The recent revelation in a report by the French IT magazine Clubic has shed light on the concerning trend of French crypto holders not declaring their coins to the state. The report indicates that only a small fraction of French residents, specifically 150,000 individuals, correctly declared their cryptoassets at the end of the past financial year. This statistic is particularly concerning considering the European Central Bank (ECB) estimates that approximately 5 million French people hold cryptoassets, including Bitcoin (BTC).
In response to the inadequate declaration of crypto assets by French residents, the Ministry of Public Action and Accounts, along with the nation’s tax bodies, are preparing to take action. There is a suspicion among tax officials that many taxpayers are under-declaring their assets, prompting the government to roll out new legislation. This legislation, developed in collaboration with the Economy Ministry, is expected to include a “large arsenal of measures” that will compel crypto holders to comply with the government’s regulations.
The failure to declare crypto holdings on tax returns in France is a punishable offense, with fines that can amount to 40% of the total value of the coins. For professional crypto traders who neglect to declare their coins, the penalty can be as high as 80% of the total value. The proposed legislation, which may be discussed in the coming weeks by lawmakers and senators, aims to crack down on under-declaration and ensure compliance among crypto holders. If approved, the bill could come into effect before the end of fall 2024.
The Ministry of Public Accounts is also seeking to expand the tax body’s powers over citizens’ overseas assets and holdings to prevent individuals from hiding their tokens in overseas-based wallets and crypto exchange platforms. This initiative is a proactive measure to address the challenges posed by French crypto holders attempting to conceal their assets from tax authorities. In a related development, a recent media outlet report revealed that 15% of individuals aged 18-24 in France have invested in crypto, demonstrating the increasing popularity of digital assets among the younger population.
The failure of French crypto holders to declare their coins to the state has significant implications for tax compliance and regulatory enforcement. The government’s response to this issue through the introduction of new legislation and penalties underscores the importance of promoting transparency and accountability in the cryptocurrency sector. By ensuring that crypto holders adhere to regulatory requirements, the government can enhance tax compliance and prevent illicit activities in the digital asset market.
