2023 guide to cryptocurrency tax reporting

This guide is brought to you by tax assistant Waltio, and is intended for individuals investing on an occasional basis and does not deal with the taxation applicable to professional traders. The assessment of the quality of occasional or habitual trader depends on the frequency, the tools, the amounts invested and the gains made.

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The dates of the tax calendar to remember

The first important thing to know to declare your cryptocurrencies in time and not to suffer penalties, it is the date.

Tax filing deadlines vary depending on where you live. If the online declaration service opens for everyone on April 13, 2023, the deadlines vary according to the departments.

Here are the tax calendar dates for the 2022 income tax return :

• April 13, 2023 : opening of the online declaration service, on the website impots.gouv.fr ;
• May 22, 2023 : deadline for filing the tax return, in paper format;
• May 25, 2023 : deadline for online income declaration in zone 1 (departments 01 to 19 and foreign residents);
• June 1, 2023 : deadline for online income declaration in zone 2 (departments 20 to 54);
• June 8, 2023 : deadline for online income declaration in zone 3 (department 55 to 976).

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What are your tax obligations in terms of cryptocurrencies?

If you have invested in cryptocurrencies, you have two tax obligations.

An obligation to declare your taxable transactions

Each year, the tax system requires you to declare your taxable transactions. This declaration must be made when you file your income tax return, by using the additional form n°2086 specific to the transfers of cryptocurrencies. Here is the formula applied to determine the taxable capital gain on your capital gain:

If you have carried out a large number of taxable transactions, it becomes very tedious to retrieve all this information and the risk of making mistakes is all the more important. To help you, the Waltio tax wizard quickly and easily compiles all this informationoffering considerable time savings for your declaration.

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Once you have provided this information, the Tax Administration’s computer tool will calculate the tax to be paid.

A requirement to report your digital asset accounts

In addition to the declaration of taxable transactions, you are required to declare your “digital asset accounts” opened, held, used or closed during the year with companies domiciled outside USA. This applies to all exchanges holding cryptocurrencies and being domiciled abroad.

This declaration is made via the combined form n°3916-3916bis. You will need to provide a certain amount of information on the platform (name, address, etc.) and the characteristics of said account (private or professional use, simple account or joint account).

Note that you do not need to enter the amounts held in your accounts. Also, it is not necessary to declare so-called “non-custodial” wallets such as those of Ledger or Trezorbecause you are the sole owner of the cryptocurrencies they keep.

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What are the risks in the event of non-declaration?

A lack of omission or an error in the declaration of your accounts abroad or your taxable transactions can have significant consequences, whether at the tax or even criminal level.

For undeclared accounts

For undeclared digital asset accounts, the law (Art. 1736 X CGI) provides for a fine of €750 per account, as well as €125 per omission or inaccuracy not rectified at the initiative of the taxpayer. If the value of your account exceeds €50,000 during the year, the fine can be up to €1,500 and €250.

In addition, an increase in the amounts you owe to the tax authorities may take place, known as a “tax adjustment”.

For an error on the tax return

In the event of insufficient declaration or late declaration of your capital gains on cryptocurrency, the increase is 10%, 40% in the event of deliberate failureAnd 80% in the event of fraudulent maneuvers or abuse of rights. It is possible to rectify your declaration within the following 30 days to avoid the tax adjustment.

However, in the event of tax evasion, criminal sanctions may apply, such as a fine of up to 3 million euros as well as a prison sentence of up to 7 years for aggravated fraud (Art. 1741 CGI).

The right to error

It is important to note that the ESSOC law of 2018 put in place the right to error in tax matters. This right allows you to regularize your situation without paying a penalty in the event of an error or omission in a tax declaration.. The situation can be regularized at any time, but late payment interest can be applied, without surcharges or fines.

It is possible to report an error or omission to the tax authorities by filing an amended tax return. To do this, all you have to do is connect to your Individual space and use the online correction service available between August and mid-December of the year of the declaration to be corrected.

What income and operations should you take into account?

Calculating capital gains on digital assets is complex and time-consumingit requires knowing precisely the total value of your portfolio (all the sums of all your accounts) at the time you make a sale.

In addition, cryptocurrency income obtained from other sources such as NFTs, Play-to-Earn games, staking, lending, airdrops or mining are also to be taken into account and included in the total value of your wallet.

You will have understood it, there is enough to tear your hair out or be desperate in front of the magnitude of the task…

Do not panic, the tax declaration assistance tool Waltio allows you, whatever your profile, to take into account all of your operations by connecting your accounts by API and by supporting more than 200 platforms and complex operations. Waltio will provide you tax documents to fulfill your tax obligations.

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💡 The tool that simplifies the declaration of your cryptocurrencies

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Editor-in-chief of cryptonewsherald, I discovered Bitcoin and blockchain technology in 2017. Since then, I have been striving to share quality content so that the sector becomes more democratic for everyone.

Clement Wardzala

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