France Moves to Tighten Crypto Taxation Rules

The French National Assembly's Finance Committee has taken steps that could significantly alter the tax landscape for cryptocurrency holders in the country. Two key amendments targeting crypto assets have been passed at the committee level, signaling a push for greater regulatory clarity, though their journey into law is far from guaranteed.

Stablecoin Conversions May Become Taxable Events

The first proposed amendment aims to close a potential loophole concerning stablecoins. Starting January 1, 2027, converting a stablecoin regulated under the EU's Markets in Crypto-Assets (MiCA) framework into another asset—be it fiat currency or a different cryptocurrency—would be treated as a taxable disposal in France.

This proposal, led by left-wing lawmaker Nicolas Sansu and others, does not introduce a new tax rate. Instead, any capital gains realized from such conversions would be integrated into the country's existing flat tax regime, which can reach up to 31.4%. The goal is to provide a clear tax treatment for transactions involving regulated stablecoins.

Proposed Exit Tax for High-Value Crypto Assets

A second, more controversial amendment targets wealthy individuals planning to leave France. It proposes an exit tax for French tax residents who relocate abroad if the total value of their crypto assets exceeds €800,000.

To be subject to this rule, an individual must have been a French tax resident for at least six out of the past ten years. The measure is designed to prevent residents from avoiding capital gains taxes on substantial crypto holdings by simply changing their country of tax residence.

The Legislative Road Ahead

It's crucial to understand that these amendments are not law. The committee itself voted overwhelmingly on October 9th to reject the section of the budget that included these revenue-raising measures. This means the proposals were not automatically added to the government's original draft law.

The path forward involves several critical steps:

  • October 13: Supporters must reintroduce and argue for the amendments during the plenary debates in the National Assembly.
  • October 20: A formal vote by the full Assembly is scheduled.

Their adoption is contingent on success in these upcoming debates and votes. In a separate but related move, the committee also approved a measure allowing crypto investment losses to be carried forward for ten years to offset future gains, offering some tax relief for long-term investors.

These proposals underscore France's, and by extension the EU's, increasing focus on integrating cryptocurrency transactions into the established tax framework, setting a potential precedent for other jurisdictions.