France will cut its existing cryptocurrency tax rate by more than half, the first steps toward a national embrace of crypto investing and development, according to its current Minister of the Economy.
Cryptocurrency profits will be reclassified as as “moveable property” to achieve the tax reduction, falling to 19% from 45%.
Prior to the ruling, cryptocurrency gains were identified as either industrial and commercial profits or non-commercial profits.
Under that classification system, the capital gains tax for cryptocurrencies was 45%. The previous tax rule had been in place since 2014.
With the new classification as “movable property,” cryptocurrency profits are assets that can be transported, such as vehicles, planes and precious metals. This also includes intellectual property.
There are some caveats to consider. The profits brought about by Bitcoin mining remain subject to the original tax rate.
The lower tax rate affects thus only investment gains from trading existing coins.
Experts believe that the new rule is a means to encourage French citizens to invest in the nascent cryptocurrency market.
At the beginning of the year, the French Minister of Economy commissioned a crypto task force to explore regulation.
In March, the government recommended a ban on investment companies that trade in crypto until after regulations were established.
Also March, France’s financial market regulator looked into legislation regarding Initial Coin Offerings (ICOs).
France Finance Minister Bruno Le Maire was one of the officials to call for cryptocurrencies to be on the agenda at the G20 meeting held earlier in year.
Le Maire since has grown increasingly accepting of Bitcoin as well of other other digital currencies.
He now believes France should lead when it comes to regulation of cryptocurrencies. Le Maire now wants to transform the country into a focal point for blockchain innovation.
“France has every interest in becoming the first major financial center to propose an ad hoc legislative framework that will allow companies initiating an ICO to demonstrate their seriousness to potential investors,” Le Maire wrote recently.
“Blockchain will offer new opportunities to our start-ups. We won’t miss out on the blockchain revolution!”