Four questions about taxation of cryptocurrencies and NFTs

What tax regimes apply to crypto-assets? How to declare them? We put these questions to Me Olivier Martin, partner of the specialized firm Halt Avocats, in charge of the tax law department.

What does the law in France say about cryptocurrencies and NFTs in terms of taxation?

First of all, it should be understood that several tax regimes are likely to apply to transactions in digital assets:

  • the specific regime known as occasional investors (article 150 VH bis of the General Tax Code)
  • the BIC regime for habitual investors until December 31, 2022 and for companies with a digital asset purchase/sale activity
  • the BNC regime for mining operations and for regular investors from 1er January 2023

The regime applicable to occasional investors has laid down a certain number of rules allowing some conclusions to be drawn on the treatment of NFTs.

Legally, cryptocurrencies and NFTs are two distinct categories of tokensthe first being “protocol tokens” making it possible to operate a blockchain, the second being tokens intended to digitally represent an individualized asset.

For tax purposes, we refer to the provisions of the Monetary and Financial Code, which recalls that there are two types of tokens that can be considered as “digital assets” (art. L 552-2 and L 54-10-1):

  • the tokens representing “one or more rights” in digital form
  • the tokens representing a value “which is not issued or guaranteed by a central bank or by a public authority, which is not necessarily attached to a legal tender currency and which does not have the legal status of a currency, but which is accepted by natural or legal persons as a medium of exchange and which can be transferred, stored or exchanged electronically”

Thus, cryptocurrencies are part, without debate, of the second. NFTs could be part of the first depending on the non-fungible asset that is encapsulated (loyalty card, right of access to benefits, etc.). Cryptocurrencies therefore fall within the specific regime for the taxation of capital gains on the sale of digital assets provided for in Articles 150 VH bis et seq. of the General Tax Code. NFTs, on the other hand, are subject to the tax treatment linked to their content: either the NFT is a digital asset and treated as such, or it falls under another category.

On January 25, 2022, MP Véronique Louwagie (LR) proposed to submit the NFTs “to the notion of works of art within the meaning of article L. 111-1 and following of the Intellectual Property Code. From a tax standpoint, transfers for consideration and exports of works of art are subject, for individuals, to a flat-rate tax proportional to the transfer price (or the customs value), in lieu of taxation of capital gains at the global rate of 6.5%, if the seller is domiciled in France (article 150VI to 150VM of the General Tax Code and article 1600-0 I of the same Code) “.

This would, of course, suppose that the content of the NFT could be qualified as a work of art within the meaning of article 98 A of the CGI. This is less and less the case in the most recent projects that we have been able to examine within the firm. In addition, the aforementioned potentially applicable tax regimes may result in different treatments depending on the nature of the transactions carried out by the taxpayer.

For the simplest transactions (occasional purchase and resale carried out privately by an individual), it is possible to make a declaration by completing the form 2086 made available by the tax authorities. Capital gains are calculated taking into account the transfer price, the acquisition price and the overall value of the portfolio. It is therefore essential to keep all the supporting documents for your purchases, as well as the value on the day of the sale.

As soon as you are subject to a regime other than that of the occasional investor, the calculation of income will be subject to the rules of the BIC or BNC with application of the specific rules provided for these categories of income. In this case, it is strongly recommended to call on a professional specialized in the taxation of digital assets.

What do industry players think of current laws?

Some actors and practitioners believe that it would be necessary to specify the tax treatment of all tokens (fungible, non-fungible). Others, including ourselves, believe that it is premature to want to modify rules that have only just been implemented.

The 2022 finance law contains several measures which have modified the system in application since 1er January 2019. Modifications will certainly occur via the 2023 finance law, but it is too early to know which ones.

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Four questions about taxation of cryptocurrencies and NFTs


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