France, which is trying to stay in line with crypto-friendly countries, has done itself one better after the Finance Minister, Bruno Le Maire announced that the European country will not tax crypto trades but only digital assets sold for cash, reported Bloomberg Tax on Sept. 12.
The Minister said that the French government believes the right time to tax crypto is when it is converted to cash.
“We believe that the moment the gains are converted into traditional money is the right time to assess tax,” said Le Maire.
Value Added Tax (VAT) will only come into the picture when cryptocurrencies are used to pay for goods or services. By a long mile, this is seen as a viable method used to minimize the difficulties faced when tracking crypto trades for tax purposes.
Some reports claim that the model is already in operation, but there is no doubt that this development is highly welcomed by crypto traders and merchants based in France.
This is a model that crypto traders based outside France hope their nations will adopt.
France still no sold on Facebook’s Libra
While France announced the positive development, it still hasn’t changed its position on Facebook Libra cryptocurrency, a stablecoin tied to a basket of major fiat currencies.
The French Minister said that Facebook’s Libra should not be allowed in the EU region in its current proposal. He backed his claims by highlighting concerns over the bad effects of the privatization of money and the associated risks of market abuse and fraud.
Binance CEO Changpeng Zhao, better known as CZ within the crypto community, welcomed France’s decision but pointed out that that the country is still harsh on Libra.
Libra has received from many countries including the US, the home of Facebook. US President Donald Trump previously tweeted his dislike for bitcoin and Libra.
The spotlight is on how countries tax crypto
Portugal, a southwestern European country, became a darling of the crypto community in late August when the Portuguese Tax Authority (PTA) officially announced that bitcoin and all its cousins will not be taxed in the country.
This, for some people, turns Portugal into a crypto tax haven as individuals are not liable to paying capital tax gains or VAT when buying or selling cryptocurrencies.
Prior to the announcement, Portugal’s tax authority had previously stated that trading digital assets or receiving payments in them was not taxable but expected companies to pay capital gains tax ranging from 28 percent to 35 percent.
While these countries have adopted stances that promote cryptocurrency trades, other countries still tax crypto-to-crypto trades.
In response to CZ’s comment on France’s latest crypto stunt, a Twitter user highlighted that Australia is bad for business (for crypto traders) and has led to many people being bankrupt.
“Yep. Australia is the worst place in the world for crypto business. Every [crypto-to-crypto] transaction is a taxable event. Many here are bankrupt as they owe more in tax than they have money. Funny how that works,” commented a Twitter user.
In the United States, crypto-to-crypto trades are still subject to tax assessments. At the moment, the US Congress has asked the taxman, the Internal Revenue Services (IRS), to clarify its position on how cryptocurrencies should be taxed.
These developments come at a time when policymakers are looking at how best they can cope with the cryptocurrency regulation at a time when the interest in the young is growing, and more institutional players coming to the scene.