France Halves Tax Rate for Retail Crypto Investors
Cryptocurrencies to be considered “Movable Property”, with tax rate cut from 45% to 19%
France’s Council of State said on Thursday it has changed the classification of cryptocurrency capital gains to “Movable Property”, thereby lowering the applicable taxes from as high as 45% to a flat rate of 19%.
Under the old tax regime, which had been in place since 2014, gains from cryptocurrency sales were considered either as “industrial and commercial profits” (BIC) in the case of usual activity or as “non-commercial profits” (NBC) in the case of occasional activity. This classification meant that the tax rate could be as high as 45%, in addition to the 17.2% generalized social contribution (CSG) charges.
Following the recent reform, Bitcoin (BTC) sales fall into the category of “capital gains of movable property.” This category has traditionally covered both certain types of physical goods that can be moved, such as vehicles and jewelry, as well as intangible goods, such as patents and copyrights. In the case of transfer, movable properties are subject to a flat tax rate of 19%. With CSG charges included, France will tax Bitcoin trades at 34.5%, which is still almost a 25% tax reduction.
The Council of State noted that certain types of transaction may, however, "fall under provisions relating to other categories of income,” and that proceeds from cryptocurrency mining as well as commercial activities related to the technology will still be taxed at the BIC rate.
The tax reform comes as good news for French crypto investors and may prompt activity within the sector. As revealed by the Council of State, the move follows petitions from a number of taxpayers who contested the excessive clawbacks that applied to the sale and transfer of digital assets.
France is generally supportive of cryptocurrencies. The country’s Finance Minister, Bruno Le Maire, was one of the officials to call for digital assets to be on the agenda at the latest G20 meeting held earlier this year. Le Maire aims for France to take the lead with regulation in what he recently described as the “cryptocurrency revolution” and for the country to be a hotbed for blockchain innovation including licensed and non-licensed Initial Coin Offerings (ICOs).
France has already started working on its crypto regulations. At the beginning of the year, Le Maire created a crypto task force to examine regulation. Last month, the government proposed a ban on investment companies to trade in digital currencies until regulations have been implemented. Also in March, France’s financial market regulator was reported to be looking into legislation that would encourage the development of ICO.