Taxation of crypto-assets: changes to be expected in 2022

Examined this week by the French National Assembly, the Finance Bill for 2022 should allow for some changes in the taxation of crypto-assets, with several amendments having been passed by the Finance Committee.

A desire to simplify capital gains taxation

Several MPs, led by LREM MP Pierre Person, have tabled amendments to the Finance Bill for 2022 aimed at modifying the taxation of crypto-assets, with a view to simplification.

Thus, the MPs concerned first proposed that the taxation of capital gains on the sale of crypto-assets be clarified. At present, the French Tax Code provides no objective criteria for distinguishing between individual and professional holders of crypto-assets. Only the "usual" or "occasional" nature of the activity is taken into account to determine its category and, consequently, its tax rate.

As a result, some individuals whose business is considered to be habitual see their capital gains taxed at more than 60%, under the heading of industrial and commercial profits (BIC), leading some of them, according to the authors of the amendment, to move abroad.

To remedy this, the amendment proposes that cryptocurrency transactions be brought into line with stock market transactions for tax purposes. This change would allow capital gains to be taxed as non-commercial profits (BNC), which was initially planned by the tax authorities before the Conseil d'Etat issued a different ruling in April 2018.

Capital gains on the sale of crypto-assets could therefore be subject to the progressive income tax scale, instead of the flat rate of 12.8%. What's more, if annual sales are below €72,600, speculators could benefit from the micro-BNC regime, with a 34% deduction.

Non-fungible tokens: a clearer legal and tax framework

Non-fungible tokens (NFTs), which are title deeds to digital objects and enable works of art and collectibles to be sold dematerially, have also attracted the attention of some MEPs.

Currently, holding them is complicated by an unclear tax and legal regime. They are taxed as capital gains on the sale of digital assets, but an amendment proposes to create a specific tax regime for non-fungible tokens.

This proposal, if adopted, would enable NFTs to be taxed according to their underlying asset, as works of art, music, etc. The amendment also proposes thata legal definition of NFTs be adopted.

The term NFT would then refer to " any intangible and non-fungible asset representing, in digital form, one or more rights that can be issued, registered, stored or transferred by means of a shared electronic recording device enabling the owner of the asset to be identified, directly or indirectly ".

On the other hand, several amendments were rejected. These were aimed at encouraging crypto-asset holders to invest in the "real economy". For example, Éric Woerth, the LR chairman of the Finance Committee, had imagined a tax exemption scheme for gains reinvested in companies, particularly those in the cultural sector. His proposal was rejected.