the utmost care. You must report on your return all transactions for the entire year. To do so, consult your transaction histories, which you will have carefully kept.

4- What Deadlines Must You Meet for Declaring Cryptocurrencies?

The obligation to declare your cryptocurrency income must comply with the set deadlines. Be careful: the dates are different depending on your region. You will therefore need to find out in advance so as not to be late, to take the time to fill everything in correctly and to forget nothing!

You will thus be able to declare your cryptocurrency income for the previous year from April 2023, for 2022 income. Moreover, now that the tax authorities grant a right to make mistakes, you will be able to correct your return, generally from August to the end of December.

If you declare your income via the website of the DGFiP (Direction Générale des Finances Publiques, the French Public Finances Directorate), the dates also vary according to your place of residence. Check beforehand.

5- Which Cryptocurrency Transactions Must You Declare?

In France, the tax regulations applicable to individuals provide for the taxation of three different categories of transactions on crypto-assets.

– The first is the sale of cryptocurrency that you have exchanged for government-issued currencies (dollars, euros, etc.);

– Next come gains arising from cryptocurrency mining;

– Finally, income from centralised/decentralised finance, on which the tax regulations nonetheless remain unclear. For example: masternodes, lending (lending cryptocurrencies), staking (locking up one’s cryptocurrencies in a smart contract), farming, etc.

Note that “digital asset” means all tokens except those having the characteristics of financial instruments and of cash vouchers (bons de caisse). Article 150 VH bis of the French General Tax Code (Code général des impôts, CGI) sets out their tax regime (rate set in Article 200 C). Under Article L 552-2 of the French Monetary and Financial Code (Code monétaire et financier), a token is any intangible asset representing, in digital form, one or more rights.

The tax regulations on cryptocurrency thus remain unclear in many respects. To obtain information and advice so as not to make a blunder, do not hesitate to prepare your cryptocurrency income declaration with the assistance of a tax lawyer if the stakes are significant. As an expert in tax legislation, a tax lawyer will be able to assist you so that your cryptocurrency investments are secure from a tax standpoint. They will also be able to advise you on your particular case, because in tax matters, each case is unique and requires careful examination.

6- What About Declaring Your Cryptocurrency Accounts Located Abroad?

Under Article 1649 bis C of the CGI, all natural persons, non-commercial companies and associations located in France are required to declare the digital asset accounts that they hold or have opened with a financial institution abroad, whether or not they use them and even if they have been closed. This declaration must be made at the same time as the annual income tax return.

To be clearer, you must declare all your accounts, whether you are the holder, the beneficial owner, a joint holder or the beneficial entitled party (ayant droit économique).

7- Cryptocurrencies: Some Information on the Tax Regime

Article 150 VH bis of the CGI states that the tax regime for occasional disposals of digital assets applies to capital gains obtained through various transactions carried out by a natural person or through a separate person.

Furthermore, the tax legislation states that the tax declaration is made at the level of your tax household (foyer fiscal). You must therefore declare all activities carried out within your household: by your spouse, your children, your partner if you are in a civil partnership (PACS), by all persons attached to your household, and by yourself.

8- In Which Cases Can You Be Exempt?

Under Article 150 VH bis II-B, you may be exempt from tax in one particular case.

This is so if the total of your disposal prices in the current year, excluding the various exchange transactions that remain subject to tax deferral, does not exceed €305.

To calculate them, you must count all disposals subject to tax, for all consideration in the form of goods, services or currency. This applies to all the persons making up your tax household, whether directly or through an intermediary.

If the total of your disposals exceeds €305, your tax will be calculated on the basis of all disposals made during the tax year concerned, including, of course, those below €305.

To help you with these calculations, do not hesitate to contact a tax lawyer who will be able to guide you through this cumbersome and time-consuming task, within the required deadlines.

9- Capital Gains: How to Calculate Them?

Article 150 VH bis III of the CGI defines how to calculate a capital gain or loss. This amount is the difference between the disposal price and the product of the total acquisition price of the entire portfolio multiplied by the ratio of the disposal price to the overall value of the portfolio.

In practice, here is the calculation you must make:

Capital gain or loss = sale price – (total purchase price x sale price / overall value of the portfolio).

This result must be expressed in euros. Consequently, if another currency is involved, you must convert it into euros before making the calculation. And this is where things get tricky: you must use the exchange rate on the date of the transaction. This procedure must be carried out for each transaction in a foreign currency. The same applies to the disposal of digital assets or to the purchase of a service or goods. You will need to take the euro value of the various services or goods on the exact date of acquisition.

10- The Total Value of the Digital Asset Portfolio

Your digital asset portfolio comprises all the digital assets you hold at the time of a sale.

All storage media are covered (local or foreign exchange platforms, offline storage systems, digital vaults or personal servers).

In addition, the tax authorities in principle allow you to use various valuation methods, for example commonly consulted websites such as Coinmarketcap or Coingecko, which provide historical data on the average daily prices from the main exchange platforms.

11- How to Regularise Your Situation if You Have Not Declared Your Cryptocurrencies?

Since 2020, every taxpayer holding cryptocurrencies must declare them, as well as their gains and accounts abroad. However, the legislation is still unclear and the procedure complicated for some individuals to carry out. That is why some people who are nonetheless concerned may fail to complete it. This is, of course, contrary to the law and risky! You could face fines, penalties and, in the most extreme cases, prison sentences.

The first thing to do is to define your status correctly. Are you an occasional or habitual investor? The difference between these two definitions is still blurred and hard for taxpayers to identify. That is why it is worth getting help from a professional in the field, such as a tax lawyer, to define your status correctly. You can also request a tax ruling (rescrit) from the tax authorities so that they rule on your status. As the two are not subject to the same taxation rules, this step is important.

The tax authorities are beginning to carry out tax audits on cryptocurrencies, and these are growing year after year. Very rare in 2020, they have been increasing since 2022 in order to detect any taxpayer who fills in their return incorrectly or who declares nothing at all. That is why, in some cases, it is necessary to request the regularisation of your situation yourself, in order to avoid a tax audit that could be severe.

Furthermore, if you have made an error or omission on your tax return, be aware that since 2018, the ESSOC Act (État au Service d’une SOciété de Confiance, “a State serving a society of trust”) gives you a right to make mistakes, by correcting your error or omission yourself. This will allow the tax authorities to take your good faith into account and reduce your late-payment interest. Of course, the right to make mistakes cannot apply where you have knowingly evaded tax.

12- FAQ

a- As an Individual, How Should I Declare My Cryptocurrency Income?

Your cryptocurrency income must be declared at the same time as your annual income tax return. To do so, you must complete three additional forms:

– Form 3916-3916 bis to declare all your digital asset accounts abroad.

– Form 2086 in the event of a taxable disposal. On it, you must enter the purchase price, the sale price and the total value of your portfolio for each disposal made during the year covered by the return.

– Form 2042 C must show all your capital gains and losses in boxes 3 AN and 3BN.

b- Can I Deduct Cryptocurrency Losses From My Gains the Following Year?

No, losses recorded in one year cannot be carried forward to the following year. For example, if you lost €2,000 in one year, you cannot deduct them from the €15,000 you earn the following year. Each year is separate and requires its own declaration.

c- What Are the Common Mistakes?

– Not declaring all of one’s foreign accounts

– Not including exchange platforms

– Not keeping all the information from storage platforms and the wallet

– Not being able to substantiate the purchase price of each asset when reselling it, even if you bought it in a different year.