# US/FRENCH taxes and cryptocurrency



## koalawhisperer (Mar 14, 2021)

Hello all,

I've been stressing a lot lately and having difficulty in finding the answers to the following questions.

If an american citizen living in France bought and is holding cryptocurrency on a US based exchange (that specializes only in cryptocurrency) decides to sell that cryptocurrency on that exchange while residing in France:

Will the gains will have to be declared both in America and France, is that right ?
Which tax rate applies ? The french tax rate or the american (or both) ? Do you know if the gain is treated and taxed just like a stock ?

Additional info : the address for the account is an american address.


Thanks for any help or guidance that can be given.


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## Bevdeforges (Nov 16, 2007)

Normally, yes, you would declare the gains on both tax declarations - and then offset the US taxes with whatever the taxes you pay to France (form 1116). However the question arises as to whether or not the US exchange will report your transaction to the IRS on some form of 1099.


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## koalawhisperer (Mar 14, 2021)

Bevdeforges said:


> Normally, yes, you would declare the gains on both tax declarations - and then offset the US taxes with whatever the taxes you pay to France (form 1116). However the question arises as to whether or not the US exchange will report your transaction to the IRS on some form of 1099.


Thank you for your response.

I still have some confusion. What I understand from this answer is that I will have to pay the 30% flat tax on the gains in France and then have to ask for a tax credit in America (form 1116).

As the assets are in America I was expecting that I would pay the tax to the IRS first (15% long term gains) then declare to the French tax office. As with stocks I have a brokerage account in America with a stock portfolio. For this I am reporting gains and dividends to the IRS and asking for a tax credit in France.


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## Bevdeforges (Nov 16, 2007)

The French provisions for avoiding double taxation work differently from how they work in the US. For France, you declare all your income first on the "regular" form (2042 I think it is), and then detail your foreign source income again on the form for foreign source income (2047). Depending on the category, the Fisc knows what the flat rates are on US investment income (interest, dividends, capital gains) and they will use the appropriate amount when figuring your French taxes to give you credit for the US taxes you should have paid. (Whether you actually paid them or not.) 

It's actually quite a bit easier than the Foreign Tax Credit in the US.


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## koalawhisperer (Mar 14, 2021)

Thanks Bevdeforges. I actually already have experienced this french declaration of foreign source income (forms 2042 and 2047).
Maybe my initial question was not straightforward enough : what i would like to know (and what i worry about a little) is : will i have to pay the US rate (15%) or the french one (30%) after selling my crypto position (especially as the money will stay in america on an american exchange and then transfered to an american bank) ? If I understood well the french system, after paying a tax on my us income (foreign source income), i just need to declare it and ask a tax credit to the french tax service... therefore not paying additional taxes...

To be honest, I am a young investor and much of this is quite complicated for me but let try a simpler example of what i mean without the crypto (as i feel it is complicating the matter too much). Thank you for your patience. Let me try another example:

Let's say I am residing in France but I have a brokerage account say with Schwab or Vanguard. I decide to sell off $100,000 of long term capital gains of stock. I would receive a 1099 form from the broker and then normally I would be taxed at 15% if this is in a non tax advantaged account. So you would pay $15,000 to the IRS and you would have a tax credit from the french tax office. This is how I am understanding the tax treaty. But maybe I am totally wrong.

What I am understanding is that crypto is to be treated just like a stock (i could be wrong here, hence why I am asking).


Thank you for your patience and time. I am really struggling to understand all of this.


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## Bevdeforges (Nov 16, 2007)

koalawhisperer said:


> If I understood well the french system, after paying a tax on my us income (foreign source income), i just need to declare it and ask a tax credit to the french tax service... therefore not paying additional taxes...


I don't believe that's how the system works. You pay the US tax in any event. Then you declare the the gain as a foreign source one on the French declaration. The Fisc takes into account the 15% (or whatever) that you paid on the gain - but I believe you wind up paying the difference between the US rate and the French rate. So ultimately you pay in total the 30% French rate - only part to the US and the rest to France. There may also be the CSG/CRDS to pay on the gain (as foreign income not subject to cotisation withholding). But I'm not sure about that bit.


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## Moulard (Feb 3, 2017)

koalawhisperer said:


> As the assets are in America I was expecting that I would pay the tax to the IRS first (15% long term gains) then declare to the French tax office.


I am no crypto expert but I suspect that for the purposes of the FTC, the capital gains from the sale of virtual currency will be considered the sale of personal property. If this is the case, then it is sourced based on the location of the sellers tax home.


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