The French government has changed the tax rate for gains created by cryptocurrencies, which will be subject to a flat tax rate of 19%, as opposed to the current rate of as high as 45%.
The Council of State on April 26 decided, that the gains that came out of profits by trading cryptocurrencies should be classified as capital gains of ‘movable property,’ and in turn benefit from, with exceptions, a lower tax rate than currently applied. It’s worth nothing, though, that with supplementary social taxes in the country, the number could reach as high of 36.2%.
Previously, gains from the sale and trading of cryptocurrencies was (for the most part) been labelled as industrial and commercial profits (BIC), and, in a few cases, as non-commercial profits (BNC). These classifications have resulted in tax rates of up to 45% for the wealthiest taxpayers. On top of this, France has an additional 17.2% generalized social contribution tax (CSG), bringing the real number to as much as 62.2%.
According to Le Monde, The definition of ‘movable property’ is goods and assets that can be moved from one place to another, like cars and planes, as well as jewellery and patents or copyrights, according As this classification of movable property now pertains to cryptocurrencies, they will be subject to a flat rate of 19%, which, even including the social contribution tax, is significantly lower than the rates reserved for BIC and BNC.
In its decision, the Council of State does state that ‘certain circumstances specific to the transaction’ of cryptocurrencies ‘may imply that they fall under provisions relating to other categories of income.’ These ‘certain circumstances’ cover cryptocurrency mining operations, no matter how big or small, which will fall under the tax classifications for BIC and BNC at 45%.
France and Cryptocurrency
On April 24, the governor of the French central bank , Banque de France addressed cryptocurrencies. The governor, François Villeroy de Galhau, remarked on the need for ‘internationally harmonized answers’ to deal with industry markets. He also emphasized the importance of developing a connection between the traditional banking world and the cryptocurrency ecosystem:
“In particular,” he said, “we should work on exchanges and platforms which provide services at the interface between crypto-assets and the real economy.”
In February, the governor had joined French finance minister Bruno Le Maire and their German counterparts to author a letter to the G20, asking the international community to discuss cryptocurrencies. The officials called for an International Monetary Fund (IMF) report on the financial stability of cryptocurrencies and potential implications of the technology. They also reiterated the importance of united moves towards cross-boarder regulation.
“We believe there may be new opportunities arising from the tokens and the technologies behind them,” the officials wrote. “However, tokens could pose substantial risks for investors and can be vulnerable to financial crime without suitable measures. In the longer run, potential risks in the field of financial stability may emerge as well,” they added.