The digital asset class, to talk about cryptocurrencies like Bitcoin and Ethereum, entered on 1is January 2019 in the regulatory framework. To be fiscally compliant, digital currencies and your cryptocurrency accounts must be declared, and a crypto-specific scale is now available through income tax. In 2021, this tax compliance will not change. It will concern your assets, but also your various accounts, especially if they are located abroad.

In this tutorial, we explain in detail how to declare your crypto-currencies during the 2021 income taxes. The forms and boxes concerned, the amount of the tax, the alternatives to not be taxed on the earnings of its Bitcoin and other cryptos … we will detail everything.

Crypto-currencies: the context in 2021

In 2020, Bitcoin took off, followed by Ethereum. The stars have aligned for cryptocurrencies: PayPal, the largest payment service, has started accepting and selling digital currencies on its platform; the boards of national currencies are turning at full speed to face the crisis; and Bitcoin has won the hearts of big companies such as some banks. So much so that millions of individuals have joined the adventure.

If you invested in cryptocurrencies in 2020, or have been holding assets for longer and have recovered your profits, the question of tax compliance has certainly crossed your mind. How to declare your crypto-currencies for taxes in 2021? To know everything, here is a complete tutorial to learn more about the regulatory framework of Bitcoin and other cryptocurrencies in French taxation.

It will also allow you, if the rules do not change for the 2022 taxes, to ensure that you take the right steps to avoid being taxed in the 2021 fiscal year, even while recovering your profits.

Crypto-currencies: Declare Bitcoin and Ether in 2021

“Digital assets”, what are we talking about?

Bitcoin, Ethereum, Litecoin, Ripple … all crypto-currencies as well as tokens that were available for purchase in 2020 have been grouped under the category of digital asset, which are imposed on the author of 30% by the ” flat tax ”(or single flat-rate levy).

This taxation falls within the framework of income taxes, and the 30% recovered concentrates 12.8% tax and 17.2% social security contributions. Commodities, stocks, and other financial products that are not digital currencies do not fall into the category.

The taxation of digital currencies

Since its integration, the 1is January 2019 in France, the category of digital assets must therefore be taken into account in income taxes. The first point to note about this statement is that French taxation focuses only on realized gains.

This is a key point to understand: as long as you haven’t flipped your digital currencies back to national currencies like the euro, or earned money on the conversion against your investment of departure, then you will not be taxed.

To find out, the tax system will ask you to report all the conversions made during the year 2020. You will therefore have to note the various gains made, from the moment you have exchanged your cryptocurrencies in one national currencies, the fiat currency. In the end, the final result between capital gains and losses will be the amount assumed for taxation. If it is negative, you will not be taxed.

👉🏼 Declaring your crypto-currencies means being taxed on the capital gains generated during the purchase and resale of digital assets.

👉🏼 Getting taxed on your crypto-currencies, it is necessarily to have made gains, and having exchanged these in national currencies (fiat currency).

👉🏼 This capital gain on the purchase and sale of cryptocurrencies is subject to a flat-rate tax of 30% when filing the 2021 tax return.

👉🏼 Namely: if the amount of your capital gain does not exceed 304 euros when converting into euros (or foreign currencies), you will not be taxed when declaring your crypto-currencies.

How to sell your crypto-currencies without being taxed?

If you have made gains on Bitcoin, Ethereum, Litecoin or any digital token, you will have understood that there may be alternatives so as not to be imposed. These follow a completely comprehensive logic: you will have to, during a transaction to exchange your cryptocurrencies, choose another digital asset.

Stables, there are a multitude, particularly known under the term of “stablecoin”. Here are the alternatives to not tax your cryptocurrency earnings:

  • Stablecoin (USDT, USDC, TUSD, PAXOS, etc …)
  • Authentication tokens (also called Security tokens)
  • Les NFT (non-fungible token)

The stablecoin solution is by far the most popular in this regard. But what is a stablecoin? It is a digital asset that replicates the face value of a centralized and fiat currency. They are therefore a kind of clone that will also follow the issuance movements of the money supply to follow national currencies while taking advantage of the blockchain architecture and its advantages for operations. They were created for the particular purpose of guarding against the volatility of the cryptocurrency market.

Where to declare your crypto-currencies? Documents to know

Main form Cerfa n ° 2042

This is the tax return form that everyone is familiar with. Within it, you will have to enter the amount of the taxable capital gain. The boxes dedicated to this subject are the same as for the 2020 income tax return, namely the “capital gains or losses on digital assets” boxes. They are located in boxes 3AN and 3BN.

Cerfa n ° 2086

Declaring cryptocurrencies requires vigor and care, especially when completing this schedule. You will be asked, here, to note all of your purchase and sale transactions, to highlight the amount of sales which determines the final gain or loss.

Cerfa n ° 3616-bis

Finally, note that the income tax declaration will require you to declare your foreign accounts. A lot of’exchange, whether for the purchase of crypto-currencies or stocks, are based abroad, like Coinbase and Bitstamp for digital assets and Degiro for trading. As with the neo-banks (Revolut, N26,…), you must therefore note your foreign accounts on the Cerfa n ° 3616-bis form, even if they are no longer used, but still open.

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