Capital gains taxes and cryptocurrency have always been an odd couple. Although a lot of people see the merit in proper taxation guidelines for cryptocurrency, things are never as clear-cut as they might appear. In France, a new proposal has been introduced to reduce the capital gains tax on Bitcoin from 45% to 19%. It’s a positive development, as a lower flat rate simply makes a lot more sense.
France Reduces Bitcoin Capital Gains Tax by 60%
Anyone who currently deals with Bitcoin for speculative or professional reasons in France will pay a capital gains tax on their profits. That’s been the situation for quite some time now. The original regulation dates back to July 2014, and it has not seen any major changes since that time. This is not to the liking of local cryptocurrency users, as paying a 49% capital gains tax seems crazy.
Changing this rule has been an ongoing battle, although major success has been achieved. French sources report that the Council of State will reduce the capital gains tax on Bitcoin and other cryptocurrencies. That is a very positive development, even though the flat fee concept will remain in place. With the tax rate dropping from 45% all the way to 19%, a very positive change has been introduced by French officials.
Although this still means French cryptocurrency enthusiasts will lose one-fifth of their profits, it is better than giving up almost half of them. Any gains from the sale of cryptocurrency are now considered to be industrial and commercial profits if these sales occur regularly. For users who only sporadically sell cryptocurrencies, the earnings will be labeled as non-commercial profits.
It is important to note that the Council of State is now putting the sale of cryptocurrency on the same level as that of movable property. The movable property designation usually applies to more tangible assets, such as jewelry, cars, and so forth. However, it also applies to intangible goods, such as patents, copyrights, and now cryptocurrencies. With the flat fee of 19% now applying to all of these products and assets, a more lenient ecosystem has been created which may allow cryptocurrencies to thrive in the years to come.
It is possible that there will be exceptions to this tax ruling. That’s because the Council of State acknowledges that certain “circumstances specific to the transactions” could cause this tax rate to change. It all depends on the type of trading activity, the amount involved, and the origin of the cryptocurrency in question. Any gains not considered the result of an investment transaction will always be considered to be industrial and commercial profits, even if it is a one-off transaction.
This latter point could have big consequences for people who mine Bitcoin. As mining is not related to investment, it is only normal that it would be considered commercial profit first and foremost. Any income from a professional activity – such as freelancers being paid in Bitcoin – will also fall into that category, which is no big surprise either. All things considered, this new regulation is rather positive for the cryptocurrency industry in general.