Crypto-assets and taxation: what individuals often don't know... at their own risk
08/08/2025
The rise of cryptocurrencies is attracting more and more investors, seduced by the promise of high returns. However, behind the craze for digital assets, many people are still unaware of how the tax regime for crypto assets applies to their personal situation. A simple oversight or misunderstanding of the legal framework for crypto assets can lead to significant consequences. Let's take a closer look at this issue to demystify capital gains taxation, reporting requirements, and common mistakes that expose some individuals to unexpected risks.
What is a crypto-asset in the eyes of the law?
The definition of a crypto-asset has evolved with the specific legislation introduced over recent years. Under French law, these assets include both the well-known cryptocurrencies and tokens intended to represent various digital rights. The Monetary and Financial Code thus provides a specific framework for defining what digital assets are in terms of law and personal taxation.
Individuals quickly find themselves confronted with a technical concept. A digital asset becomes “taxable” when it is sold for legal tender (euro, dollar, etc.), but also during certain types of exchanges between crypto-assets. This raises the issue of the applicable tax regime, which differs from that of a simple stock market or traditional real estate investment.
How does the tax regime for crypto assets work for individuals?
The tax regime for crypto-assets has undergone several changes, notably through the 2019 Finance Act. For most individuals, it is now a system designed to simplify the tax reporting of cryptocurrencies, although some subtleties remain depending on investor profiles and the nature of the transactions carried out.
Understanding this specific tax regime helps avoid costly mistakes and ensures compliance with regulations.
What is the principle behind capital gains tax on sales?
The general principle is relatively simple: as long as there is no conversion of digital assets into euros (or any other fiat currency), no taxation applies. Capital gains tax is only levied when the investor sells their assets for official currency or uses this value to pay for goods or services. Exchanges between crypto-assets, if they do not involve conversion into traditional currency units, are normally exempt from this rule, except in cases provided for by specific legislation.
The formula for calculating capital gains, which we admit is not very simple, is as follows:
Capital gain = Sale price – [Total acquisition price of the portfolio × (Sale price / total value of the portfolio)]..
Since the flat tax—officially known as the single flat-rate levy (PFU)—came into effect, gains from the sale of digital assets are subject to an overall rate of 30%. This rate includes 12.8% income tax and 17.2% social security contributions. This simplification aims to clarify the taxation of individuals who invest on an occasional basis. However, since 2023, it has been possible to opt each year, by express choice, for the progressive income tax scale instead of the flat rate of 12.8% (still with 17.2% in social security contributions).
Non-commercial profits and special cases: a little-known subtlety
Some individuals discover, sometimes a little too late, that their activities involving crypto assets may be subject to a different tax regime. When the tax authorities consider that trading activity is “habitual,” repeated, or even organized, it then falls under the non-commercial profits (BNC) regime. In this case, the taxpayer no longer benefits from the flat tax, but is subject to the progressive income tax scale.
Ce point précis fait partie des changements majeurs apportés par la réglementation récente. Avec l’évolution du cadre juridique des crypto-actifs, il reste pertinent de vérifier régulièrement sa propre situation auprès d’un professionnel compétent, surtout si les montants échangés deviennent importants ou si une fréquence élevée d’opérations apparaît dans son historique d’investisseur.
In particular, since 2023, the distinction between private management and professional activity has been based on all the conditions of implementation (frequency, volume, organization, professional methods, etc.) and no longer solely on repetition.
Reporting obligations: what information must be provided to the tax authorities?
Tax reporting for cryptocurrencies requires a clear understanding of which transactions must be reported to the authorities. Ignoring these rules can result in significant penalties, ranging from a simple warning to dissuasive financial penalties, not to mention the risk of a tax adjustment in the event of an unexpected audit.
As soon as an account is opened, held, or closed on an exchange platform located outside France, there is an obligation to declare it. Each year, the existence of these foreign accounts must be specified when filing your tax return, generally using form number 3916-bis. Failure to comply with this requirement will result in an automatic fine, regardless of whether the account has recorded any transactions during that year.
In addition, DAC 8, which will be implemented in France in 2025, strengthens and clarifies reporting requirements for platforms and individuals.
Reporting capital gains in practice
For each sale, individual investors must calculate the exact amount of their net gains and then report the total amount on their annual tax return (Form 2086 for digital asset sales). Be careful not to confuse this with income from professional activities, which falls directly under the BNC regime mentioned above.
There are tools and applications available to accurately track all transactions, but nothing can replace personal vigilance. The method generally consists of calculating the difference between the sale price and the weighted purchase price of all purchases made during the calendar year. In the event of losses on resale, these can be offset against future gains, in accordance with the terms provided for by law.
What are the risks for those who fail to declare?
While there may be a temptation to “fly under the radar” or minimize the scope of one's operations to avoid personal taxation, this strategy can be costly. Recent tax laws have given the tax authorities new tools to detect discrepancies in tax returns or deliberate omissions. Failure to file a tax return or a significant error can result in heavy penalties, including additional tax, interest on arrears, and even criminal penalties for proven fraud.
Exchange platforms are now subject to various reporting and enhanced identification requirements, which greatly reduces the anonymity initially associated with cryptocurrencies. Failure to comply therefore often ends up being reported to the tax authorities, even after several years.
What about special plans?
Mining
Gains from crypto-asset mining activities (i.e., the creation or validation of blocks on a blockchain in exchange for a reward) are taxed in the non-commercial profits (BNC) category for individuals. This taxation applies as soon as the crypto-assets are received, regardless of whether they are subsequently resold. In the case of professional or habitual activity, reclassification into another category of profits may occur.
Donations and transfers
The transfer of crypto-assets by donation or inheritance is, in principle, subject to the general regime of transfer duties on gifts. Certain transactions may benefit from tax exemption or deferral measures, particularly in the context of contributions to companies or transfers free of charge under certain conditions. It is important to document the valuation of crypto-assets on the date of transfer and to fulfill specific reporting obligations.
Crypto/crypto exchanges
Exchanges between crypto-assets (e.g., exchanging Ether for Bitcoin) benefit from a tax deferral under certain conditions: as long as there is no conversion into legal tender (euro, dollar, etc.) or goods/services, the unrealized capital gain is not taxed immediately. However, certain complex exchanges or exchanges treated as disposals may constitute a taxable event: it is important to pay attention to the nature of the transactions carried out and to keep a precise record of transactions for the subsequent calculation of taxable capital gains.
Key precautions to take regarding the tax framework for crypto assets
Let's be honest: it's better to take a proactive and methodical approach when investing in digital assets. First, it's essential to clearly distinguish between personal investments and potential regular activities that could be considered business income. This helps avoid more costly reclassification later on.
It is recommended that you systematically keep all proof of purchase, sale, and exchange of digital assets. These documents form a solid basis in the event of a tax audit and facilitate the rapid collection of the information needed to complete your annual tax return.
Remember to regularly check for regulatory changes.
The legal framework for crypto-assets is constantly evolving, influenced by finance legislation and European or international standards. Staying abreast of changes allows you to anticipate new reporting requirements or adapt your investment strategy if necessary. Seeking advice from a knowledgeable professional protects against overly personal interpretations, particularly on issues related to crypto-asset exchanges or the specific treatment of certain tokens in terms of personal taxation.
The use of dedicated tools or specialized software solutions also helps to produce comprehensive and compliant reports. Many offer, for example, automated generation of files to be attached to cryptocurrency tax returns, reducing the risk of omissions or material errors.
Don't underestimate the risks associated with crypto assets
Behind the volatility and opportunity for significant capital gains, investing in cryptocurrencies also exposes investors to tax uncertainties. In addition to the inherent risk of miscalculation, the legal aspects associated with holding or transferring wealth in the form of digital assets should not be overlooked.
Consideration of the inheritance or donation of crypto assets must be anticipated from the outset of any investment: few individuals include these assets in their overall estate planning, even though specific legislation on these issues is beginning to take shape. Informed decisions must also be made to legally secure assets in the event of premature death or family disputes related to these innovative assets.
Frequently asked questions about crypto-asset taxation and reporting for individuals