According to the French tax body, taxpayers in France declared a total of $442 million in profits from crypto trading in the latest tax year. While this figure is considered substantial, it falls short of the estimated gains made in 2021 by a factor of 10. The tax body’s claim is based on the number of people who disclosed their gains on tax returns. However, a report by Chainalysis suggests that the gains made in 2021 from crypto trading in France amounted to more than $4 billion. This is 10 times more than the amount declared to public finance authorities, indicating that many crypto holders in France are still evading taxes.
The Taxation Laws and Implications
Under French law, a flat rate tax of 30% is imposed on profits made from crypto trading. This was introduced in 2019, and 20,000 tax households declared gains in 2022 for the tax year FY2021. While the tax body does not provide information on the proportion of this sum that was taxed, it is stipulated by law that 30% of the profits must go directly to the state coffers. Additionally, only crypto-to-fiat trades are subject to capital gains tax, while crypto-to-crypto trades do not have to be declared. However, for prolific traders, different taxation laws apply. Individuals who regularly receive profitable crypto payments can be obligated to pay tax as though they were making industrial and commercial profits.
Despite these laws, the media outlet claims that the amount declared was well below the estimates of capital gains during the year. This is attributed to factors such as the decline in crypto prices. In a survey conducted earlier this month, it was found that one in 10 French people own crypto, and 85% of respondents had some knowledge about cryptoassets. This represents a rise of about 10% from a similar survey conducted in 2022.
In conclusion, while the reported figures of declared crypto trading profits in France are substantial, it is evident that many crypto holders are still evading taxes. The French government and tax body need to enforce stricter regulations to ensure that crypto trading profits are accurately declared and taxed in the future.