For the past two years, France has been at the forefront of the Chinese bloc revolution in the European Union. The French government is currently working with activists in the country’s digital currency ecosystem to establish a clear legal framework for the initial public offering of coins. The 2016 decree, which included two separate sections, allowed digital currencies to be used as interest-free bonds. The most important effect of this decree was to provide the first definition of the Chinese bloc in French law, although these sections covered only minimal applications. Another command, issued in December 2017, went a step further and made it possible to use China’s blockchain technology in a broader range of financial instruments. In October 2017, the French Financial Markets Strategic Authority (AMF) launched the “UNICORN Digital Asset Collection Support and Research Program” to support and analyze ICOs. In December 2017, France passed a law making it the first country to use Blockchain technology to register and transfer unregistered securities. In March 2018, French Economy Minister Bruno Le Maire announced his intention to make Paris the ICO Capital of the World by implementing an innovative legal framework governing the ICO. In June 2018, the French General Commission for Strategy and Foresight, under the supervision of the Prime Minister, published a 150-page report on the Chinese blockchain and digital currency and proposed reforms for the proper development of this technology in France. In short, the French government is working to establish a clear legal framework, and it is now recognized as one of the most friendly countries to the Chinese bloc and digital currency. However, if France is to attract more ICO suppliers, it must clarify the practical aspects of how ICOs pay their taxes. It should be noted that France’s pacifist position does not mean that it recognizes digital currency as “real money.” In March 2018, the Bank of France published a report on the main problems, risks and prospects of Bitcoin and other digital currencies, in which it states the reasons for the incompetence of digital currencies as money. As a result, the Bank of France deemed the term “digital currency” inappropriate and replaced it with “digital assets.” The Bank of France believes that digital assets cannot meet the conventional role of Fiat currencies for the following reasons:
The French central bank also confirmed that the only French currency is the euro, and therefore may not be considered digital assets or electronic means of payment under French law.
To date, there are no specific regulations regarding digital currencies. Based on the case-by-case analysis and the legal issues of each digital currency, these currencies may be placed within the legal framework governing the supply and sale of securities. However, this situation will change with the approval of the optional licenses of ICOs approved by the strategic reference of the French financial market.
To date, there are no specific regulations and rules regarding the collection of funding for activities based on digital currency and blockchain technology. In October 2017, in addition to the UNICORN mentioned above, the French Financial Markets Strategic Authority launched a program for public consultation and public consultation on ICOs to gather stakeholder feedback on various monitoring methods. Based on studies conducted by the French Financial Markets Strategic Authority on transactions and their legal consequences, it was found that some ICOs fall within existing regulations. According to the AMF, this analysis should be done on a case-by-case basis, given the rights and obligations delegated to each digital currency. Suppose the salary and liabilities are such that they are very close to the securities. In that case, the AMF will treat the digital currency as a security, and the French securities sales rules will apply to the sale of the digital currency. Given such uncertainty for suppliers, the French Financial Markets Strategic Authority has proposed three options for monitoring future ICOs:
Most activists in this field agree to create an appropriate legal framework for this new way of raising capital, or ICO. Accordingly, the AMF decided to work with the French government uniquely and innovatively, introducing an optional license for ICOs of companies based in France that want to ensure that the Securities and Exchange Commission does not cover their ICOs. Slowly Under the new legal framework, suppliers will be free to choose whether they want to implement a regulated and approved ICO. To obtain an optional AMF license, suppliers must comply with some of the organization’s obligations that have not yet been determined. In April 2019, the French government introduced and approved a new legal framework in the Pacte bill. It is currently trying to persuade other EU member states to adopt their own digital currency rules similar to its own.
Accounting and handling of ICO income tax in France are unclear. The French National Accounting Standards Center (ANC) works closely with the French government and the French Tax Administration to improve legal certainty. The ICO revenue will be the same as the French corporation tax. Currently, the tax rate for French companies is 33.33% plus a 3.3% surcharge. This tax is payable during the fiscal year following the closure of the ICO. With these interpretations, the sale of digital currencies, like the sale of goods and services eligible for the VAT law, the rate is 20%.
It should be noted that digital currencies, known as securities tokens, are subject to a securities sales tax regime; That is, the registration fee (at the rate of 0.1 percent) and exempt from VAT. However, the French tax law has been silent on income taxation from individuals’ sale of digital currencies. The French tax authority published the implementing principles in July 2014. Such payment is subject to French income tax and is classified as Will be “industrial and commercial revenues.” Taxpayers involved in paying bitcoin sales tax objected to this tax principle, and finally, in April 2018, this time, the tax became lighter and lower, moving to the “movable property” category. Certain revenues will be exempt from this tax return. Therefore, they will be subject to the “Industrial and Commercial Revenue” or “Non-Commercial Revenue” tax system, which includes profits from taxpayers’ participation in the creation and operation of bitcoins other digital currencies. That is the revenue from mining activities as well as the profit from their frequent sales.
Under French law, the only mandatory anti-money laundering (AML) requirement for digital currencies is for Fiat currency conversion service providers and vice versa. In this regard, these platforms are required to obtain approval. The license to operate as a service provider and strict control of users, including implementing the “Know Your Customers” or KYC policy. EU member states in May 2018 amended the Anti-Money Laundering and Terrorist Financing Guidelines to include digital currency exchanges and wallet custody providers as traditional intermediaries. However, the amendment did not affect French law. Because French cryptocurrency exchanges were already are a subject to AML requirements and KYC obligations. Under French and EU law, anti-money laundering requirements include the following:
Customer accuracy commitments: The need to authenticate platforms and “effective stakeholders” such as individuals behind a legal entity.
Reporting and Information Provisions: If the platforms notice a suspicious item while fulfilling the customer’s obligations, they must report the situation to a specific authority.
While there is currently no obligation for ICO suppliers under AML requirements or KYC obligations under French law, it will probably be mandatory for ICOs to approve an optional license.
As mentioned earlier, the approach taken by the French Financial Markets Strategic Authority is very similar to the concept of the Sandbox, despite the launch of the UNICORN public consultation program and the support and analysis of transactions. As part of these consulting activities, the French Financial Markets Strategic Authority met with stakeholders in the Chinese blockchain and digital currency ecosystem, financial professionals, academics and law firms and received 82 collaborations and assistance during these meetings. In February 2018, the AMF announced during the UNICORN program that it had consulted with 15 companies during the first two months of the program, almost 50% of which were Chinese blockchain projects. In general, the AMF is aware of the importance of these issues and tends to be in contact with the Chinese blockchain ecosystem and digital currency to establish a specific legal framework. In addition, in April 2018, more than three-quarters of European countries, including France, signed a statement on the launch of the China-Europe Bloc Partnership, seeking to strengthen cooperation between member countries to exchange technical and regulatory expertise. France, therefore, wants to promote and promote the digital currency and the Chinese blockchain through the actions of government officials, research and investment in related projects.
There are no border restrictions or obligations to declare digital currency assets in France.
Mining of bitcoins and other digital currencies is allowed and not regulated. However, the income from the extraction is taxable.
Under French law, there is no requirement to report payments of less than a certain amount.
There is no specific procedure for drawing up a will and determining the inheritance of digital currencies, and digital currencies are treated like any other asset.
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