What is Airdrop Income and Why Must You Report It in France?
Cryptocurrency airdrops – free distributions of tokens to wallet addresses – are considered taxable income by French authorities. Under Article 92 of the General Tax Code, the French Tax Administration (Direction Générale des Finances Publiques or DGFiP) treats airdropped tokens as miscellaneous income (revenus divers) at the moment you gain control over them. Failure to declare can trigger penalties up to 10% of undeclared amounts plus interest. With France’s intensified crypto tax enforcement since 2023, accurate reporting is non-negotiable for residents and tax-registered entities.
How France Taxes Airdrop Income: Key Rules
Airdrops fall under these French tax frameworks:
- Flat Tax (PFU): Applies if tokens are sold within the same tax year as receipt. Includes 30% flat rate (12.8% income tax + 17.2% social charges)
- Progressive Income Tax: If held over 12 months before selling, only social charges (17.2%) apply initially. Capital gains tax kicks in upon disposal.
- Valuation Basis: Income equals the token’s fair market value in EUR at receipt date. Use exchange rates from credible platforms like Binance or Coinbase.
- Threshold: Declare ALL airdrops regardless of value – no minimum exemption exists.
Step-by-Step Guide to Reporting Airdrop Income
- Identify Taxable Events: Document every airdrop received during the tax year, including project name, date received, token quantity, and EUR value at receipt.
- Calculate Income Value: Convert token value to EUR using exchange rates from the exact day of receipt. Keep screenshots as proof.
- Complete Form 2042-C PRO: Report total airdrop income under Box 1AC (“Autres revenus des valeurs mobilières”). For non-trading individuals, use standard Form 2042.
- File Capital Gains Separately: If selling airdropped tokens, declare profits in Form 2086. Losses can offset gains.
- Submit by Deadline: Electronically file via impots.gouv.fr before May-June (exact date varies annually).
Essential Documentation for Airdrop Reporting
- Wallet transaction histories showing airdrop receipts
- Dated screenshots of token/EUR conversion rates
- Records of subsequent sales (date, amount, fees)
- Receipts for related expenses (e.g., gas fees)
- Proof of wallet ownership linking to your identity
5 Costly Mistakes to Avoid With Airdrop Taxes
- Assuming small amounts are exempt: France taxes all airdrops, even under €1.
- Mixing valuation methods: Using average annual rates instead of exact receipt-day values.
- Overlooking DeFi airdrops: Liquidity mining rewards and governance tokens are also taxable.
- Forgetting social charges: The 17.2% CSG/CRDS applies even if tokens aren’t sold.
- Poor record-keeping: DGFiP can audit transactions up to 3 years back.
Frequently Asked Questions (FAQ)
Q: Are NFT airdrops taxable in France?
A: Yes. NFTs received for free follow the same rules as token airdrops – value at receipt is taxable income.
Q: What if I received airdrops before moving to France?
A: Only airdrops received after establishing tax residency are subject to French taxes. Document relocation dates.
Q: Can I deduct transaction fees?
A: Gas fees paid to claim airdrops are deductible from the income amount. Track blockchain transaction IDs.
Q: How does France treat airdrops from staking rewards?
A: Staking-generated airdrops are taxed as miscellaneous income upon receipt, plus capital gains if later sold.
Q: What penalties apply for late declaration?
A: 10% fine on unpaid tax + 0.2% monthly interest. Deliberate fraud risks 40-80% penalties.
Q: Do I need to report if tokens have no market value yet?
A: Yes. Estimate fair value using comparable assets or report €0 with explanatory notes. Update upon valuation.
Always consult a French crypto tax professional for personalized guidance. Tax rules evolve – verify current regulations via impots.gouv.fr before filing.
