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Two legal ways to avoid tax on your capital gains
Before going through the declaration box, there are two completely legal ways to avoid taxation of your capital gains: conversion to stablecoins and certain cryptocurrency donations.
Converting to stablecoins
Any transfer for consideration of digital assets is taxed at the rate of 30% of the capital gain. This is called the flat tax. The law does not provide for any allowance and the only exemption provided concerns capital gains less than or equal to €305.
However, the law is also clear on its scope. An assignment for consideration is the sale of your cryptocurrencies against a legal tender currency, for example the euro in France. However, an exchange between two crypto-assets, it is not an assignment for valuable consideration.
Thereby, if you convert your cryptocurrency to stablecoins, Tether (USDT) or USD Coin (USDC), your capital gains are not taxable. The general tax code (CGI) then specifies that you are subject to tax deferment, meaning that this capital gain will be taxed only if you convert it for euros.
Accordingly, if you have doubled your capital in Bitcoin (BTC) compared to your initial investment, you can exchange it for USDC and not be taxed in a completely legal way. You can then redeem BTC whenever you want.
The case of cryptocurrency donations is more complex, because several cases are possible. Indeed, not all donations are exempt from taxation. So we’ll give you the ones that are.
Donations made within the immediate family are generally not taxable. They are considered as gifts of use. The main thing is that the donation remains lower than the applicable allowance.
This allowance may vary depending on the tax year. In 2022, it is for example €80,724 for the spouse or PACS partner of the donor and €100,000 for the donor’s child.
So, if you give cryptocurrencies to your child worth €70,000 at the time of the donation, this donation is in principle not taxable. The further away the kinship tie, the lower the reduction. For example, there is no deduction for the donation to a friend.
However, if the donation can be exempt from taxation, this is not the case for the latent capital gain. This will be imposed at the time of a transfer for valuable consideration.
Blockpit, your tax assistant in case of taxable capital gains on your cryptocurrencies
You were not aware of these two legal ways of taxation before making one or more transfers for consideration? You are therefore liable for the flat tax at 30%.
You may have several assignments, sometimes only assigning part of the capital. Doing the math can then turn out to be a real headache. Luckily, Blockpit Tax Assistant can help you file your tax return. You can import all your operations carried out on the exchange platforms by API.
The calculation of the capital gain to be declared will then be carried out automatically and the documents necessary for the declaration will be sent to you. Finally, good news, Blockpit has a free version if you have performed 25 transactions or less.
👉 Find our tutorial on the Blockpit tool to declare your cryptocurrencies
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