Now registered in France, Binance is subject to the “right of communication” of the tax authorities. A subject that can be sensitive to retailers.
What are the tax implications as cryptocurrency giant Binance obtained the registration of the Autorité des marchés financiers (AMF) as a digital asset service provider (PSAN) on Wednesday? The question is all the more important at a time when French cryptocurrency holders have to file their tax returns. The law firm Revo advocaten, specializing in tax and blockchain issues, has made a long thread on this topic.
To date, as part of the 2022 tax return, a taxpayer who has opened an account on a foreign cryptocurrency exchange platform, such as Coinbase or Binance, must declare this account to the tax authorities in Form 3916-BIS, even if his account was closed during the financial year reported on. This does not matter how much money he has on the platform. A user will have to fill in as many forms as there are platforms on which he is located.
However, now that Binance France is registered as a PSAN, as of next year, a user will no longer have to declare this account in the form above, i.e. when declaring 2023 for the year 2024. “Good news,” the law firm said, although there are is also a consideration.
Indeed, according to the law firm, Binance France is now entering the realm of the tax authorities’ “right to communication”.
“This right is separate from the ‘request for international administrative assistance’ (applicable to persons established abroad). In summary, the right of communication is the right of the tax authorities to request “certain information” from “certain persons” in France The communication law applies to persons (legal or natural) in the capacity of merchant”.
Binance France can therefore be in the crosshairs of the tax authorities, being an SAS so “commercial in form”. The documents that can be requested are those “relating to” the activity of the person questioned, such as transaction history, trading, deposits or withdrawals. The Administration may make general requests regarding unidentified persons.
“To be valid, the request relating to unidentified persons must contain the following: the nature of the legal or economic relationship between Binance France and the taxpayer, as well as the period to which the request relates (maximum 18 months)”, specifies the firm’ attorney. For Binance, in case of refusal to communicate, the company will owe a fine of 10,000 euros “for any request for which all or part of the documents or information has not been communicated”.
Fear of some active traders
To date, an occasional private individual, when he realizes a capital gain on cryptocurrencies in euros, is subject (unless he takes the option of the progressive scale) to the flat tax regime (at 30%) established under the Pacte law. On the other hand, if an occasional person exchanges one cryptocurrency for another and realizes a capital gain, he benefits from a tax exemption.
The situation is different when it comes to an investor considered professional by Bercy. When he realizes a capital gain of cryptocurrency in cryptocurrency, he is subject to the regime of industrial and commercial profits (BIC). The amount of the tax can be up to 66.2%†
According to the law firm, contacted by BFM Crypto, there are fears that retailers will be reclassified as professional traders based on their data by the tax authorities, which would prevent them from enjoying a tax exemption. An occasional individual trader who has declared a significant amount of capital gains can be reclassified as a professional.
“If you are considered a professional by the tax authorities, the consequences will generally be very serious, as you are presumed to have a SIREN number and have made the correct tax and social security statements. Upstream on this very important point, and , in case of doubt, question the desirability of a rescript,” underlines tax lawyer Marc Uzan on his blog†