For your calculators, or rather your Excel tables! – As planned, we will return to the topic of capital gains on the sale of digital assets, so that you are able to correctly complete your tax return for 2021.
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Disposal of digital assets exempt from taxation
First, keep in mind that not all digital asset transactions are considered taxable events. So non-taxable transactions are the following:
- Purchase of cryptocurrency with legal tender (fiat)
- Cryptocurrency exchange against other cryptocurrencies
- Crypto transfers against stack coins
On the other hand sale of cryptocurrencies against fiat as well as purchase of goods or services in cryptocurrencies, are considered as transfers of digital assets taxable.
One of the amendments from Sten PERSON to the Finance Act 2022 consisted of creating an exemption for the purchase of goods or services under € 3,000. Unfortunately, this amendment was rejected by the National Assembly at first reading …
The calculation of the capital gain on the disposal of taxable digital assets
Trading operations performed regularly or occasionally
The provisions of Article 150 VH bis of the General Tax Code (CGI) applicable to the disposal of taxable digital assets calls for a distinction to be made as to whether these operations are considered to have been carried out in a professional capacity Where Not professional. However, the provisions of the article do not specify the criteria for determining whether an activity is carried out on a professional basis or not.
However, the difference is significant then transactions deemed to have been carried out on a regular basis will be taxed in accordance with the provisions in force industrial and commercial profits (BIC), because this activity will be considered commercial. On the other hand, they are considered to be performed occasionally taxed according to the realized capital gain to which the tax applies. flat tax with a course of 30%.
However distinguishing criteria are unclear, then the boundary between the usual and occasional criterion is sometimes flimsy. The tax doctrine calls for taking into account several clues such as:
- Used tools for the benefit of trading activity;
- Level of rationalization and sophistication of the activity;
- Transaction frequency and holding period active …
The tax authorities could also clarify this the use of a computer tool to carry out the exchanges, and the fact that income from trading activity is higher than business income is not not enough to consider that a taxpayer carries out the activity regularly.
Finally, for people who trade cryptocurrencies on a regular basis, taxation should be changed from January 1, 2023. One of the provisions of Finance Act for 2022 provides that from that date, the activity of trading in digital assets carried out on a regular basis will be subject to the non-trading profit scheme. This change allows to adjust the tax system for transactions in digital assets on it of stock market transactions.
The calculation of the added value
First, one must keep in mind that the calculation of the capital gain must be made per each taxable waiver. These taxable waivers may be those resale of digital assets in legal tender (fiat)Where purchase of goods or services in cryptocurrencies.
Then, Article 150 VH bis of the CGI provides the method to calculate the capital gain on the sale of digital assets. Three elements are important:
- Retail Price : it is the effective selling price (the amount of the sale of digital assets against fiat, or the nominal value of the purchased good or service) minus the transaction costs. You will be able to deduct the costs provided you can justify them.
- Purchase price : this is the amount corresponding to the acquisition value of the assets actually transferred.
- Total portfolio value : Total value of the portfolio on the day of sale.
here is algorithm capital gain or loss on sale of digital assets:
These amounts must be converted into euros at the exchange rate applicable on the day of the transfer. Thus, it is necessary to keep the transfer date in order to determine the exchange rate in the case where the transfer takes place in dollars.
Mr JDC, occasional dealer purchased for € 5,000 in digital assets in April 2020 (this amount is the total acquisition price). In April 2021, thanks to the rise in the price of Bitcoin, Mr. JDC had the chance to double his initial investment. He thus has one wallet digital asset that has one global value of € 10,000.
He thus decides to secure his situation by transferor for € 4,000 of digital assets against the euro.
Thereby, calculate the added value from Mr. JDC:
Sir. JDC released one price gain of € 2,000 on this taxable waiver. He must thus state this capital gain in his tax return for 2021. Thereafter, 30% flat tax will apply to this capital gain. Sir. JDC will thus be responsible for one 600 € tax for this operation.
This calculation of capital gains or losses must be performed for each operation taxpayers, then add them together and then calculate the tax amount (by multiplying the sum of your capital gains and losses by 30%).
Let’s take the example of Mr JDC, in addition to having to declare his digital asset accounts with Cerfa 3916 bis, he will have to complete Form No. 2086 compared to ” capital gains after the disposal of digital assets “. Then he must fill number of taxable transactions performed in 2021. In our case, Mr. JDC performed only one. He must therefore fill in the boxes corresponding to task 1:
Once Mr JDC has completed this form, the size of his capital gain will be automatically reported in the tax return in the box 3 YEARS (in the case of the online statement). That kurstab will be reported in box 3BN. You should make sure that the amounts correspond to your calculations.
In some cases, it is not useless to be accompanied by a lawyer tax specialist el use accounting aids available on the Internet to avoid errors.
Subject to the adoption of the provision as it stands, it is stipulated in the Finance Act for 2022 that from 1 January 2023 it will be possible tochoose the progressive scale income tax (IR). To this rate must be added the rate of social contributions corresponding to 17.2%. This option will thus only be advantageous for taxpayers who declare less than € 25,711 in income per year. Please note that this provision will only apply to tax-generating transactions executed from 1 January 2023. For transactions executed in 2022, you will thus not be able to choose the IR scale, and they will be subject to the current tax system, ie. flat tax by 30%.
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