Will France’s 75 percent tax be cut down to size?

It’s appearing more and more unlikely that President François Hollande’s much-vaunted 75 percent supertax proposal will ever see the light of day. Claims in the French media on Thursday predict it will have to be set at a lower rate.

Will France's 75 percent tax be cut down to size?
Belgian Workers Party (PIB) militants hold boxes looking like laundry detergent, called 'Millionaires Tax', during a protest in front of Gerard Depardieu alleged new home. Photo: Philippe Huguen/AFP

The flagship proposal of Hollande's election campaign fell at the final hurdle in December when the country’s highest court – the Constitutional Council – ruled the tax on the highest earners was in fact "unconstitutional".

An embarrassed French government was forced to go back to the drawing board but insisted it would return with a new proposal.

But a report in Le Figaro on Wednesday has cast further doubt that the controversial 75 percent levy on those earning more than one million euros a year would ever be legally valid.

Le Figaro claims to have had access to a report by the State Council (Conseil d’État), a body which advises governments on the legality of new policies, which states that the ‘supertax’ band could only be as high as 66.66 percent.

Any higher and it will simply be ruled illegal once again by the Constitutional Council, Le Figaro claims.

This analysis needs to be adopted officially by the State Council before it is passed on to the government, where it is not likely to be well-received.

Hollande has been adamant that the country’s most wealthy must pay their way to help bolster the ailing economy.

Despite heavy criticism from business leaders and even actor Gérard Depardieu, the French government has insisted the tax will be brought in.

Earlier this year Prime Minister Jean-Marc Ayrault swiftly dismissed media reports claiming the government had accepted defeat after the levy was snubbed by the Constitutional Council.

“We categorically deny these reports,” a defiant Ayrault said in February.

The Council ruled the tax was unlawful because it applied to individual income rather than household income, and therefore was not in line with France’s general approach to income tax.

We may not know the exact details of the new tax until the government reveals its finance plan for 2014 in September this year.

The French Communist Party’s Jacques Fath, responsible for international relations previously told The Local that dropping the 75 percent tax rate would be another broken promise by the government.

“This would just be another case of the government backing down under pressure from business and the Right. It’s a real shame,” he said.

“This was one of the most positive measures of the government’s election manifesto but in abandoning it they are showing they are not as orientated towards the left as they claim.

“This tax was necessary to make the fiscal system in France more equal,” Fath added.

A recent BVA poll for France’s i-TELE found that 61 percent of 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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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.