A report from the French IT magazine Clubic revealed that only a small percentage of French crypto holders have declared their cryptocurrency holdings to the government. The Ministry of Public Action and Accounts, along with the nation’s tax authorities, are gearing up to take action as only 150,000 French residents properly declared their cryptoassets at the end of the last financial year. European Central Bank estimates suggest that around 5 million French people hold cryptoassets, including Bitcoin.
Amid concerns of under-declaration of assets by taxpayers, the French government plans to introduce new legislation to compel crypto holders to comply with tax regulations. The Ministry of Public Action and Accounts is collaborating with the Economy Ministry to enact new measures to tackle tax evasion related to cryptocurrencies. These measures will be aimed at ensuring that French cryptocurrency enthusiasts properly declare their assets and comply with the government’s regulations.
Failing to declare cryptocurrency holdings on tax returns in France carries hefty penalties, with fines that can amount to 40% of the total value of the coins. For professional crypto traders who fail to declare their coins, these fines can be doubled, reaching up to 80%. The proposed legislation, which could be discussed in the coming weeks by lawmakers and senators, is expected to come into effect before the end of the fiscal year 2024. This would serve as a rude awakening for French crypto holders who have not been meeting their tax obligations.
In addition to penalties for failing to report crypto holdings, the Ministry of Public Accounts is also looking to grant tax authorities new powers over citizens’ overseas assets. This move is aimed at preventing French crypto holders from attempting to conceal their assets in foreign-based wallets and cryptocurrency exchange platforms. With a significant percentage of young adults in France investing in crypto and a sizeable portion of the population having purchased cryptocurrency at some point in their lives, the government is taking steps to ensure compliance with tax laws and regulations.
The European Central Bank has commented on the limitations of Bitcoin as a decentralized digital currency, highlighting concerns related to fraud and manipulation. While recent approval of an ETF may have positive implications for the cryptocurrency market, issues such as high costs, slow transaction speeds, and inconvenience continue to be challenges for widespread adoption. As the French government cracks down on crypto tax evasion through new legislation and increased penalties, crypto holders in the country will need to adhere to regulatory requirements to avoid facing fines and legal repercussions. With the potential for stricter enforcement measures on the horizon, French cryptocurrency enthusiasts will need to ensure compliance with tax laws to avoid financial penalties.
