Late last month the French Council of State ruled that returns generated from the trading of virtual currencies should be taxed like other movable properties. This has consequently reduced the tax rate from capital gains of virtual currencies from 45% to 19%. Previously proceeds from the sale of digital currencies were viewed as industrial and commercial profits when the activity of trading in cryptocurrencies was usual and continuous. When trading in virtual coins was an occasional activity proceeds were considered non-commercial earnings.
The change in the taxation rate for cryptocurrency capital gains comes in the wake of stakeholders approaching the Administrative Court of France to challenge the previous tax measures. However while the stakeholders won with regards the taxation rate for capital gains being lowered, proceeds from the mining of digital currencies will still be subject to the old rate since they are considered gains from commercial and industrial activities.
Earlier in the year the minister of finance in France, Bruno Le Maire, called for cryptocurrencies to become an item of discussion during the G20 forum. This was in line with the progressive stance that France has adopted towards cryptocurrencies and the blockchain technology. However the French finance minister did not always have a positive view of virtual currencies. Previously he had concerns that digital currencies posed a risk not just to novice investors but also to the world economy.
According to Le Maire a blockchain technology revolution is on the way and bitcoin (BTC) is a precursor. Besides cryptocurrencies Le Maire is also supportive of Initial Coin Offerings and has stated that this method of raising funds was particularly suited for startups. Consequently the French finance minister has asked Jean-Pierre Landau, an ex-deputy governor of the Bank of France to develop an effective legal framework for Initial Coin Offerings.
Per Le Maire blockchain technology has the capacity to disrupt various sectors including insurance and banking. However Le Maire has also urged some level of caution as he has said that there are some risks that this budding sector poses and includes wild volatility. He has thus called for legislation to be developed since innovation will not take place in a regulatory vacuum.
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