Phew relief! French investors, and especially those who are deep into cryptocurrencies, have just experienced an emotional rollercoaster. After a week of heated debate, the Finance Commission finally rejected the flat tax increase from 30 to 33% yesterday, Saturday, October 19, by 29 votes to 22. While the crypto community is a bit on the verge of “relief,” subtlety still remains. The fate of tax income above €250,000 (or €500,000 for a couple) remains suspended. And this matter may still be expensive for bitcoin and ethereum lovers…
The flat tax: A simplifying tool that gets complicated
PUSH flat taxfounded in 2018, originally had a clear and laudable goal. It was supposed to simplify the taxation of capital gains by applying a uniform rate of 30%. Regardless of your tax status or the nature of your financial income, this was a rate for everyone. An “off-road” solution that ended tax pain calculations for years.
However, things have changed a lot during the era of Michel Barnier’s government. With public accounts still in the red, the idea of a flat tax increase seemed inevitable. Thus, the Finance Committee worked on a series of amendments that aimed for an increase of 30 to 33%, or even up to 37.2% for the highest incomes.
So good news? this” tax abuse » did not see the light of day for most taxpayers. The plan for a general increase to 33% has been postponed. Bad news? For high income exceeding €250,000 per year (or €500,000 for a couple), a flat tax of 37.2% remains in operation. The council will discuss it on Monday. And guess what? Profits in cryptocurrencies will not be spared!
Finance Bill 2025: Sword of Damocles on the French?
Against the backdrop of this rejection, France continues to have one of the highest taxes in Europe, a hot topic that continues to be divisive. While Minister for the BudgetLaurent Saint-Martin, condemned the “irresponsible” tax increase in this modified version of the PLF, the debate on the original version will continue on Monday in the plenary session.
Apart from this dramatic turn of events, the “Finance Bill 2025” is disturbing because of what it announces. Here, in detail and without further ado, are the points to remember about this project led by the Barnier government:
- The flat tax has increased : Proposal to increase the flat tax from 30% to 33% for all taxpayers (rejected in the finance committee).
- flat tax of 37.2% : Rate applied to taxable income above €250,000 (or €500,000 for a couple).
- Exemption from sale of head office : Proposal to impose a minimum holding period of 5 years to be able to use exemptions in certain areas.
- Targeted universal tax : Tax expatriates leaving France for countries with lower taxes (difference greater than 50%) could be subject to universal tax.
- Extended period for tax collection : Proposal to extend the period for tax recovery from accounts not declared to the tax administration (including crypto-accounts) from 3 to 10 years.
- Property tax base (IFI) : Proposal to include cryptocurrencies in the IFI base.
- DAC8 regulation : Require Digital Asset Service Providers (PSANs) to collect and transmit their clients’ transaction data to the tax authorities.
Cryptocurrencies: The New ‘Turkey Tax Joke’?
For crypto enthusiasts, this blow could leave its mark. If this 37.2% flat tax is adopted, it will also apply to capital gains from digital assets. In France, gains have indeed been made crypto investment like bitcoinEthereum and even NFTs are already subject to a 30% flat tax.
Good. Remember, nothing is set in stone yet! The final decision is in the hands of the deputies, the current version of the text will be discussed by the National Assembly. Option a minimum tax 20% (which would mean a flat tax of 37.2% for some taxpayers) remains on the table.
If the increase to 33% were to be rejected, the debate around the flat tax is clearly not over. Crypto investors, especially those whose profits are exploding due to the bull run, could be the next to experience this increased tax pressure.
Debates in the National Assembly will be tense in the coming weeks. So it may be time for investors to review their tax plans… or think about expatriating!