The Council of State has handed down its verdict on the taxation of cryptocurrencies: It has estimated that capital gains generated by crypto-currency like Bitcoin should be taxed as “movable property” when realized by casual sellers.
Taxation of earnings could exceed 60%
The Council of State (the highest French administrative court) was seized earlier this year by taxpayers who wanted to challenge the tax regime applied to capital gains generated by the sale of cryptocurrencies.
Until now, earnings were subject to income tax and social security contributions. Their tax rate could therefore exceed 60% for taxpayers most heavily taxed on their income (45% TMI + 17.2% social security contributions).
As part of an occasional sale, cryptocurrencies will be taxed as movable property
The Council of State has computed that the profits generated by way of cryptocurrencies ought to be considered as capital profits of “movable assets”, and therefore gain from this and with exception, the same tax gadget.
These gains will consequently be taxed at a flat rate of 19%. there is also 17.2% social safety contributions, bringing the overall tax rate to 36.2%.
Another positive point of the tax regime of movable property: the realized gain profits from a reduction of 5% per year of detention from the third year. This means that when the assignment occurs after 3 years of detention, only 95% of the gain is taxed. After 22 years of detention, the gain is totally exempt.
In addition, capital gains realized on disposals of less than $5,000 are exempt.
But beware, the Council of State has indicated that only the capital gains made by casual sellers can benefit from the taxation of movable property and that the criteria for qualifying the activity of occasional “result from the examination, the on a case-by-case basis, factual circumstances in which the purchase and resale transactions are carried out (the periods separating the dates of purchase and resale, the number of bitcoins sold, the conditions for their acquisition, etc.) “.
Good to know: The taxpayer must make the declaration spontaneously to the tax department of his home within a month of the transfer. Tax is paid when filing the return.