Taxation of digital assets : How to report your profits and losses ?

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This article explains how to report your crypto income and helps you complete your annual tax return.

Are you taxable?

If you want cash-out, i.e. reconverting your digital assets (BTC, ETH, EUR-L, ...) into fiat currency such as the euro, you must know if you are in a situation of capital gain or in capital loss situation. You are in a capital gain situation if the total value of your investment portfolio exceeds the value of your initial capital.

  • Example #1: Baptiste invests 6000€ in different cryptocurrencies in January 2020. In December 2020 his investment portfolio has a total value of 15000€. Baptiste is in a situation of capital gain, if he wishes to withdraw his earnings by converting them back into euros, he will be taxed on his capital gain at the rate of 30%. 
  • Example #2: Baptiste invests €6000 in different cryptocurrencies in January 2020. In December 2020 his investment portfolio has a total value of 3000€. Baptiste is in a situation of capital loss, if he wishes to withdraw his money despite his losses by converting his cryptocurrency into euros, he will not be taxed and may declare a capital loss. This capital loss may be deducted from a future declared capital gain. 


How do I calculate the taxable amount?

The formula to calculate the taxable amount on its capital gain is the following:

Taxable capital gain = Cash-out- Cash- in * (Cash-out / Total value of the wallet on the date of assignment pan).

Example: Taxable capital gain = €15,000 (cash-out) - (€6,000 (cash-in) x 40% (fraction cash out on the value of the portfolio on the date of sale)) = €3,600.

Then your €3600 will be taxed by the “flat tax”, up to 30% (12.8% tax and 17.2% social security contributions).


How to declare your taxes if you are in a capital gain position ?

Only capital gains are taxed in cryptocurrencies.  

One ​​of the benefits of having a Coinhouse account is that we are a French company based in France and registered with the AMF as a PSAN, so you don't have a declaration  holding an account abroad to be made, the only declaration to be made is at the time of sale for euros (cashout) when you are in a situation of capital gain.

Still, if you have an account on a foreign cryptocurrency exchange, you need declare it. For this you will need to bring the declaration by a resident of a digital asset account opened, held, used or closed abroad: Cerfa 3916-bis. 

To declare your capital gains in cryptocurrencies, you will need to provide the additional tax return: Cerfa 2042. C . He may then declare the amount of the annual global capital gain or loss must be declared, each year, in the dedicated box ("Capital gains or losses on digital assets”) of the tax return.

To complete the return with your capital gains, you will have to report your taxable amounts in box 3AN or 3BN of the declaration.

On the other hand, must be attached to the tax return an annex detailing all taxable transactions during the year. You can find these statements on the government website:

Given the presented characteristics of the plan, the appendix involves  declare a  number very  significant amount of information relating to the taxpayer's trading activity and his digital asset holdings when a taxable transaction has been carried out during the year. Thus,  for  each  taxable transactions, must be indicated:

  • The sale price of digital assets.
  • The total acquisition price of the portfolio (ie the amount of cash-in) specifying the fractions of this total acquisition price already deducted in the context of previous taxable transactions.
  • The overall value of the digital asset portfolio at the time of disposal, across all media;regard to valuation, the administration admits that taxpayers refer to "websites offering daily average quotation histories on the main exchange platforms", such as CoinMarketCap or Coingecko.
  • The amount of the capital gain or loss realized on the taxable transaction.

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