Almost every nation today taxes cryptocurrency, and France is no different. The General Directorate of Public Finances, aka Direction Générale des Finances Publiques (DGFiP) in French, has established tax regulations for cryptocurrencies in France that are very different from those in other European nations.
With this weblog, we can decrypt the different aspects that come into consideration when discussing France’s taxation pattern. So let’s check it out in the following sections.
How Is Cryptocurrency Taxed In France?
Capital gains tax is applied to cryptocurrency earnings in France. According to the French General Tax Code Article 150 VH, the taxation of investment income depends on whether the cryptocurrency was gained through investments or other activities like mining.
Following the Action Plan to Business Transformation and Growth law, popularly known as PACTE, cryptocurrencies were finally given a legal classification as of May 2019 for the first time.
According to the General Directorate of Public Finances (DGFiP), moveable investments include cryptocurrencies like Bitcoin and Ethereum. The DGFiP continues by stating that the Euro is the only legal money in France and that cryptocurrencies are not real currencies. The DGFiP clearly states that using cryptocurrencies to pay for goods or services is entirely allowed.
What Could Change For France’s Cryptocurrency Tax Treatment Next Year?
Finance Minister Bruno Le Maire said France would review its tax law concerning crypto tokens. This marks the country’s effort to become the leading Blockchain hub by next year. With their latest efforts, the government would lead the industry rather than try to replicate the current stock market regulations.
Le Maire told BFM TV he was worried about the energy use of cryptocurrencies and the possibility that Blockchain technology could replace the role of the Euro, France’s national fiat currency. Le Maire stated, “We aim to create the European Union as a central economic zone in the world for creating and organizing the crypto market. “We want France to become the center of the ecosystem for digital assets in Europe.”
The EU has officially adopted the ground-breaking Markets in Crypto Assets Regulation (MiCA), which allows cryptocurrency firms to operate across the union provided they follow stability and investor protection rules. Regarding legislation that prefigures some of the objectives of MiCA, several companies, including Binance and crypto.com, have recently registered with French authorities. Nevertheless, French lawmakers have complained about the government’s inactivity in not doing enough to assist Web 3.0 enterprises.
The Latest Updates Around The Revamped Crypto Tax Structure In France
The European Union has passed the Markets in Crypto Assets Rule (MiCA), a groundbreaking piece of legislation. But unfortunately, it was followed by a second regulation that required the institutions to disclose the names of anyone making crypto payments.
A person familiar with the discussions said that at a meeting on Wednesday, diplomats from the EU Council’s member nations approved the language of regulations that were the subject of the political agreements reached in June, ostensibly without further discussion.
MiCA implements reserve limitations for stablecoins and the first-ever licensing program for cryptocurrency wallets and exchanges operating in the EU to stop collapses such as those in Terra. In addition, separate legislation on financial transfers requires wallet providers to confirm the names of their clients to combat money laundering.
Since June, representatives and legislators have tried to convert the two main political outlines reached in June into a final legislative language.
Industry advocates hoped to clarify MiCA provisions that they worried may restrict the trade of stablecoins pegged to the dollar within the bloc. However, nations like France that are eager to prevent intrusion into another country’s sovereign territory appear to have rejected softer legal language leaked two weeks earlier.
Could 2023 Mark A New Beginning For Crypto In France?
Le Maire stated that they aim to utilize the year 2023 to extend the reflection with participants to evaluate whether new tax law adaptations are necessary. For example, simple alignment with stock taxes is only sometimes a desirable goal, even if others, like Portugal, recently had a change of mind and wanted to raise rates again. On the other hand, advantageous tax regulations have been essential to luring crypto entrepreneurs to other regions of Europe, such as Germany.
Le Maire also indicated that he was working on a study on how cryptocurrencies affect the environment. He applauded the Ethereum Blockchain for transitioning to a proof-of-stake consensus method that uses much less energy.
However, he is still preparing for large coins like bitcoin (BTC) to overtake the dollar as the dominant currency. He also opposes making tax payments with cryptocurrencies, as proposed in Colorado.
“Our sovereignty, but also beyond all the most susceptible among us,” he continued, “would be put at risk by the worship of a world without states, without a central bank, without borders, and even without money.” Adding to it, he continued, “The euro is our official currency, and the payment of taxes in only one currency is a requirement of our unity.”
French Regulators Grant Trading Platform Crypto.com Permission To Conduct Business There
On Wednesday, the Singapore-based trading platform for digital assets, Crypto.com, said it had been permitted to operate in France as a DASP (Digital Asset Service Provider).
According to the news, the trading system has registered with France’s leading markets authority, the AMF (Autorité des Marchés Financiers). As a result, all businesses seeking to offer custody, trading services for digital assets, and “purchasing or selling digital products in legal cash” throughout the nation must register.
According to the release, the platform was evaluated to provide its regulatory certificate and ensure that the exchange complies with countering terrorism funding and anti-money laundering. The exchange recently received registration licenses in the UK, Italy, and South Korea and in-principle approval in Singapore and Dubai.
France’s Role In Crypto’s Future Boom
France has become a preferred site for cryptocurrency businesses in the European Union. At the beginning of September, Paris was dubbed “the financial center for crypto in Europe” by Binance CEO Changpeng Zhao.
The French AMF has also recently accepted registrations from the crypto exchange Binance and Luno. Considering the different governmental aspects of France in introducing the change in its taxation scheme, we’re left to believe that the country could soon be the hub of crypto.