Bitcoin and cryptocurrency trading in France
Many French businessmen and thought leaders want France to be at the forefront of the crypto economy. The central bank is also trialling digital currency. There is plenty of consumer investment activity, with very positive lobbying for blockchain progress.
Law and crypto trading in FranceLegal - existing crypto legislation
French regulatory authorities have been generally wary of cryptocurrencies, due to their high volatility but, like other EU countries, are enthusiastic about the underlying blockchain technology. In regard to tax, any profits from the sale of crypto is taxable, and overall value is taken into account when calculating wealth tax.
Cryptocurrencies are broadly considered legal across the European Union, but cryptocurrency exchange regulations depend on individual member states. Regulations may vary by member state, and by compliance with the European Banking Authority (EBA), European Commission (EC), European Central Bank (ECB), European Insurance & Pension (EIOPA), and European Supervisory Authority for Securities (ESMA). Cryptocurrency taxation also varies, but many member states charge capital gains tax on cryptocurrency derived profits at rates of 0-50%.Legal - forthcoming crypto legislation
Crypto legislation is continually being debated and assessed but nothing is forthcoming right now.
Taxing cryptocurrencies in France
Any individuals who partake in occasional trading must declare all cryptocurrency sales on their yearly tax returns, stating all capital gains they made that year. Individuals and companies who control overseas accounts must also declare all sales on their yearly returns or face fines.
However, if you’re a professional trader (someone who generates most of their income from trading), you’ll be subject to a special tax regime called the BIC. This assessment will be based on your trade volume and the gains you make.
Okay, take a deep breath, we’re getting technical….when crypto is exchanged for fiat currencies, no VAT is due on the value of the cryptocurrency or fees charged by the intermediary. Charges made over and above the value of the cryptocurrency for arranging or carrying out any transactions in bitcoin, except forex transactions with official currencies, are subject to VAT. Acquiring products or services via cryptocurrency payments is also subject to French VAT. However, the sale of cryptocurrencies is not subject to VAT unless made for the purpose of obtaining income on an ongoing basis. Got that?
As with most countries, holding crypto in your wallet and sitting on it, or transferring it between wallets incurs no tax, but make sure you aren’t getting confused –it’s easy to do – between transferring them, transacting them or disposing of them.
The French government famously ruled that it was to cut the income tax on gains from cryptocurrency sales from 45% to a flat rate of 19%. Isn’t that good news? It ruled that cryptocurrency sales should be considered as capital gains of ‘movable property’ – such as cars or jewels for example and meaning they are eligible for a lower tax rate than was previously the case.
Crypto sales under 305 € per year are completely tax-exempt and need not be declared.
This change was partly as a result of a private case brought about by investors, challenging the tax rates that had been in force relating to the sale of bitcoin and other cryptocurrencies.
Tax when moving residency
As with any income, your bitcoin will come under the tax laws of the country where you are legally resident. If you move outside France but are still resident, make sure you have detailed transaction reports about your purchases and sales across all exchanges you used. If you set up a business to trade crypto, that business will come under the tax laws of the country it operates from.
Tax on mining
Mining is fantastically complicated and beyond the scope of most individuals. To bring things back to earth, mining for bitcoin or any other cryptocurrencies is, you guessed it, a taxable event. In France, the mining of crypto by individuals is taxed as income, and the taxable amount is the net profit you make on your mined coin. In general, profits from cryptocurrency speculation and mining are treated as industrial and commercial profits subject to the prevailing income tax scale.
Crypto financial services in France
Investing in crypto and blockchain tech has become increasingly recognized by French financial institutions. However, cryptocurrencies are not generally recommended by consumer pension plans and retirement funds due to risk and volatility. The situation is changing all the time, and some European countries are able to offer some form of crypto retirement fund planning.
When it comes to crypto, France has a great deal of consumer lobbying pressure to make changes. Recently, the Banque de France announced a successful trial of Central Bank Digital Currency (CBDC) within TARGET2-Securities (T2S), the European Central Bank settlement platform.
As above, many institutions and thought leaders see DeFi as a way forward that France must take advantage of. The government is receptive to blockchain, but DeFi as a subject is still a patate chaude.
Using crypto in France
Most stores still don’t accept cryptocurrency as a form of payment, but there are gift card programs that allow you to convert your cryptocurrency into a gift voucher to spend at participating stores. Major crypto exchange Coinbase, for example, launched a feature that lets French customers use crypto to buy giftcards that can be redeemed at over 100 retailers including Uber, Google Play, Nike, Ticketmaster, and fashion brands like Ted Baker and Clarks. Currently, the gift card feature is only open to people in the UK, France, Italy, Spain, The Netherlands, and Australia, but Coinbase says it will eventually expand to other places as well.
If you’re feeling generous you can gift crypto, but you are still subject to tax on the gain you have made from it prior to gifting it no matter how or where you store or trade your coins. You can gift it to a recognized charity or non-profit organization, and most crypto exchanges will be able to advise on gifting your coins.
Crypto regulation in France
Crypto exchanges typically request two forms of identity verification; a SEPA transfer accompanied by an identity document. In addition, all exchanges, including those that do not offer fiat trading pairs, will need to register with an administrative body, likely the Autorité des marchés financiers (AMF), France’s financial markets regulator.
It pays to check your exchange for its longevity and protection against fraud – many have insurance cover which you might like to know about. Claiming a loss through fraud or theft is quite complex as there are so many definitions to comply with, including asset price and circumstances. If your crypto wallet has been stolen, you cannot claim any immediate tax relief, but you should record any losses as you can offset these with any future crypto profits within one year. You’ll also need to make clear whether your losses were part of a trading business or for personal investment purposes. Reputable exchanges carry insurance against fraud or hacking, so in this event, you’re more likely to be claiming some form of compensation from the exchange.
While crypto trading is legal and acceptable in France, the government has taken a series of new measures to combat the anonymity of cryptocurrency transactions. In fact, anonymous accounts are banned and crypto exchanges have strict identity requirements.