Recent reports indicate that only a fraction of French cryptocurrency holders have properly declared their holdings to the state, prompting the government to take decisive action to ensure compliance.

Under-declaration of Crypto Assets

According to a report by the French IT magazine Clubic, just 150,000 French residents out of an estimated 5 million crypto holders have correctly declared their cryptoassets to the authorities by the end of the previous financial year. This significant disparity has raised concerns among tax officials, who suspect widespread under-declaration among taxpayers.

New Legislation to Enforce Compliance

In response to the under-declaration issue, the Ministry of Public Action and Accounts, in collaboration with the nation's tax bodies and the Economy Ministry, is preparing to introduce new legislation aimed at compelling crypto holders to adhere to tax regulations. This legislation is expected to include a comprehensive set of measures designed to ensure compliance and combat tax fraud effectively.

Severe Penalties for Non-Compliance

French taxpayers who fail to declare their crypto holdings face substantial fines, which can amount to 40% of the total value of their crypto assets. For professional crypto traders, this penalty can be doubled to an astonishing 80%. The proposed legislation aims to impose these penalties on non-compliant individuals to deter tax evasion and promote transparency in crypto transactions.

Timeline for Implementation

The new legislative proposals are expected to be discussed by lawmakers and senators in the coming weeks. If approved without opposition, the bill could be enacted before the end of fall 2024, potentially coming into effect by the end of the fiscal year. This timeline underscores the government's commitment to swiftly address the issue of undeclared crypto holdings and strengthen tax enforcement measures.

Enhanced Oversight and Enforcement

In addition to imposing penalties on non-compliant taxpayers, the Ministry of Public Accounts seeks to empower tax authorities with new capabilities to monitor citizens' overseas assets and holdings effectively. This initiative aims to prevent French crypto holders from concealing their tokens in overseas-based wallets and exchange platforms, further enhancing tax compliance and enforcement efforts.

As the French government intensifies its efforts to regulate the cryptocurrency market and combat tax evasion, crypto investors and traders in the country are urged to ensure full compliance with tax regulations to avoid penalties and legal consequences.