How to Report NFT Profit in France: Your Complete 2024 Tax Guide

Understanding NFT Taxation in France

As NFTs (Non-Fungible Tokens) explode in popularity, French investors must navigate complex tax rules when reporting profits. In France, NFT sales are treated as movable property capital gains under Article 150 UA of the Tax Code. Whether you’re an occasional seller or professional trader, accurately declaring earnings is crucial to avoid penalties from the French Tax Administration (DGFiP).

Step-by-Step Guide to Declaring NFT Profits

1. Determine Activity Type: Occasional sales fall under capital gains tax. Frequent trading may classify you as a professional trader subject to income tax.
2. Calculate Your Gain: Profit = Sale Price – (Acquisition Cost + Gas Fees + Platform Commissions). Maintain transaction records for verification.
3. Apply Tax Allowances: After 2 years of ownership, gains benefit from a 6% annual reduction (max 72% after 22 years). A €305 annual deduction applies to all gains.
4. Complete Tax Form 2042 C: Report net gains in Section 3AN of France’s income tax return. Specify “Vente de NFT” in the description field.
5. Pay Your Taxes: Capital gains incur a 30% flat tax (12.8% income tax + 17.2% social charges). Professional traders pay progressive income tax rates up to 45% plus social contributions.

NFT Tax Rates and Allowances Explained

France’s flat tax (PFU) applies to most NFT profits:

• 12.8% for income tax
• 17.2% for social contributions (CSG/CRDS)
• Total: 30% on net gains after deductions

Holding period reductions provide significant savings:

• Year 3-4: 14% reduction
• Year 5-6: 28% reduction
• Beyond Year 22: 72% maximum reduction

Essential Record-Keeping Requirements

Maintain these documents for 6 years:

• Blockchain transaction IDs (TXID) for all purchases/sales
• Wallet addresses used for transactions
• Exchange statements showing EUR conversion rates
• Receipts for acquisition costs and gas fees
• Documentation of any NFT creation expenses

Critical Mistakes to Avoid

• Ignoring small sales: All profitable transactions must be declared regardless of amount
• Miscalculating cost basis: Include minting fees, gas costs, and platform commissions
• Overlooking airdrops: Free NFTs are taxed upon sale at full market value
• Failing to convert crypto: Report all values in euros using exchange rates at transaction time

Frequently Asked Questions (FAQ)

Are NFT losses deductible in France?

Yes. Capital losses can offset NFT gains in the same year. Unused losses carry forward for 10 years against future capital gains.

Do I pay tax if I trade NFTs for other cryptocurrencies?

Yes. Crypto-to-NFT swaps are taxable events. You must calculate gains based on the euro value at transaction time.

How are NFT artists taxed in France?

Primary sales are taxed as artistic revenue under BNC (non-commercial profits) with allowable expense deductions. Resale royalties qualify as capital gains.

What if I use a foreign NFT platform?

French residents must declare worldwide NFT income. Foreign platforms may report transactions to French authorities under CRS regulations.

Are there penalties for late NFT tax reporting?

Yes. Late filings incur 10% penalties plus 0.2% monthly interest. Deliberate underreporting can trigger fines up to 80% of owed tax.

Do I need to declare NFTs held in cold wallets?

Only upon sale. France doesn’t tax unrealized gains, but you must document wallet ownership for audit purposes.

Can I deduct NFT creation costs?

Professional creators can deduct expenses like software, marketing, and gas fees. Occasional sellers can only offset direct acquisition costs.

Final Recommendations

Always consult a French crypto tax specialist for complex portfolios. Update records quarterly using crypto tax software, and file before the May deadline. As regulations evolve, monitor updates from the DGFiP to ensure ongoing compliance with France’s digital asset taxation framework.