France Targets Bitcoin With New Tax In 2025 Budget Proposal

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As a seasoned financial analyst with over two decades of experience under my belt, I find myself intrigued by the French government’s proposal to tax unrealized capital gains on cryptocurrencies like Bitcoin. Having navigated through various tax regimes and economic landscapes, I can appreciate the government’s attempt at balancing taxation between digital and physical assets.

The French government plans to switch the existing property tax with a “tax on unproductive assets” in its upcoming budget. This new tax will focus on assets that are not being actively used, such as cryptocurrencies, luxury items, and idle real estate, as suggested by Senator Sylvie Vermeillet. Bitcoin is expected to be categorized as an unproductive asset next year, following this proposal. This new tax system is reminiscent of the way luxury goods and unused properties are currently being taxed.

As of now, French tax rules impose a flat rate of 30% on profits from cryptocurrencies that exceed €305. However, a new proposed law for 2025 might require taxation not just on realized gains but also on the increase in value of cryptocurrencies before they are sold (unrealized gains). According to Vermeillet’s proposal, if your total crypto holdings exceed €800,000, those assets will be subject to taxes.

Not disclosing an external financial account could result in a penalty of €1,500 per account. However, trading one cryptocurrency for another does not incur taxes as of now. The initial vote on this new tax law has been approved by the Senate, but it’s important to note that the final legislation is yet to be passed.

JUST IN: France to tax #Bitcoin unrealised capital gains.

— Bitcoin Archive (@BTC_Archive) December 3, 2024

French Gov’t Looking For ‘Balanced Taxation’

On the 3rd of December, Senator Sylvie Vermeillet from France put forth a plan to categorize Bitcoin and cryptocurrencies as non-productive assets in the upcoming budget. Similar to vacant real estate and high-end goods, these types of assets (such as Bitcoin and digital currencies) will be subject to taxation due to their non-productive nature. (French)

As a financial analyst, I find myself in agreement with Finance Minister Laurent Saint-Martin, who has recently expressed approval for the proposed policy exemption of the top digital asset from taxation. In my view, this decision appears inequitable when considering that other economic assets are subject to taxation.

The idea behind this proposal is to establish a fair tax structure for both digital and tangible possessions, resulting in what we call a “level playing field” in taxes. Once enacted, those involved in cryptocurrency and other digital investments will need to reassess their current holdings and future ventures. Yet, it’s important to note that there are some skeptics who argue this change might dampen market enthusiasm and potentially escalate price fluctuations.

No Tax On Crypto-To-Crypto Trades

Currently, French tax regulations require taxes on earnings from buying or selling Bitcoin (BTC) or other digital assets for Euros. However, as of now, there are no taxes levied on trading cryptocurrencies for another crypto. This exemption enables investors and holders to make immediate tax obligations only when they convert their crypto holdings to Euros. Supporters argue that this new tax law will stimulate the crypto market by encouraging broader participation.

The tax amendment submitted on November 18th sets out the tax rates for next year’s national budget, affecting those who own assets worth more than €800,000. Although this rule appears straightforward, some might find the reporting process challenging. Cryptocurrency owners need to monitor transactions such as lending, staking, and liquidity pool activities.

Crypto Holders Must Report Or Face Fines

This proposed change in regulations implies that French taxpayers must disclose any cryptocurrency accounts they hold outside France. Not submitting this report could result in a fine of €750. If the account exceeds €50,000 in assets, the penalty rises to €1,500.

Vermeillet’s suggestion implies that individuals should submit the Cerfa 3916-bis form every year for tax reporting purposes. It’s important to note that this form must be submitted annually, regardless of whether there have been any recorded transactions. The authorities retain the ability to scrutinize individual tax records if the government has reason to suspect fraudulent activities.

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2024-12-04 16:42