The taxation of digital assets in France has been defined by the government as of January 1st, 2019.
Capital gains from the sale of digital assets are subject to a flat rate of 30%, which is the same tax rate for securities. The calculation of capital gains is based on a proportion of the total capital gains of an individual’s entire digital asset portfolio, rather than just the sale price minus the purchase price of the digital asset. Capital gains must be declared annually when filing an income tax return, and taxpayers must also declare any accounts they hold with digital asset trading platforms based outside of France.
The accounting and tax treatment of digital assets will depend on the use of these assets by the company. The French Accounting Standards Authority has created a “tokens held” account in the category of cash instruments, and gains on digital assets are only accounted for when the tokens are sold. Exchanges between digital assets are considered a taxable event for corporate tax purposes. Token sales are not taxed in the year of issuance if the issuer makes a commitment to provide a good or service for the tokens.
The tax implications for crypto companies in France are determined by the type of company established. SAS (Société par Actions Simplifiée) and SARL (Société à responsabilité limitée) companies, which are French limited liability companies, are subject to the standard corporate tax rate ranging from 15% to 25%. These companies are also required to pay 20% VAT on their services.
It is crucial to keep in mind that the taxation of crypto assets in France is subject to change, so it is advisable to consult with a knowledgeable attorney to ensure compliance with the latest regulations and requirements. Moreover, international tax laws may impact crypto exchanges operating in France, particularly if they have a global presence or clientele.
Value Added Tax (VAT)
The purchase or sale of digital assets as a means of payment has been exempt from VAT since 2015. VAT is not applicable to ICOs if there is a contingency on the existence of the counterparty, and mining operations are outside the scope of VAT. Currently, there are no border restrictions or requirements to declare cryptocurrency holdings when entering France. The “exit tax” system, which allows the French tax authorities to tax unrealized capital gains on securities portfolios, does not yet apply to digital assets portfolios.