Taxation & crypto: should I pay taxes on my crypto-currency?

What are the current regulations concerning taxes on cypto-currency? Do you have to pay taxes on your SITY tokens? The Versity team answers your questions about taxation in the metaverse!

Do you have to pay taxes on crypto-currency?

In general, gains made on crypto-currencies are taxable, in the same way as gains made on traditional investments such as stocks or bonds. If you buy crypto-currencies and their value rises, you will have to pay taxes on the gains made when you sell your crypto-currencies.

What are the crypto-currency tax regulations in France?

In France, gains made on crypto-currency transactions are subject to income tax and the real estate wealth tax (IFI) for amounts in excess of €1.3 million.

More specifically, the tax authorities consider cryptocurrency gains to be non-commercial profits (BNC) if they are made on a regular basis, and capital gains on the sale of furnished property if the crypto-currency is held for more than 2 years.

Non-commercial profits are subject to the progressive scale of income tax (IR), while capital gains are taxed at a flat rate of 19%, to which social security contributions of 17.2% are added, giving an overall tax rate of 36.2%.

Are there any tax allowances for crypto-currencies?

You can benefit from a holding period allowance on capital gains realized on crypto-currency disposals, depending on how long they have held the crypto-currencies.

So, if you've held crypto-currencies for more than a year, you should be able to benefit from a 50% allowance on capital gains realized on the sale of the crypto-currencies. This means you'll only pay tax on half of the gains made.

On the other hand, if you've held crypto-currencies for less than a year, you won't benefit from any allowance and will be subject to an income tax rate of up to 45%.

What happens if I resell my crypto-currency?

If you resell your crypto currency, you'll need to declare the amount of the sale as well as the original purchase price on your annual tax return.

Beware: if you fail to meet this obligation, you risk financial and criminal penalties!

We therefore advise you to keep accurate records of your cryptocurrency transactions. You can also consult a chartered accountant to ensure that you comply with current tax regulations. Note that tax regulations differ from country to country.

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