France Crypto Tax

As France seeks to become a premier European hub for crypto businesses, its taxation system has been structured to attract innovation and investments. The government and the population openly embrace the use of cryptoassets across the economic ecosystem, and therefore crypto entrepreneurs have plenty of opportunities to build and sustain their businesses.

In France, the General Directorate of Public Finances (DGFiP) is responsible for managing nationwide processes and tasks related to taxation and public accounting. The authority collects public revenues, issues interpretative instructions for general and specific taxation cases, as well as designs and imposes rules and procedures related to the control and payment of public expenditure. In line with AML/CFT regulations and rules for digital assets taxation, it also keeps records of crypto transactions carried out by private and public persons. For tax purposes, the DGFiP treats cryptoassets, including cryptocurrencies, as moveable assets, which is similar to the treatment of securities and bonds.

Tax Reliefs

France has signed over 100 international agreements on the elimination of double taxation. They cover corporate and personal income taxes, social security contributions, and other payroll taxes. Interest, dividends, and royalties are taxed on the basis of preferential rates. Overall, these agreements provide foreign investors with greater security and allow for the optimisation of taxes, which leads to reduced burdens of obligations.

With the aim to encourage the growth of innovative startups, France also offers competitive taxation for businesses engaged in research and development (R&D) activities. Eligible businesses can receive an R&D tax credit, which is determined on the basis of the R&D expenses incurred during the calendar year. The available R&D tax credit is 30% of the eligible expenses incurred during the calendar year, which can reach up to 100 mill. EUR, and on certain occasions, an extra 5% beyond this amount can be granted. The tax credit for innovation expenditure is 20% of the eligible expenses, which can be up to 400,000 EUR per year.

Normally, expenses related to patent registration, depreciation of fixed assets, monitoring of technical developments, and insurance contracts are regarded as eligible R&D expenditures. The granted tax credit is offset against the Corporate Tax payable by the eligible business.

Furthermore, new businesses, that were established before the 31st of December 2022, that invest in R&D activities, and that have innovative startup (JEI) or university startup (JEU) status can avail of exemptions from several taxes.

The exemptions for new businesses are as follows:

• A total exemption from the Personal Income Tax or the Corporate Tax for the first financial year or the first period when they are taxed on profits (this may not be longer than 12 months), followed by a 50% exemption for the next year when eligible persons post a profit
• The Local Economic Contribution (CET) and the Property Tax for seven years following a decision by the local government

Categorisation of Crypto Traders

In France, different types of crypto traders are subject to varying taxes. Therefore, if you engage in such activities, take the time to determine which category your business falls within. The French tax legislation doesn’t specify how to decide whether the activity is carried out occasionally or on a regular basis, and it’s determined on a case-by-case basis. The authority normally takes such factors as the total invested amount, the total trading volume, and the frequency of transactions into consideration.

The DGFiP categorises crypto traders as follows:

• Occasional traders – a Single Fixed Levy (PFU) or flat tax, at the rate of 30% which consists of 12.8% Personal Income Tax and 17.2% Social Security Contributions (earners of high income may be obligated to pay an additional 4%)
• Professional traders – Industrial and Commercial Benefits (BIC) tax at the rate of 0-45% is levied on capital gains associated with regular crypto trading activities

It’s worth noting that slightly different tax rules apply to crypto mining, which is subject to Non-Commercial Profits (BNC) tax at the rate of 45%. If the turnover during the previous year doesn’t exceed 70,000 EUR, crypto miners are eligible for Micro BNC tax, which means that only 66% of the income is subject to the tax.

Under certain conditions, occasional traders can choose the progressive tax rate. If you wish to explore these categories further and determine your specific case, please reach out to our dedicated legal team here at Regulated United Europe (RUE).

Corporate Tax

In France, the standard Corporate Tax rate is 25%. Tax resident companies are subject to paying tax on their income sourced in the territory of France, while income sourced from foreign business activities is generally excluded from the French tax basis. Non-resident companies are subject to paying the French Corporate Tax on income sourced through business activities carried out in France or through French Permanent Establishments (PEs), as well as on income sourced from real estate located in France. The tax residence is generally determined by identifying whether a company is incorporated under French commercial laws.

Small and medium-sized companies (SMEs) whose turnover doesn’t exceed 7,63 mill. EUR, are eligible for a reduced 15% rate levied on the first 42,500 EUR of profit. Another important condition is that the company’s share capital has to be fully paid up, and at least 75% of this capital must belong to natural persons.

Capital Gains Taxation

Since the DGFiP treats cryptoassets as moveable assets, they are subject to capital gains taxation. In France, moveable assets are subject to Capital Gains Tax and Social Charges. The Capital Gains Tax is applicable to residents and non-residents of France, and under certain conditions, it can slice off around 40% of the profit made upon the sale or transfer of cryptoassets. The sale happens when cryptoassets are sold for fiat currency.

The Capital Gains Tax rate applicable to profits sourced from crypto varies depending on the frequency of your trading activities. The flat Capital Gains Tax rate is 19%, and the Social Charges rate is 17.2% which amounts to 36.2%. Fortunately, taxpayers can also avail of various tax allowances and even be tax-exempt, provided that they meet certain requirements.

With regard to the Capital Gains Tax, crypto-to-crypto transactions (trading one cryptoasset for another) aren’t deemed taxable events. It means that such DeFi transactions as crypto staking, crypto mining, lending, borrowing, or liquidity pools don’t trigger liability for the Capital Gains Tax.

Value-Added Tax

In France, the standard VAT rate is 20% which is in line with the EU directives and is levied on products and services sold in France. Not every crypto-related activity is subject to tax, however, most French companies are obligated to register as VAT payers if their supplied products are worth more than 34,600 EUR or their supplied services are worth more than 86,900 EUR.

In accordance with the decision of the Court of Justice of the European Union (CJEU), crypto exchange services (including exchange into fiat money) aren’t subject to VAT as they fall within the category of financial services for VAT purposes.

Mining isn’t subject to VAT either due to the absence of a contractual relationship between the supplier and the customer. Also, when a VAT payer carries out mining activities, there is no eligibility for a VAT deduction from any related expenses (such as technical equipment or electricity consumption used for the mining activities).

European and Global Tax Regulations

France is a member of various European and global organisations which set taxation standards that usually replace national rules and consequently increase taxation efficiency, consistency, and transparency. Therefore, French crypto businesses should carefully examine the European and global regulations in order to duly fulfil their taxation obligations.

The EU’s Directive on Administrative Cooperation (DAC) is designed to ensure fair and efficient taxation across member countries. It’s set to cover the reporting and exchange of information between the EU’s tax authorities involving income or revenue generated through cryptoassets by EU residents. It’s aligned with the Markets in Crypto-Assets (MiCA) regulation and relies on MiCA’s authorisation requirements, which prevents cryptoasset service providers from facing additional administrative burdens.

Moreover, DAC8 is also consistent with the Crypto-Asset Reporting Framework (CARF), recently approved by the Organisation for Economic Cooperation and Development (OECD), which also includes amendments to its Common Reporting Standard. The purpose of this framework is to raise crypto taxation and tax reporting standards by introducing automatic tax reporting and taxpayer information sharing between international authorities. The CARF standards are applicable to natural and legal persons that provide services pertaining to crypto exchange (including fiat money), and crypto transfers.

How do I pay taxes on crypto in France in 2024?

In 2024, the procedure for paying taxes on cryptocurrency income in France remains the subject of particular scrutiny by both taxpayers and tax authorities. France, like many other countries, is looking to create a transparent and understandable cryptocurrency taxation system to ensure fair and efficient tax collection. Here is a detailed guide to paying tax on cryptocurrency income for French residents for 2024.

Understanding the tax status of cryptocurrencies

The first step for taxpayers is to understand how the French tax authorities categorise cryptocurrency. According to the latest updates, cryptocurrency income can be treated as capital gains (or losses) and is subject to taxation according to this status. This includes both transactions involving the exchange of cryptocurrency for fiat money and the use of cryptocurrency to purchase goods or services.

Determination of taxable income

To determine taxable income, it is necessary to take into account all transactions made during the tax year. It is important to accurately calculate the gain or loss from each transaction, taking into account the initial acquisition cost of the cryptocurrency and the cost of its sale or use. French taxpayers should keep detailed records of all their cryptocurrency transactions to facilitate accurate tax calculation.

Tax rates

In 2024, the tax rate on cryptocurrency capital gains in France is 30%. This rate includes both income tax and social contributions. It is important to note that tax rates are subject to change, so it is important to follow the latest updates from the tax authorities.

Income declaration

To declare cryptocurrency income, taxpayers must fill out a special form provided by the tax service. In this form, it is necessary to indicate all income received during the year, as well as the calculated tax. The declaration must be submitted within the prescribed deadline, usually by mid-May of the year following the reporting year.

Retention of documentation

It is crucial to retain all documentation related to cryptocurrency transactions, including proof of purchase and sale, exchange receipts and any other relevant information. These documents may be required by tax authorities to verify declared income and settlements.

Possible exemptions and exclusions

Certain cryptocurrency transactions may qualify for tax incentives or exemptions depending on specific circumstances. For example, long-term ownership of cryptocurrency may entitle you to a lower tax rate. It is advisable to consult a tax advisor for information on possible benefits and optimisation of your tax burden.

Conclusion

Paying taxes on cryptocurrency gains in France in 2024 requires careful planning and attention to detail. Complying with all tax requirements and keeping accurate records of cryptocurrency transactions will help avoid potential penalties and ensure compliance with tax laws. In France, the tax system includes various types of taxes, including personal income tax, capital gains tax, value added tax (VAT) and others.

 

Main tax rates in France 2024

If you’re preparing to develop a sustainable crypto business in France, our team of dedicated and quality-focused legal consultants here at Regulated United Europe (RUE) will be delighted to provide you with tailored, value-added support in structuring your taxes in accordance with local and international rules. We also offer French crypto company formation, crypto licensing, and financial accounting services. Contact us now to book a personalised consultation.

Also, lawyers from Regulated United Europe provide legal support for crypto projects and help with adaptation to MICA regulations.