The French government has announced that it has significantly lowered the tax rate for gains generated by cryptocurrencies after a Conseil d’Etat (Council of State) decision this week.
Gains from the sale of cryptocurrencies were previously labeled as industrial and commercial profits under French tax law and therefore could have up to as much as 45% tax levied on them for larger users. With French social security contributions (CSG) currently standing at 17.2%, some wealthier crypto traders could have been paying a massive 62% in tax.
French daily Le Monde noted that the decision to change the crypto tax rate came after citizens appealed to France’s highest regulatory body earlier this year to change the regulations for crypto transactions that had been in place since July 2014.
Under new tax laws specifically aimed at Bitcoin, the Conseil d’Etat has set the new crypto tax rate at 19%, which is the same rate applied to what the French call “movable property”, such as goods which can be moved, such as cars, jewelry and patents. Bitcoin now falls into this same category.
The council has made it clear that crypto mining falls into a different category as “certain circumstances specific to the transaction of cryptocurrencies” which would incur a 45% tax rate.
The Bank of France proposed a ban earlier this year on investment companies to keep financial institutions from conducting business in the cryptocurrency market until the government could enact proper regulation. The French ministry of the economy has since formed a task force in order to consider regulation, primarily aimed at addressing cybercrime, money laundering, and tax evasion. The task force was also created to develop possible international legislation of the cryptocurrency market.
Recent comments by French Finance Minister, Bruno Le Maire, has suggested that the G20 still needs to find clarity on the subject of virtual currency and its regulation.