France: Bitcoin Revenues Must be Declared to Tax Authorities
Published on April 25, 2014 at 13:14 GMT
The French Ministry of Economy and Finance has said that, while bitcoin is not officially recognized by the state, revenues generated from digital currency transactions are subject to taxation.
However, under French law, there exists a certain margin of tolerance for minor and irregular revenues for those who do not make their living from bitcoin trading, according to the ministry.
"For the time being, there is no declarative obligation in what concerns bitcoin,” a spokesperson for the French ministry told local daily Le Monde, explaining:
"All taxpayers are required to declare all their revenues, including those originating from abroad. This said, there is a certain tolerance [from the state authorities] regarding minor and irregular revenues, for instance from occasional sales.”
Disputed legal status of bitcoin
The unclear legal status of bitcoin in France makes imposing taxes on bitcoin-related revenues wired to personal bank accounts a controversial issue, according to the French Banking Federation (Fédération bancaire française or FBF):
"The declaration is not related to bitcoin, which is not illegal. If your response does not allow [the tax authorities] to understand the operation, the bank could be forced to file a declaration to [the French anti-money laundering office] Tracfin accordingly with the law.”
In addition to this, the bank could also ask its clients whether bitcoin trading is their main professional activity, said the FBF.
The statement by the Ministry of Economy and Finance comes as a confirmation of the stance presented by the Bank of France in a paper published in December 2013.
In it the bank said:
"Bitcoin cannot be considered as a currency, given that it is possible to refuse payment made in bitcoin without violating article R642-3 of the [French] Penal Code which sanctions refusal of banknotes and coins denominated in the euro.”
As previously reported, in late 2013, French central bankers joined their many international counterparts in issuing a warning against the risks of bitcoin trading. The bank warned that the price of bitcoin is inherently volatile, and that cryptocurrency users could have difficulties with converting their bitcoins into real money.
Moreover, the bank said that, under French law, bitcoin cannot be considered as a legal currency in line with the country’s monetary and financial code.
While the document recognizes electronic currency, it also specifies that all currency has to be fitted with a legal guarantee of reimbursement at its nominal value.
Bank image via Shutterstock
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