The capital gains tax rate on virtual currencies in France has been reduced by more than half thus giving citizens an incentive to invest as well as liquidate their holdings in order to book the profits. According to the French Council of State the classification of virtual currency capital gains will be changed with the tax rate lowered to 19% from a high of 45%. Generalized Social Contributions will still be effective for most incomes.
The lowering of the tax rate in France on virtual currency tax gains comes as the Council of State, which is the highest administration court in France, said that profits from virtual currencies fit the definition of moveable property and are thus subject to a tax rate that is lower than what had previously been set. This has resulted in the rewriting of rules which have been in existence since 2014.
Mining of crypto coins
Before the ruling gains on virtual currencies were defined as either non-commercial, commercial or industrial profits. Under this system of classification the tax on capital gains for virtual currencies was 45% for residents in the highest tax bracket. The new definition now sees profits from digital coins being viewed as assets which are transportable and they are thus likened to precious metals, planes, vehicles or intellectual property. In this category the flat tax rate is 19%.
However the new tax rate does not apply to all aspects of virtual currencies. As an example profits that are made from the mining of virtual currencies such as bitcoin (BTC) will not see any changes and the original tax rate still applies as the reduced rate only applies to investment gains.
Progressive crypto stance
Earlier this year the French finance minister Bruno Le Maire requested that virtual currencies be placed on the agenda during the G20 summit. The French finance minister is viewed as having an accommodating stance towards bitcoin as well as other virtual currencies. France is aiming to play a leading role in the financial technology sector and Le Maire wants the southern European country to be attractive to blockchain startups. In 2017 France gave the go-ahead needed for commercial banks to support the trading of unlisted securities by making use of the blockchain technology.
Besides the French finance minister the president of France, Emmanuel Macron, is thought to be a bitcoin enthusiast. Some photos of him holding a virtual currency hardware wallet have even emerged online.