How to Report DeFi Yield in France: Your Complete 2024 Tax Guide

Decentralized Finance (DeFi) has revolutionized investing, allowing French residents to earn yield through lending, staking, and liquidity pools. However, these crypto gains come with tax obligations. In France, failing to report DeFi income can lead to penalties up to 80% of unpaid taxes. This guide breaks down exactly how to report DeFi yield in France while optimizing compliance.

Understanding DeFi Taxation Rules in France

France treats DeFi earnings as movable property income (Revenus de Capitaux Mobiliers) under Article 150 VH bis of the Tax Code. Key principles:

  • Flat Tax Rate: DeFi yields are taxed at a 30% flat rate (12.8% income tax + 17.2% social contributions)
  • Taxable Events: Yield accrual when tokens become withdrawable/redeemable
  • Reporting Threshold: All earnings must be declared regardless of amount
  • Exclusions: Capital gains from token sales require separate reporting under capital gains rules

Step-by-Step Guide to Reporting DeFi Yield

Follow this process when filing your annual tax return (declaration de revenus):

  1. Track All Yield Sources
    Use tools like Koinly or Accointing to aggregate earnings from protocols (e.g., Aave, Compound, Uniswap LP tokens)
  2. Convert to Euros
    Calculate yield value in EUR using exchange rates at receipt date (not when claimed)
  3. Complete Form 2042 C
    Report total annual yield in Box 3VG (“Produits des placements à revenu fixe”)
  4. Attach Annex 2074
    Detail each DeFi platform used and corresponding yields
  5. Pay Taxes
    Taxes are due upon declaration via direct debit or TIP payment

Critical Documentation You Need

Maintain these records for 6 years:

  • Wallet transaction histories (CSV/Excel)
  • Proof of yield receipt dates and amounts
  • Exchange rate documentation (e.g., Banque de France rates)
  • Protocol reward statements

Common Reporting Mistakes to Avoid

  • Mixing Yield and Capital Gains: LP token rewards ≠ token appreciation
  • Ignoring Small Amounts: Even €1 in COMP tokens must be declared
  • Using Wrong Exchange Rates: Always use official EUR rates at transaction time
  • Omitting Foreign Platforms: Yield from non-EU protocols (e.g., U.S.-based) still taxable

Frequently Asked Questions

Is staking yield taxed differently from lending yield?
No. France treats all DeFi-generated yields identically as movable income at 30%, regardless of mechanism.

Do I pay tax if I reinvest yields?
Yes. Taxation occurs upon receipt, even if rewards are automatically compounded in the protocol.

How does France treat impermanent loss?
Impermanent loss isn’t deductible. Only actual yield received is taxable.

Are there penalties for late reporting?
Yes. 10% penalty plus 0.2% monthly interest on unpaid taxes. Deliberate omissions risk 40-80% fines.

Can I deduct gas fees?
No. Transaction costs aren’t deductible against yield income under current rules.

Conclusion: Reporting DeFi yield in France requires meticulous tracking and understanding of movable income rules. While this guide covers essentials, consult a crypto-savvy tax advisor for complex portfolios. With France’s 2024 Finance Bill proposing stricter crypto reporting, compliance is more crucial than ever. Always declare accurately to avoid audits and maximize your DeFi returns legally.

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