Crypto and taxation in France: How does the flat tax work?

The flat tax (or single flat rate levy, PFU, in French) is a single-rate tax applied mainly to capital income. It was implemented in France in 2018 in order to simplify taxation on savings and make it more attractive. What is the flat tax?

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It applies to capital income, i.e.:

• Dividends (shares)
• Interests (unregulated passbooks, bonds)
• Capital gains (gains from the sale of financial securities)

What is the flat tax rate in France?

The overall rate is 30%, broken down as follows:

• 12.8% income tax
• 17.2% social security contributions

This rate is flat rate, i.e. identical regardless of the amount of income concerned.

The cryptocurrency tax regime in France

The taxation of cryptocurrencies in France depends on the use you make of them (personal investment or professional activity), and the types of gains you make (capital gains, income, mining, staking, etc.). It should be noted that the flat tax only applies to capital gain. As soon as the amount of the capital gain exceeds 305 euros you are taxable. Below this amount, earnings are exempt. Attention, the flat tax only applies to capital gains made in cryptocurrencies. Under no circumstances is tax involved in the purchase of a product or service paid in cryptocurrencies: you will not pay 30% more for your product or service.

For individuals (non-professional use)

When you sell cryptos for euros or other fiat currencies (or use them to buy a good/service), the capital gain is taxed. For individuals, the tax rate on realized capital gains is 30% (flat tax), i.e. 12.8% income tax and 17.2% social security contributions. For example, on an initial investment of 20,000 euros in cryptos that became 30,000 euros after one year, the capital gain achieved is 10,000 euros, which implies 30% tax on earnings, or 3,000 euros.

Conversions between cryptos (e.g. Bitcoin BTC → Ethereum ETH) are not taxable if they are not converted into fiat currency. If the total annual sales do not exceed €305, you are exempt from tax on these capital gains.

If the activity is considered professional

This may be the case if:

• You carry out very frequent or large-scale operations,
• You use automated tools (bots),
• You get a significant portion of your income from these operations.

You then fall under the BIC regime (Industrial and Commercial Profits) and not the flat tax. Taxation becomes progressive according to the income tax scale, with additional social security contributions.

Mining, staking, lending, airdrops, etc.

Mining is considered a professional activity, which is taxed as BIC (Industrial and Commercial Profits) or BNC as the case may be. For stacking, the income received is considered as income from movable capital, thus taxed at the rate of 30%. If you receive tokens for free (Airdrops), they may be taxable as soon as they are received (depending on the nature and use).

Tax declaration

You must first declare the capital gains in form 2086. Then, the existence of accounts on foreign platforms (Binance, Kraken, etc.) in the Form 3916-BIS. Failure to report these accounts may result in a fine of €750 to €10,000 per undeclared account.

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