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ELECTION

French government coy on new super tax

France’s Finance Minister Pierre Moscovici, insisted on Monday that his government's controversial super tax would soon be back on the table. The minister however declined to specify at what rate the tax would be set, fueling speculation the government might be ready to lower it from 75 percent.

French government coy on new super tax
Finance minister Pierre Moscovici, pictured in December, 2012. Photo: Eric Feferberg/AFP

President François Hollande’s much publicised 75% tax on those earning more than €1 m was thrown out by France’s highest legal ,the Constitutional Council, in December on the grounds it was unconstitutional.

The council, known as "Les Sages", ruled the law was unconstitutional, partly because it applied to individual rather than household income, so was not consistent with France's usual method of taxation.

Last week Prime Minister Jean-Marc Ayrault was forced to deny reports that the government had decided to scrap the tax and on Monday Moscovici said details of the redesigned levy would be revealed by the "end of February".

However he refused to be drawn on whether it would remain at 75 percent, saying only it would be in the "same spirit" as the previous proposal.

According to a report by Europe 1 radio, Moscovici has been working with the PM to devise a tax plan that will avoid a second rejection from the constitutional council.

“I don’t want to risk censure again, and I’d like to stay close to the principles defined by the Constitutional Council,” said Moscovici.

If the tax is adjusted to affect households rather than individuals it would effectively increase the number of people affected by the new tax from 2,000 to 15,000, which have an impact on the popularity of what was Hollande's flagship pre-election pledge.

A source close to the president told Europe 1 on Monday that he would consider it "politically impossible" to abandon the hike on wealthy tax-payers.

A recent BVA poll for France’s i-TELE found that 61 percent of French people supported in principle the idea of a separate tax on earnings over €1 million, but only 21 percent thought the rate should be at 75 percent or above.

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MONEY

Do you pay tax on cryptocurrency in France and if so, how much?

Cryptocurrency is big business in France but the rules on the taxation of income from the currency differ to other countries.

Do you pay tax on cryptocurrency in France and if so, how much?

Bitcoin. Ethereum. Tether. Mining. Binance. To the uninitiated, cryptocurrency can sound like a different language. But, in France, it’s big business, with an estimated 3.4 million people reportedly holding at least some “crypto”.

In May, France became the first major European nation to give approval for cryptocurrency exchange Binance to operate in the country.

But this does not mean the country is operating a light touch on cryptocurrency regulations – a fact Changpeng Zhao, Binance’s CEO and founder, recognised at an event in Paris in April to launch a government-backed programme for “Web3” start-ups.

As cryptocurrencies become more mainstream, more and more people may be looking to get on board. But, is it taxable? How is it taxable, and how much tax do you have to pay?

First things first: yes, cryptocurrency income is taxed. It’s income. It’s taxable.

The tax rate applicable for capital gains and income from crypto assets depends on whether you’re a professional trader, an occasional investor or a miner.

France’s Direction Générale des Finances Publiques (DGFiP) says that capital gains from the sale of crypto assets like bitcoins are currently taxed at the following rates:

Occasional investors – flat tax rate of 30 percent, made up of 12.8% income tax and 17.2% for social security contributions

Professional traders – BIC tax regime of 0-45 percent.

Crypto Miners – BNC tax regime of 0-45 percent.

The flat rate for occasional investors applies to individuals with financial investments in crypto assets, and other investment income like dividends and life insurance, not to professional traders. 

The DGFiP will only tax capital gains from crypto when crypto is converted into euros or any other fiat currency, if the total capital gain exceeds 305€ per year.

That means those who only dabble in crypto pay less than those who make their living from it.

The difference between an occasional investor and professional trader lies in how often you “dabble”. 

The more you play the crypto market, the more likely you are to be regarded as a professional trader – in which case the variable rate of 0 percent to 45 percent applies.

The point at which an occasional investor and professional trader isn’t obvious – that decision is made on a case-by-case basis – but the DGFiP’s working out on this calculation is based on the total investment amount, trade volumes, and how often you sell cryptocurrency. 

The more often you do this, the more likely you are to be considered a trader.

Mining, meanwhile, falls under the non-commercial profits regime of the general tax code. For more details, click on the government website, here.

As for declaring any crypto accounts you may have, there’s a special section on your annual French income tax declaration. Transfers into legal tender currency (but not another cryptocurrency), as well as purchases of goods or services using crypto, are taxable.

The overall amount of the capital gain (or loss) for the year must be entered in the annual income tax return, along with the details of the transactions

Fines for failure to declare a single bank account or investment scheme are hefty – from €1,500 to €10,000, with €3,000 being a fairly common penalty. These amounts are applied to each account you fail to declare.

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