How to avoid your bitcoins being taxed? Since 2019, gains received on the purchase and sale of cryptocurrencies, such as bitcoin, ether, or dogecoin are taxable. Unless the total amount of your capital gains do not exceed 305 euros per year, in which case they are exempt from tax.
Beyond this ceiling, your earnings will be systematically subject to the single flat-rate deduction (PFU) of 30%. Or 12.8% tax and 17.2% social security contributions.
However, the situation should change next year. Article 79 of the finance law for 2022 provides that from January 1, 2023, investors will be able to choose between the PFU and the progressive tax scale when declaring their capital gains.
Good news for taxpayers who are not taxable, or taxed at 11%, since they will then only pay 17.2% of social security contributions, or 28.2% of taxes and social security contributions, respectively, instead of 30% of PFU. Taxpayers whose income is taxed at 30 or 45%, on the other hand, will have every interest in keeping the PFU.
How To Avoid Your Bitcoins Being Taxed: A tedious statement
While for their bankbook, their life insurance, their PEA, and other common savings products, investors can rely on the annual statement of earnings issued by their financial intermediaries, they are left to their own devices to declare for taxes their income from trading digital assets.
And the task turns out to be tedious, especially for those who are active crypto-investors, and regularly make arbitrages according to the current fluctuations in valuation.
Because, in addition to declaring the total amount of their earnings over a calendar year, they must also list on a specific document all the crypto-euro conversions they have made and the revenue corresponding to each of these operations.
On the other hand, if they remain in the world of cryptocurrencies and resell their ethers to buy bitcoin, for example, crypto-investors do not have to declare it to the tax authorities and they are not taxed on these crypto-to-crypto transactions.
"Today, what is taxed in France is the capital gain when you resell in euros, for example on a bank or payment account", explained to MoneyVox Claire Balva, co-founder of Blockchain Partner, consulting firm specializing in cryptocurrencies.
How To Avoid Your Bitcoins Being Taxed: Cryptocurrencies pegged to the dollar and the euro
However, there is a solution to protect your earnings from the high volatility inherent in cryptocurrencies without exposing yourself to the shackles of tax regulations: stablecoins.
These are also cryptocurrencies, but which have the particularity of being indexed to a traditional currency, such as the dollar or more rarely the euro.
Their stability is allowed thanks to a guarantee mechanism, such as sanctuarizing in a bank account the exact amount of money necessary for the conversion of all stablecoins.
“When you stay in the blockchain via, for example, a stablecoin, you are not taxed. This is why investors prefer to change their bitcoins or their ethers into dai or usdt rather than euros. This is a known mechanism in the world of cryptos, ”explains Claire Balva.
If this technique is legal, does the Ministry of Public Accounts see it in a good light? Asked about the possibility of delaying the tax in this way, he has so far not reacted to our request.
In France, the market for stablecoins in euros is still small. In March 2021, a promising announcement came from the start-up Lugh, of which Casino is a shareholder, which launched its stablecoin in euros (1 lugh = 1 euro).
It is currently accessible to individuals and companies investing via the Coinhouse broker.
“Since its launch on March 18, 6 million lughs have been created. Today 40% of transactions at Coinhouse are made with lugh”, explained Olivier Ou Ramdane, co-founder of Lugh, at the time of the launch. For comparison, it has traded over the last 24 hours for nearly 62 billion euros in usdt.
Coinhouse, on the other hand, derives a specific advantage from offering the lugh on its platform. This allows it to store, via this ersatz euro, the savings of its customers. Because, of not having a banking license, this crypto broker is not authorized to directly keep their euros.
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DISCLAIMER: This situation is well-suited for France because this post is written from France's tax system perspective. You need to find out what your country's tax system says about cryptocurrency gains. But there is a good chance that you have to pay taxes on those gains.
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