April 20, 2020 marks the start of the 2019 tax return campaign for French taxpayers. This year again, the declaration of taxable capital gains on cryptocurrencies is subject to new taxation, resulting from the 2019 Finance Law Project (PLF). So, happy owners of Bitcoin and other crypto that you are, and whether you are an avid trader or a holder at heart, you will have to get down to fulfilling your tax duty!
Welcome to this first edition of the Crypto Tax and Tax Forum ! A new section that will focus on the legal and tax aspects related to the presence of crypto-assets in your wealth or investment portfolio. Today is society Waltio, specializing in assistance to individuals and professionals in the tax declaration of cryptocurrencies and Bitcoin which inaugurates the premises!
Bitcoin, cryptocurrencies and taxation
Since 2018, the State has engaged in a process of understanding the subject in order to set up a regulatory framework and a tax system dedicated to Bitcoin and the cryptocurrency ecosystem.
These works made it possible, among other things, to define the notion of digital asset, neutralize crypto-crypto operations and above all set up a flat tax rate via the Single Fixed Levy (PFU).
“For the first year, the French have the legal obligation to calculate and declare their taxable earnings in digital assets at the same time as their tax return,” specifies the white paper of Waltio and ORWL Avocats about the taxation of cryptocurrencies in France.
But rather than focusing on understanding the details of the law, let’s focus on the reporting obligations for French taxpayers, imposed as part ofoccasional purchase and resale of digital assets.
The taxpayer must complete two separate forms in order to declare its overall capital gain realized. By the way, if he has overseas digital asset accounts (such as Binance, Coinbase…), he must inform the French tax administration via a specific form.
Complete the f2086 AAnnex to calculate the taxable capital gain
This appendix allows “Calculate the taxable capital gain on the 2086 declaration”, according to the April 17, 2020 update of article 150 VH bis of the General Tax Code (CGI). For this, it is necessary to detail each of the taxable operations carried out during the fiscal year.
A taxable transaction is an exchange of digital assets (cryptocurrencies) for a monetary currency of state (fiat) or the use of a digital asset as a means of payment for the purchase of a good or of real service.
“The appendix involves declaring a very large number of information relating to the taxpayer’s trading activity and his assets in digital assets”
White Paper by Waltio and ORWL Avocats on the taxation of cryptocurrencies in France.
The points to indicate in this appendix are:
- the sale price digital assets
- the total portfolio purchase price
- the overall value of the portfolio on the date of transfer
- le amount of the capital gain or loss realized on the taxable transaction.
Bitcoin and crypto, chow to calculate the overall value of a portfolio?
You must collect all the data from your accounts (cold storage portfolio – wallets – and exchange platforms). During each taxable transaction, the corners of the portfolio should be valued by referring to “Websites offering daily average quotation histories on the main trading platforms”, For example CoinMarketCap.
How to obtain the amount of the realized gain or loss?
To determine the realized gain or loss, you must do the sum of all capital gains or losses from taxable transactions.
The gain or loss is equal to the invested (cash-in) weighted by the share of cash-out in the total value of the portfolio on the date of this sale, all less the sale price of the digital assets (cash out).
The calculation formula is as follows:
Taxable capital gain = Cash-out – Cash-in * (Cash-out / Total value of the portfolio on the date of transfer)
To make these calculations, this regime involves identifying taxable transactions, monitoring the amount of cash-in and all the transactions in his portfolio so that he can value it.
Carryover into Form 2042C
Once all of your capital gains or losses have been calculated for each of your taxable transactions, the amount of the global capital gain should be entered in the specific box within form 2042C, in accordance with the new regime provided for by the article 150 VH bis CGI.
This overall gain or loss is equal to the sum of all capital gains or losses from taxable transactions carried out during the year.
Declare accounts of digital assets held abroad via form 3916 Bis
Calculating and declaring capital gains in digital assets is not enough to comply with tax legislation for income from cryptocurrencies.
The form to fill out is 3916Bis. It is a derivative of the declaration form for accounts held abroad (Form 3916).
Please note, cryptocurrency accounts that do not convert cryptocurrencies to state monetary currencies are also to be declared.
“While it is clear that the digital assets held on a Ledger are not affected by this reporting obligation, uncertainties remain regarding the obligation to declare accounts which, without being custodial, are not entirely non-custodial (Set, Compound, etc.) “
White Paper by Waltio and ORWL Avocats on the taxation of cryptocurrencies.
The reporting obligations are addressed to taxpayers who have realized an overall capital gain as presented in the article. 150 VH bis CGI and that whatever the amount.
To learn more about Bitcoin and cryptocurrency taxation for a French taxpayer, download and view the 18-page white paper (completely free) co-authored with the tax law firm, ORWL Lawyer. This document will allow you to understand in detail how to calculate your taxable capital gain, understand and anticipate a tax audit.
A word from Pierre Morizot, Co-founder of Waltio
“Waltio is a tax and accounting assistant for cryptocurrencies. Our mission is to increase the adoption of digital assets (Bitcoin and cryptocurrencies) by simplifying their administrative and regulatory management. In 2019, our tax robot supported more than 400 French taxpayers in their tax management. “
Warning – The information provided on this page is for informational purposes only. In no case should they be considered as legal, tax, financial or investment advice. The company Waltio declines all responsibility in the event of information, comment, analysis, opinion, advice and / or recommendation proving to be inaccurate, incomplete or unreliable or leading to investment or other losses.
Nice to meet you, it’s Hellmouth! Editor-in-chief of Bitcoin, the crypto media you are honoring to survey right now (well done, you have taste).
Crypto-enthusiast of the second hour, nothing is more important to me than supporting the global adoption and democratization of the treasures that the blockchain offers us.
I write articles between two cocktails in Tahiti, my adopted island, and do not hesitate, if the opportunity arises, to feast on a plump scam or a little too enterprising Ponzi pyramid.
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