France cuts cryptocurrency tax rate

The French State Council has ruled that the gains from cryptocurrency sales should not longer bet taxed at up to 45% and that a flat rate of 19% should apply

What has happened?

The French State Council has amended the tax regime of profits generated from cryptocurrency sales, reducing it from up to 45% to a flat 19%.

What does this mean?

The French State Council (Conseil d'État) has announced in a press release that profits arising from cryptocurrency sales should be considered as capital gains of "movable property".

This means that they will benefit from a lower tax rate than is the case at the moment.

Earlier this year, several investors brought a case before France's highest administrative court, challenging the tax rate that had applied since 2014 to the gains from the sale of bitcoin and other cryptocurrencies.

Since 2014, gains made by individuals from the sale of cryptocurrency have been considered "industrial commercial profits" (bénéfices industriels et commerciaux (BIC)), in the event of usual and continuous activity, while gains from occasional transactions are treated as "non-commercial profits (bénéfices non commerciaux (BNC)).

As reported by Le Monde, this means that tax on cryptocurrency gains can be as high as 45% for higher-band taxpayers, to which is added the country's generalised social contribution (CSG) of 17.2%.

The State Council agreed for the most part with the aggrieved investors and ruled that "the sale of bitcoins" would be classified "in principle under the category of moveable property", which as the name suggests refers to property that can be moved, such as cars or jewellery, but also patents or copyrights.

Classifying cryptocurrencies as moveable property brings a flat capital gains tax rate of 19%, and even when adding the CSG, this is considerably lower than the BIC or BNC.

In its press release, the State Council said that certain types of transaction may, however, "fall under provisions relating to other categories of income".

For example, proceeds from cryptocurrency mining will be taxed under the BNC rate, even for a one-off transaction, while commercial activities related to the technology will be taxed at the BIC rate.

Next steps

If you want to take advantage of blockchain's huge potential and disruptive impact, while avoiding falling foul of ever-developing regulatory and legal requirements, visit our Hogan Lovells Engage Blockchain Toolkit.

Patrice Navarro
Languages English
Topics Blockchain
Countries France


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