The National Assembly of France has passed a bill to lower the capital gains tax on cryptocurrency profits as part of 2019 budget bill. The proposed bill aims to establish France as a major cryptocurrency hub with an attractive and comprehensive framework in taxation.
Under the proposed bill, capital gains from the sale of digital assets on an occasional basis, subject to an overall rate of 30% (12.8% for income tax and 17.2% for social security contributions), reduce the existing rate of 36.2 percent. The rate would apply to any crypto assets that are converted into “lawful” currency, or assets “used as a means of payment for the acquisition of goods or services. Further, the exchange transactions between Crypto-assets are not taxable. When the parliament approves the bill, crypto gains taxation will be in line with other capital gains.
In order to address the issue of money laundering, terrorism financing, tax evasion, and other financial crimes due to the anonymity in cryptocurrency, the mandatory declaration is laid out in the proposed bill. Natural persons, associations, companies not in commercial form, domiciled or established in France, are required to declare, at the same time as their declaration of income, the references crypto-active accounts opened, held, used or closed with the companies, legal entities, institutions or bodies established abroad.
Before this bill was launched, Cryptocurrency investors have been hesitant in France because of an uncertain regulatory environment. Countries have taken different approaches to tax cryptocurrency, and no international standard has emerged. In Europe, Switzerland and Malta have been seen as the most attractive hosts to the emerging industry.
The entry into force of these proposed provisions is scheduled for January 1, 2019. Capital gains from the sale or exchange made before that date, which already had to give rise to the payment of a tax under the current provision, will not be included in the calculation of capital gains realized from 2019.
The bill also proposed a penalty for taxpayers who do not declare their crypto-asset account’s holder abroad. The amount of the penalty will vary according to the seriousness of the acts committed. The reporting and sanctioning provisions apply to returns to be filed on or after January 1, 2020. A decree will also set out the reporting requirements.
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