From France: Administrative Supreme Court Rules on Bitcoin Gains
Melissa Pun - STC Partners in France, a member firm of Andersen Global
On April 26, 2018, the French Administrative Supreme Court gave a joined decision in cases Nos. 417809, 418030, 418031, 418032 and 418033, ruling that, as a principle, the gain resulting from the disposal of Bitcoins must be reported as a capital gain on movable property.
More specifically, The French Administrative Supreme Court affirmed the treatment of the conversions and acquisition performed regularly while invalidating the treatment of the conversions and acquisition performed casually (which would then be taxed at a flat rate of 19% for capital gains on movable assets).
Details of the case are given below:
(a) Facts: The applicants in the joined cases sought to annul the administrative doctrine concerning the tax treatment of Bitcoin gains that was published by the French tax administration on July 11, 2014. According to that doctrine, income resulting from the sale of a Bitcoin must be reported as (i) industrial and commercial profits when it results from a habitual activity; or (ii) as non-commercial profits when it derives from a non-habitual activity.
(b) Legal background: Except for the aforementioned doctrine, no laws governing the taxation of Bitcoins exist in France.
(c) Decision: The French Administrative Supreme Court ruled that gains resulting from the disposal of Bitcoins must, in principle, be reported as capital gain on movable property under article 150 UA of the French Tax Code.
However, gains resulting from a habitual activity exercised in the course of a commercial profession must be reported as industrial and commercial profits.
By exception, gains resulting from the disposal of Bitcoins must be reported as non-commercial profits when the gain constitutes the remuneration for the taxpayer's participation in the creation/operation of this virtual unit of currency.