Mining, taxation, capital gains… what the crypto industry would like to change in French law

Between the development of mining in France and the simplification of tax regimes for investors, the Association for the Development of Digital Assets (Adan) is making strong proposals within the 2023 finance bill.

The Association for the Development of Digital Assets (ADAN) has proposed 9 amendments within the finance bill (PLF) of 2023, which were tabled by certain deputies at the end of September. The stated objective for the association is to promote the development of the cryptocurrency ecosystem in France.

“Attracting mining to France”

While Bercy had convened the ADAN at the beginning of September to address the impact of cryptocurrencies on the environment, the association is returning to the charge with two amendments on the issue of mining in France. At a time when the ecosystem deplores an increasingly pronounced centralization of this industry in certain parts of the globe, ADAN proposes to strengthen this activity in France… but under certain conditions.

“It is therefore important to attract mining to France, at a time when, according to a White House report, 38% of the bitcoin network alone is maintained thanks to miners located in the United States”, can we read .

Despite everything, the mining activity (based on a “proof of work” operating system) requires a high consumption of electricity and is the subject of many criticisms on the issue of its energy consumption.

“The rate of tax applicable to electricity consumed by a digital asset creation center operated by a company is, for the fraction of the annual quantities exceeding one gigawatt hour and when the total electricity consumption of this center is equal to or greater than one kilowatt hour per euro of added value, set at €12 per megawatt hour”, underlines the amendment.

For ADAN, the mining activity should fall within the scope of so-called “electro-intensive” activities allowing it to benefit from tax advantages, provided that certain criteria are met in terms of ecological transition.

“The provisions of I apply to centers for the creation of digital assets that use 80% renewable energy, in addition these companies must have an ESG label, have a procedure for the continuous improvement of energy performance, with an energy audit of the activities carried out by the operating company must be carried out every four years and adhere to a program recognized by a public authority”, specifies the amendment.

“Reinvest their earnings”

Another dimension addressed by ADAN through several amendments, that relating to capital gains and losses of investors (see our full article on this subject). According to a study published by ADAN and KPGM, 8% of French people invested in cryptocurrencies in 2021.

“Some have made significant capital gains but remain in the world of crypto-assets. The objective of this proposal is to encourage them to reinvest their earnings in companies that need funding”, underlines the summary of the amendment of ADAN.

ADAN proposes another amendment aimed at “encouraging investors in crypto-assets to repatriate their capital gains which remain dormant in the real economy, this time by granting them a tax advantage when they invest in small or medium-sized enterprises. , i.e. the ones most in need of funding”.

“Erase” the disadvantage of the 30% flat tax

In addition, ADAN suggests that “the payment of tax occurs when the rights received in exchange for the digital assets contributed are transferred, or if the company sells the digital assets received and does not comply with the conditions set for this reinvestment”. .

As a reminder and to date, cryptocurrencies fall within the scope of the 30% flat tax (the single flat-rate levy or PFU, with 17.2% social security contributions plus 12.8% income tax ) of the Pacte law, with a dedicated regime concerning digital assets. This amendment would aim to “erase the disadvantage” linked to the 30% flat tax.

In addition, in another amendment, ADAN proposes to “compensate for the difficulty that taxpayers have in accurately calculating their capital gains in crypto-assets (…) by specifying in article 150 VH bis of the Code General tax that the costs of disposal deductible by taxpayers include the accounting costs incurred for the calculation of their capital gain”.

Shorten the deadlines for deferral of capital losses

Another amendment, the one relating to losses in cryptocurrencies.

“To date, a crypto-asset holder cannot charge his losses against a capital gain of the same nature only over the same year. However, for many other types of income it is possible to charge them over several years”, can we read.

While the PLF 2022 proposed deferring capital losses for up to 10 years, ADAN suggests a deferral period of 3 years.

“This shortened time frame should be more acceptable for public finances while allowing taxpayers to hedge against their possible short-term losses (a full cycle in the digital asset market is estimated at 3 years)”, can we read.

In the same vein, ADAN has proposed allowing start-ups to “defer the taxation of their capital gains from the exchange of one digital asset for another digital asset for up to 3 years.”

Simplify the tax system for employees who receive tokens

Similarly, an amendment aims to simplify the tax regime applicable to the allocation of tokens to employees of a company. “Under the proposed scheme, the chargeable event does not occur at the time of allocation, but at the time the beneficiary sells these tokens, whether for euros or other digital assets”, can we read.

Finally, the association points out that some non-profit organizations that have launched cryptocurrency donation campaigns are subject to “de facto unequal treatment compared to donors in cash or in kind”.

“For donations of digital assets within the meaning of Article L. 54-10-1 of the Monetary and Financial Code, the value of the donation is determined by the average of the last thirty daily prices preceding the delivery of the digital assets by the donor to the donee”, specifies the amendment.

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Mining, taxation, capital gains… what the crypto industry would like to change in French law


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