French taxes on currency exchange gains

Hi, this is a topic specific to the French community, but I stick to English for respect of the international community using this forum.

The Revolut account is an IBAN starting with GB, so it is in a foreign country from my perspective. Although I have seen many people doubt on the forum, there is no doubt for me that I need to declare the account to the tax authorities, which I do each year.

My question is more around how to declare to tax authorities the gain made on currencies. My intention is not to use Revolut as a trading platform. But I changed some currency (NOK and ZAR) more than 2 years ago, in preparation or a trip abroad in 2020 that was canceled because of COVID. As I don’t need the currencies anymore, I changed them back to EUR thus generating a profit on the exchange rate.

I hope that someone on this forum has some good tax expertise to help me to declare this gain. I called the “Allo Impot” today which is a 1 day free service for accountant support, however the person on the phone said this was too technical for him to answer and did not have the answer.

He just gave the hint that I should declare it on the 2047 form, section 3, under “Plus-values de cession de valeurs mobilières: avant abattement”

It is not clear if a loss in one currency can compensate a gain in another currency from a tax perspective, and whether this is the right way to declare it?

@pprt I’m a French resident and tax payer and I’m not sure that, unless you can be regarded as doing forex commercially (in the same way that selling some of your household items at a brocante is generally exempt) , that there would be anything to declare in such a circumstance as you outline.
Sure, income/pensions from (in my case) the UK need to be translated to Euro for the tax declaration (by whatever means - often the ECB annualised rate is used) so you could if you were feeling super honest check the cross rate between the Euro NOK and Euro ZAK on the days of translation in the ECB website to see if you did indeed make a profit and help you decide what to do.
If the holiday had gone ahead and you used the currency, I presume you would not have felt the need to declare anything even if the value of the currency was above expectations…

Hi Graham, as it is a source of income, my interpretation is that I need to declare it. Even if I am not doing forex commercially as I am not trading very often, there is still obligation to declare this gain.

I am really wondering how to do that. Of course Revolut does not offer any tax guidance (let alone an IFU “Imprimé Fiscal Unique”) as it is not a local financial institution, so I have to do everything myself. I am leaning towards the 2047 taxation form, section 3, under “Plus-values de cession de valeurs mobilières: avant abattement” but I have no confirmation of this.

I even had some people tell me that within 1 month of making a profit on currency exchange, I must declare it to the tax authorities and pay taxes on it without waiting for the tax statement of the following year.

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Are we talking substantial sums of Euro (or whatever currency you exchanged from/to) here?
Personally, I think you are making a mountain out of a molehill.
In the commercial context, the profit/loss is reported as income in the P&L account of the enterprise based on the investment holdings at the 31st December in the tax year under view - this isn’t the case here from what I understand you to have said.
But as I outlined earlier, it’s your choice. Personally I’d not bother if you are not doing this commercially which IMO is why the tax office were reluctant (or unable) to give you a direct response.
Don’t also forget that you may be charged cotisations on any “profit” you declare which might completley wipe out any gain :frowning_face:
Other than that, I can only suggest you engage the services of a tax consultant which will have a similar effect on any percieved gain.

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Hi Graham, I am sorry but whatever the gain (1000€ or 10 000€) it is irrelevant to the obligation to declare. No I cannot afford the services of a tax consultant. For example if you make profit from buying and selling a stock, even a small price, even if you are not doing it commercially, as an individual you will have the obligation to declare it.

I don’t see why it is different when the gain comes from currency exchange. Except it is much more clearer how to declare when it is a gain from selling a stock. I have limited guidance on how to do that for currencies.

I think you’re wrong but believe what you will.
If you buy a car privately and then sell it sometime later at a profit - a vehicule de collection for example - would you need to declare the profit?
IMO no and that is also the opinion of the fisc on the understanding it was not sold as a business activity.

I believe you’re right Graham. All tax authorities aren’t stupid, they know that people aren’t in a position to claim tax on infinitely small gains + they know it would cost more to actually ensure those are being taxed than it’s worth

If tax authorities want us to declare everything, they need to put that burden on the shoulders of the people we hold our financial products with, and have it paid real-time!

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This is how it works in some countries with broker and savings accounts, but cross boarder investments are a different story. Just because the foreign bank doesn’t report and deduct investment tax to your national tax authorities doesn’t mean you don’t have to report that income.

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@pprt
I’ve done some further digging and found that there is a new requirement from January 2020 in respect to Digital Asset Accounts and a form 3916-bis on which to declare (I translated to English):


and this
On page 3 of the 3916-bis it outlines “Persons required to carry out the declaration” and where to place profits on the return.
This reference outlines the French Tax Law concerned.
I still maintain that this will only apply where an individual is “trading” currencies as in the case of share holdings by private individuals but it is for you to decide what to do based on the available information.
Strange that your tax office didn’t seem to know about it…
I hope you find the references useful.