Understanding the BNC Regime and Staking/Mining Income

What is the BNC Regime?

Bénéfices Non Commerciaux (BNC) refer to the profits derived from non-commercial professional activities. This classification is part of the broader category of income taxable under the income tax (Impôt sur le revenu, IR). Specifically, BNC encompasses earnings by individuals engaged in professional practices that do not fall within industrial or commercial categories.

Although there are no explicit regulations regarding passive income from activities like staking and mining in the cryptocurrency space, legal professionals generally agree that such income should be treated as BNC income. This means that earnings from staking and mining are subject to the same tax rules as other types of freelance income.

How Are My Staking Rewards and Mining Income Taxed?

Under the BNC regime, you are required to declare your staking and mining income. Here are some key points to be aware of:

• Declaration of Income: The value of your staking and mining rewards is determined based on its worth on the day it is received.

• Misconceptions about Double Taxation: A common misconception is that you are taxed twice on staking rewards—first when you receive them and again when you sell them. This is not true. You are initially taxed on the value at the time of receipt, and this value then becomes the purchase price for future transactions. Therefore, you can deduct this value from future gains, preventing double taxation.

• Immediate Taxation: Staking income considered as BNC income means that the value is taxed immediately upon receipt rather than upon sale.

Benefits and Tax Rate of the BNC Regime

One significant benefit of the BNC regime is the tax deduction:

• 34% Deduction: You are exempt from paying tax on 34% of your earnings, with a minimum deduction of 305 euros. This means you are not taxed on the entire amount of your earnings.

• Income Threshold*: This deduction applies if your BNC income is less than 77,700 EUR.

• Tax Calculation: The final sum of your BNC income is not subject to a 30% flat tax, as is the case with disposals of cryptocurrency. Instead, it is added to your income tax and subject to the progressive income tax rate.

For example, if you earn 10,000 EUR in staking rewards, you can deduct 34% from this value, leaving 6,600 EUR to be added to your taxable income. The current tax rates can be found here. Note that as your income progresses through different levels of the tax system, only the income above each threshold is taxed at the new rate.

How to Declare Your BNC Income

Declaring your BNC income involves a few steps:

Initial Access:

• Log in to your account on impots.gouv.fr.

• Click on "accéder à la déclaration en ligne" to start your online tax declaration.

Declaration Process:

• Once you reach Étape 3, click on “Déclaration des Annexes”.

• Ensure that you have checked the boxes for 3916-3916 bis and 2086. The 3916-3916 bis form must be checked if you have any cryptocurrency on foreign exchanges, and the 2086 form must be checked if you have made any taxable trades.

To indicate that you have BNC income, check the box for “Revenus non commerciaux non professionnels”.

Filling in Income Details:

• Proceed by clicking "suivant" (next) until you reach "REVENUS ET PLUS-VALUES DES PROFESSIONS NON SALARIÉES" (sections starting with 5..).

• If your passive income is greater than 78,000 EUR, enter it in box 5JG. If it is less than 78,000 EUR, enter it in box 5KU