Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.
Council of State of France has changed the tax rate on cryptocurrency sales from 45 to 19 percent, which is the result of a new classification of Bitcoin. The move came after citizens appealed to France’s highest regulatory body to change harsh regulations for crypto transactions earlier this year.
France’s Conseil d’Etat (Council of State), a body of the national government that provides the executive branch with legal advice and acts as the supreme court for administrative matters, has decided to reduce the tax rate on cryptocurrency sales from 45 to 19 percent, according to the report from Le Monde, local news outlet.
On Thursday, April 26, the Council of State said that such a significant change is a result of a new classification of Bitcoin separate from commercial or non-commercial activity. Currently, gains from the sale of cryptocurrency trading are considered to be “industrial and commercial profits”, while profits from occasional transactions are still non-commercial profits.” So, the profits arising from cryptocurrency sales should be considered as capital gains of “movable property”.
“The sale of ‘bitcoins’ fell under the principle from the category of capital gains of movable property,” the Council of State said.
Le Monde adds, hovewer, that the Council of State said certain types of transactions may “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.
This means that tax on crypto gains can be as high as 45 percent for higher-band taxpayers, and is also added to the country’s generalized social contribution (CSG) of 17.2 percent. Hovewer, considering digital currencies as movable property brings a flat capital gains tax (CGT) liability of 19 percent, plus CSG.
Regulations for crypto transactions in France were established in July 2014. Some investors considered the tax regime harsh, that’s why they took a case to the supreme court over the regulations. According to Le Monde, the decision to change the crypto tax rate came after the appeal. Cutting the crypto tax rate would put an end to suffering of cryptocurrency investors on the tax day in France.
By the way, France has already started working on its crypto regulations. At the beginning of the year, the Minister of Economy created a crypto task force to examine regulation. Later, in March, 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 Initial Coin Offerings (ICO).