More and more Internet users are investing in cryptocurrencies. Lockdown has clearly accelerated this trend. A recent study by KPMG shows that 8% of French people have already invested in crypto-assets and that almost 61% of these investors started less than three years ago, after the crash of 2018. That’s good to invest, but it is still necessary to anticipate the tax declaration which arrives each year.
After several cryptocurrency transactions, it is difficult to follow your transactions on a spreadsheet and therefore to calculate the amount of capital gains to declare. With Waltio, a cryptocurrency tax assistant, everything is much easier. This platform’s mission is to increase the adoption of cryptocurrencies by simplifying their tax management, a subject that scares investors (we understand why).
Since the first lockdown in the spring of 2020, investments in cryptocurrencies have seen a sharp rise. At that time, the French were looking for new ways to save their money. Bitcoin was able to do well (49% of investments) ahead of Ether (29%). To be in good standing when filing your tax return, you absolutely must avoid making these 3 mistakes:
1 – Do not forget to declare your accounts held abroad
It’s the law: when you open an account abroad, you have the obligation to declare it to the financial services. Each digital asset account held, opened, closed and used abroad during the fiscal year concerned must be declared. This regulation applies to trading platforms that own your funds and therefore depository accounts.
On the other hand, it does not apply if you remain the owner of the funds with your own key. It is then a non-custodial account. If you ever have any doubts, Waltio points out that “you can consult the terms and conditions of the accounts/platforms on which you have doubts in order to define their depository character or not in order to be completely fixed”.
Do not forget to declare your accounts held abroad each year (even if they have already been declared the previous year). Don’t forget that the statement of accounts always relates to year N-1. Let’s take an example: if you opened an account on February 7, 2022, you do not have to declare it for the current tax year (the one relating to 2021). However, you will have to declare it during the 2023 campaign, which will relate to the 2022 tax year. Same thing, if you close a depository account in 2022, you will have to mention it on your 2023 declaration.
2 – Identify the cost of buying the cryptocurrencies sold
This is an extremely important point when filing your tax return. The calculation of the purchase cost is essential to calculate individually the capital gains or losses of each operation. This calculation requires tracing all of your movements. A tedious operation on which Waltio can help you.
It is essential because “this allows you to understand what was the purchase price, the quantity and your balance at the time of the sale”. Thus, you must take into account all the purchase and sale operations carried out for each cryptocurrency sold. Concretely, if you bought a Bitcoin at 2,500 euros in 2018 and resold it in 2021 at a price of 12,000 euros. To calculate the capital gain in question, Waltio therefore needs access to the purchase transaction carried out in 2018.
3 – Properly integrate DeFi/NFT revenues
All income from DeFi, stacking, play2Earn and NFTs are reportable. It is therefore essential to take into account all of your accounts so as not to be mistaken when filing your tax return. To go further on this subject, Waltio has written a free downloadable white paper with the firm ORWL Avocats. This ebook aims to present the tax treatment that may apply to these different income related to cryptocurrencies.
A real painstaking task… Especially when you know that for some platforms, the API connection is necessary to retrieve the transaction history. To facilitate this aspect, Waltio has forged links with more than 130 platforms. No, it’s not impossible to calculate everything by hand or even create your own tool to calculate wins and losses. However, since the majority of investors use multiple platforms, the task is not easy.
Waltio has even developed algorithms capable of calculating the acquisition cost of the crypto-assets sold. A way to save precious time. Take advantage of a dedicated promo code, for all new customers, of -10%: PRESSECITRON10.