France Moves to Tighten Crypto Taxation: Key Proposals in the 2027 Budget Draft
A series of amendments targeting the taxation of digital assets have been introduced by French lawmakers during discussions on the 2027 finance bill. These proposals seek to close loopholes in the current tax regime and increase oversight of high-value holdings. All measures are currently under discussion and have not been enacted into law.
Breaking Down the Proposed Amendments
The amendments focus on four main areas, reflecting a growing governmental focus on regulating the crypto asset sector.
1. Capital Gains Tax Extended to Stablecoin Swaps
Current law applies a 31.4% flat tax on capital gains from selling crypto assets for fiat currency. The new proposal aims to extend this tax to trades where Bitcoin is exchanged for specific stablecoins. This extension would only apply to stablecoins qualifying as “e-money tokens” under the EU's Markets in Crypto-Assets (MiCA) regulation, such as USDC. Such a swap would thus become a taxable event.
2. An “Exit Tax” for High-Value Holders Leaving France
To address capital flight, a new rule proposes an “exit tax” for individuals with digital asset holdings exceeding €800,000 in value who move their tax residence out of France. The tax would be levied on unrealized capital gains, ensuring the state can tax the appreciation before significant assets leave the country.
3. Mandatory Disclosure of Self-Custodied Assets
The draft mandates that French residents must declare self-custodied (non-exchange held) digital assets worth more than €100,000 to tax authorities. Failure to comply could result in fines of up to €10,000. This clause aims to increase transparency around personally held crypto assets.
4. Longer Loss Carryforward Period
Alongside stricter measures, a beneficial provision allows tax losses from digital asset investments to be carried forward for offset against future capital gains for up to 10 fiscal years. This offers investors greater flexibility in managing their tax liabilities.
Legislative Journey and Next Steps
The Finance Committee of the National Assembly voted 31 to 3 against the revenue section of the budget containing these tax proposals on October 9. Consequently, the amendments must be revised and resubmitted for consideration. A planned vote on the revenue section, initially scheduled for October 20, has been postponed.
The introduction of these proposals signifies France's attempt to balance innovation with tax fairness and abuse prevention. Their ultimate fate hinges on further parliamentary debate and political negotiation. Market participants should monitor developments closely to prepare for potential changes in the tax landscape.