Cryptocurrency holders in France have been handed a reduction in their tax bill this week by the French Council of State (Conseil d’État) who have reclassified cryptocurrencies as “transferable securities”, slashing the applicable tax rate from 45% to 19% as a result.
As reported in Le Monde, the decision followed petitions from a number of taxpayers who contested the excessive clawbacks that applied to the sale and transfer of bitcoin and other digital assets.
Exemptions Still Apply
Since 2014, profits on regular trading had previously been classified as industrial and commercial profits (BIC) while occasional trading was seen as non-commercial profits (NBC). These classifications automatically lead to taxpayers paying anything up to 45% on top of an additional 17.2% generalised social contribution (CSG) charge, depending on other earnings.
By changing the classification to transferable securities which is subject to one simple flat rate of 19%, cryptocurrencies fall under the same tax bracket as cars and jewellery as well as intangible assets such as copyrights and patents.
However, the new statute exempts those who acquire their cryptocurrency holdings as earnings. In other words, those who are paid in Bitcoin will continue to pay tax in accordance with the pre-existing tax regime.
France’s supreme administrative court also specified that cryptocurrency mining would also still be categorised as BIC and thus remain liable to the higher tax rate.
It appears cryptocurrency tax reform was one of the areas French Finance Minister Bruno Le Maire had in mind when he determined earlier this year that “… there is not a moment to waste in accelerating the economic transformation of France.”
In a later speech, he further announced that cryptocurrencies were leading to an “… international landscape [that] is changing at a stupefying pace and is leading to deep changes in the balance of power and the economic game.”