France - Crypto penetration

intro

France is one of the most crypto-friendly among the major economies of the EU, with 3,4+ million residents investing (1) in crypto. The country has a soft and clear licensing framework. Binance has registered (2) its entity in France in May 2022. Another extensive exchange Crypto.com, got the regulator's approval (3) in September 2022. Operating companies also include Coinhouse and Bitpanda.

Security level

France has a minor danger security level according to our rating. The jurisdiction has 45.4 points (from 100) for safety level in Numbeo crime rating (4). The homicide level (5) is 1,1 per 100,000 inhabitants a year. Story of firearm-related death (6) 2.33 per 100,000 inhabitants a year.

Crypto Payments

Although the euro is the only official currency in France, crypto payments are legal in France, according to the government website (7): “While creditors are required to accept payments in euros, they can also accept foreign currencies or virtual currencies. Merchants are therefore free to accept or refuse cryptocurrencies.” Also, there is an official reminder about the possible taxation of gains from crypto payments.

Moreover, the commercial court of Nanterre recognized (8) Bitcoin as a legal payment method in 2020. You may check more details about the court case here (9).

Crypto Salaries

According to the local expert (10), it’s possible to pay a salary in crypto in France since The Labor Code (11) and The Monetary and Financial Code (12) allow it.

Quote from The Labor Code

” The salary is paid either in cash or by cross check or by transfer to a bank or postal account., According to Article L3241-1.

Quote from The Monetary and Financial Code

“Salary and pay […] Must be transferred by cross check or to an account maintained by a bank or post office or payment company or electronic money company providing payment services.”

Thus, it can be assumed that the current laws do not prohibit crypto salaries, but only in case they are paid into accounts of a licensed payment service.

Legal

Based on Law Review (13), the French government’s first step to regulate cryptocurrency came in 2014 when the Prudential Supervision and Resolution Authority required exchanges to obtain a license to provide payment services. This was followed in 2017 and 2018 by introducing a regulatory framework for ICOs and the passage of Ordinance No. 2017-1674, which defined certain crypto-assets as securities.

According to the Law Review guide, existing crypto regulation acts in the country include:

Article D. 54-10-6 of the Monetary and Financial Code;

Article 721-2 of the AMF General Regulation;

AMF Instruction DOC-2019-23;

AMF Instruction DOC-2019-24.

According to AMF guide (16), an actor may be considered a Digital Asset Service Provider (DASP) if it provides at least one of the following digital asset services, as mentioned in Article L. 54-10-2 of the Monetary and Financial Code. Currently, 59 companies are registered (18) in France as DASP.

You may find more information about French crypto policies in France's Crypto Regulation Overview from the local Ministry of Economy (17).

Crypto Penetration suggests that regulated types of crypto entities include:

-Exchange (crypto to crypto exchange and crypto to fiat exchange)

-Asset Management (crypto fund)

-Wallet/Custody

-Crypto Consulting (license of Financial Investment Advisor (FIA) also essential)

-ICOs/crowdfunding

Taxation

Tax name	Index
PIT tax Min	0
PIT tax Max	45
Corporate tax (CIT)	30
Min Individual CGT (for crypto)	0
Max Individual CGT (for crypto)	30
Wealth tax Min	0
Wealth tax Max	1.5

According to Cryptotaxcalculator (18), crypto-to-crypto transactions are tax-free in France. DeFi transactions and gains (staking, lending, liquidity pools) are taxable once converted into fiat. NFT trading to crypto is also untaxable.

At the same time, this happens due to the uncertainty of DeFi and NFT in the current tax framework and may change soon. According to Simmons-Simmons (19), legal uncertainty with NFTs may also be interpreted as implementing CGT (30%) or artwork taxation (6,5%).

Koinly tax guide (20) defines the legal status of crypto in France “as a moveable asset by the General Directorate of Public Finances (21), or DGFiP.” Koinly also determines the most proper crypto taxation cases are:

-If crypto is acquired through mining, or any other form of labour

-If you convert your crypto into fiat currency

Previously, there were different tax rates for professional and occasional traders—up to 45% PIT for the first group and 30% CGT for the second. However, from 2023, in most cases of conversion crypto into fiat, it will be implied CGT.

PIT

Professional traders can sometimes still pay PIT up to 45% (formerly BIC tax). At least experienced miners need to do it. Micro miners with gains up to €77,700 for 2023 are exempted. This information is based on the Koinly France Guide (22) and confirmed by PWC (23).

CGT

Most individual investors and corporates pay CGT with 30% of their crypto gain after conversion into fiat. The fixed rate of 30% includes (24) “both the tax element (12.8%) and social charges (17.2%)”. According to Koinly (25), high earners may also need to pay an exceptional Income Tax rate at a maximum marginal rate of 4%.

CIT

Usually, corporates pay (26) CGT for their crypto profits - 30%. However, staking income (27) will be subject to CIT.

Links

1)France Crypto Tax Guide 2023.

2)Binance is a Fully Regulated Digital Asset Service Provider in France. Article

3)Crypto.com Receives Regulatory Approval in France. Article

4)Crime Index by Country 2023 Mid-Year

5)List of countries by intentional homicide rate

6)List of countries by firearm-related death rate

7)Peut-on payer un commerçant en cryptomonnaie? The Economy Finances Documentation Center is a service open to all.

8)La justice française assimile le bitcoin à de la monnaie. French justice equates bitcoin to currency.

9) France officially recognizes Bitcoin as a legal tender. Article