Crypto cost basis: average cost, FIFO, the section 104 pool and France's method
Average cost is one way to count what a crypto you sell cost you; FIFO is another, and each tax authority has its own. The methods, one example worked out, and the rules of France, the UK and the US.
A crypto's average cost is what each unit you hold cost you on average, fees included: it is one way among others to count what the units you sell cost you, and each country's tax authority has its own.
Four ways to count the cost
- Weighted average cost: each unit costs the average of your purchases, fees included. A sale does not change the average cost of what remains.
- FIFO (first in, first out): a sale takes the units bought first.
- Specific identification: you choose which units you sell, if you can identify them.
- Total acquisition price (France): the gain is calculated on the whole portfolio of crypto-assets, not asset by asset.
The same history, three results
Two purchases of 1 BTC, at $30,000 and then at $50,000, then the sale of 1 BTC at $60,000, fees set aside:
| Method | Cost of the bitcoin sold | Gain | Cost of the bitcoin left |
|---|---|---|---|
| Weighted average cost | $40,000 | $20,000 | $40,000 |
| FIFO | $30,000 | $30,000 | $50,000 |
| Specific identification, the second purchase | $50,000 | $10,000 | $30,000 |
The total does not change: all three methods count $80,000 of cost for the two bitcoins. They split that cost differently between the bitcoin sold and the one left, and so between today's gain and a later one.
The rules of three countries
| Country | Method | Source |
|---|---|---|
| France | Total acquisition price of the whole portfolio of crypto-assets | Article 150 VH bis of the French General Tax Code |
| United Kingdom | One pool per type of token (section 104), after the same-day and 30-day rules | HMRC, Cryptoassets Manual, CRYPTO22200 |
| United States | Specific identification, otherwise FIFO | IRS, questions 39 to 41 of its FAQ |
In France: the total acquisition price
Article 150 VH bis of the French General Tax Code (Code général des impôts) calculates the gain on a disposal as follows:
Gain = disposal price - total acquisition price × disposal price ÷ overall value of the portfolio
- The total acquisition price (prix total d'acquisition) is the sum paid for all your crypto-assets. After each disposal, it is reduced by the share of initial capital that disposal contained.
- The overall value is that of your whole portfolio of crypto-assets at the time of the disposal.
- An exchange between crypto-assets with no cash balance is not taxed at the time: it qualifies for a tax deferral.
- If your disposals for the year total no more than €305, they are exempt.
An example: you bought 1 BTC for €30,000 and 10 ETH for €20,000, a total acquisition price of €50,000. On the day your bitcoin is worth €60,000 and your ether €10,000, you sell 0.5 BTC for €30,000:
| Calculation | Operation | Result |
|---|---|---|
| Overall value | €60,000 + €10,000 | €70,000 |
| Share of the total acquisition price | €50,000 × €30,000 ÷ €70,000 | €21,428.57 |
| Taxable gain | €30,000 - €21,428.57 | €8,571.43 |
| New total acquisition price | €50,000 - €21,428.57 | €28,571.43 |
With the bitcoin's average cost, €30,000 per BTC, the same sale would give a €15,000 gain: the fall in the ether, which is not sold, lowers the taxable gain here. Average cost tracks each position; the tax return, on form 2086, follows the formula of article 150 VH bis.
In the United Kingdom: the section 104 pool
HMRC groups each type of token into a pool, whose allowable cost changes with each purchase and each sale; a sale takes its share of it, which comes to the average cost. Before the pool, two rules apply in order: a sale is matched first with purchases of the same token on the same day, then with those of the following 30 days.
In the United States: specific identification or FIFO
The IRS lets you choose which units are sold, provided you can identify them (questions 39 and 40 of its FAQ). Otherwise, they are deemed sold in chronological order, first in, first out (question 41). The cost includes fees, commissions and other acquisition costs (question 8).
This guide explains calculation methods; it does not replace your tax authority's rules or tax advice.
How CentraFIN works out your average cost
CentraFIN reads your whole history of fills on Kraken, Coinbase, OKX, Hyperliquid and Interactive Brokers, and works out each asset's weighted average cost, fees included, in euros, across all your platforms. To work it out by hand: the average cost calculator.
Sources
- Article 150 VH bis of the French General Tax Code (Légifrance)
- BOFiP: tax base of disposals of digital assets
- HMRC: Cryptoassets Manual, CRYPTO22200
- IRS: frequently asked questions on virtual currency transactions
Frequently asked questions
Is average cost the basis of my tax in France?
No. In France, the taxable gain is calculated on the whole portfolio of crypto-assets, with the total acquisition price. Average cost tracks each position.
Is swapping one crypto for another taxable in France?
Not at the time: an exchange between crypto-assets with no cash balance qualifies for a tax deferral.
Which method does my country use?
It depends on your country: France counts across the whole portfolio, the United Kingdom by pool of tokens, the United States by specific identification or FIFO. Check your tax authority's rules.
Does my average cost change when I sell?
No. With weighted average cost, the units that remain keep their average cost. With FIFO, the cost of what remains changes with each sale.
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