Please note: this article concerns sales you make in 2023, to be reported in 2024, and not the 2023 tax return covering 2022 sales.
The tax regime applicable to gains on the disposal of digital assets made in 2023 by individuals has been adjusted on the following points:
- the criteria for classifying as "professional" an activity of buying and selling digital assets have been clarified and aligned with those applicable to stock market transactions;
- capital gains made in a professional capacity are taxed under the non-commercial profits regime (bénéfices non commerciaux, BNC) and no longer under the industrial and commercial profits regime (bénéfices industriels et commerciaux, BIC);
- capital gains made in a non-professional capacity, which are in principle subject to the 30% flat tax (31.4% since the 2026 Social Security Financing Act (loi de financement de la sécurité sociale, LFSS)), may, by election, be subject to the progressive income tax scale.
Gains Made in a Professional Capacity Are Classified as BNC
The law aligns the provisions governing transactions in digital assets with those applicable to stock market transactions by providing that income from the purchase, sale and exchange of digital assets carried out under conditions similar to those that characterise an activity exercised by a person engaging in this type of transaction in a professional capacity falls within the BNC category.
This provision applies from 1 January 2023 (transactions carried out from that date).
Capital gains made by individuals on the disposal of digital assets are subject to the 30% flat tax (31.4% for disposals made since 1 January 2025, pursuant to the 2026 LFSS). This specific tax regime applies only subject to the provisions specific to professional profits.
In this respect, the French tax authorities (administration fiscale) have specified that:
- the tax regime of the flat tax applies exclusively to individuals who carry out transactions on an occasional basis in the course of managing their private assets;
- capital gains resulting from the habitual exercise of an activity of buying digital assets for resale are subject to the BIC regime;
- the BNC regime applies, by way of exception, where the gains made by the taxpayer do not constitute a capital gain resulting from an investment transaction, but are consideration for the taxpayer's participation in the creation or operation of this virtual unit of account system (so-called "mining" activity).
The habitual nature of the activity is open to interpretation. Some individuals do indeed face the reclassification of their activity on the grounds that they carry out a large number of transactions using their phone and make substantial capital gains.
The purpose of the law is to reduce this legal uncertainty.
Criteria for the Professional Nature of Transactions
For disposals made from 2023 onwards, whether transactions involving digital assets are professional or non-professional will be assessed no longer on the basis of their habitual nature, but in light of the conditions under which they are carried out.
As a result, the frequency of transactions, as well as the amount of capital gains made, should in principle no longer make it possible to classify transactions as "professional".
As stated in the explanatory memorandum, carrying out transactions in digital assets "under conditions similar to those that characterise an activity exercised by a person engaging in it in a professional capacity" could in principle concern taxpayers:
- who benefit from preferential transaction fees in return for a commitment to trade a certain volume of digital assets per month;
- or who use professional tools or complex trading practices.
For the application of the stock market transactions regime, the tax authorities have specified that, in assessing whether transactions are carried out under conditions similar to those that characterise an activity exercised by a person engaging in this type of transaction in a professional capacity, the possession, command and use of specialised information and trading techniques, as well as their organised pursuit for the benefit of numerous and sophisticated stock market transactions (hedging, carry-over, etc.), are essential criteria.
Taxation of Professional Transactions Under the BNC Regime
Gains regarded as arising from an activity exercised in a professional capacity will be treated, from the taxation of 2023 income (which therefore corresponds to disposals made in 2023, reported in 2024), as arising from the exercise of a non-commercial profession or as income treated as non-commercial profits.
These gains will therefore be taxed no longer in the BIC category, but in the BNC category.
An Election for the Progressive Income Tax Scale Is Possible
The law provides that, by way of derogation from the application of the 30% flat tax, capital gains on the disposal of digital assets made in a non-professional capacity may, by express and irrevocable election of the taxpayer, be subject to the progressive income tax scale.
The election is global and covers the total capital gains on the disposal of digital assets made by the tax household.
It is exercised each year when filing the income tax return and at the latest before the filing deadline.
The election for taxation of capital gains on the disposal of digital assets under the progressive scale is independent of the election that may be made for the taxation of investment income (interest, dividends, etc.) and capital gains on the disposal of company shares (disposals of securities in companies).
Taxpayers for whom it is advantageous will therefore, where applicable, have two elections to make.
This provision applies to disposals made from 1 January 2023.
The election may therefore be exercised for the first time in 2024 for the taxation of 2023 income.
