French regulators are realigning the taxes imposed on hodlers of Bitcoin and other cryptocurrencies.
The French finance commission supported plans yesterday that will see capital gains tax applied to cryptocurrencies brought in line with other capital gains tax, Reuters reports.
Any profit obtained from owning cryptocurrencies is currently taxed at a rate of 36.2 percent. Other non-real estate assets are taxed at 30 percent. The amendment would see capital gains tax on cryptocurrency fall to flat-rate of 30 percent.
However, this amendment is not yet legally binding, it’s simply being pushed through parliament in attempt to become law. For this to happen, it must be approved in the final update of the budget bill. According to Cointelegraph, if the bill is approved it will be enacted from January 1 next year.
Previous reports in April this year suggested that French regulators were considering dropping capital gains tax on Bitcoin from 45 percent to as low as 19 percent.
Currently, the exact amount a hodler will pay is dependent on their income, and if they trade cryptocurrency as a business or casually. However, if this amendment is accepted, capital gains tax will become a flat-rate of 30 percent. Beneficial for some, but not for all.
French politicians have been quite active on regulating and engaging in the cryptocurrency space. In September this year, French regulators stepped out on their own to protect the country’s netizens from scam ICOs, despite there being calls for a united European approach.
What’s capital gains tax?
To be liable for capital gains tax you have to make a capital gain. Let’s say you own one Bitcoin, currently valued at $6,500, if that digital asset appreciates in value to $7,000 in a years time and you sell that asset making a $500 profit, you have made a $500 capital gain.
Capital gains tax is then quite simple. You pay a percentage of that profit (read: capital gain) made, as tax, to the government. If the new amendment in France is passed, cryptocurrency traders will have to pay 30 percent of any capital gains in tax, a drop of 6.2 percent.