Across the world, there has been a significant push to create more comprehensive and efficient tax code with regards to cryptocurrency because crypto is becoming more widely used and because these tax codes have not existed in the past, many crypto users have been at a loss for how exactly crypto-related tax should be processed and paid. One region of the world that has been very efficient in this regard is Europe, particularly France as in 2018, they put in place many crypto-positive laws and even give a grant of several hundreds of millions of euros to encourage the blockchain and crypto industry.
Now, their finance minister Bruno Le Marie has come out with some more clarification as to how crypto-related taxes will be handled and it was reported on September 12, 2019, that crypto-to-crypto transaction will be tax-free and taxes will only apply when cryptocurrency is exchanged for fiat currency.
According to the reports, the reasoning behind this new tax initiative is to enable the government properly track the movement of cryptocurrency and minister Le Marie believes that it will be better done through accessing crypto to fiat currency transactions as crypto-to-crypto transactions will be harder to assess by the government.
“We believe that the moment the gains are converted into traditional money is the right time to assess tax,” he said.
Besides this, clarification was also given as to how value-added tax would apply to cryptocurrency and more specifically when it would not apply. According to the minister, value-added tax will be implemented when cryptocurrency is used for the purchasing of an asset or service and this aspect of the tax code is still under development.
It is apparent that many countries in Europe are trying to figure out the tax code with regards to cryptocurrency as Portugal recently announced that all cryptocurrency transactions will be tax-free and many see this as an effort to encourage the growing industry across these countries as European countries are seeing more clearly the benefits of cryptocurrency and how it can stimulate the economy.