Major Setback for Crypto Tax Reforms in France

In an unexpected turn of events on October 12, the French legislative process hit a snag. The National Assembly's Finance Committee overwhelmingly rejected the revenue section of the government's proposed 2027 budget bill, with a vote of 31 in favor and 3 against. This decision temporarily nullifies a series of cryptocurrency taxation amendments that had previously been approved by the same committee.

What Tax Measures Were Put on Hold?

The rejected budget provisions included several key proposals designed to regulate taxation in the digital asset space, originally scheduled to take effect from January 1, 2027. The main measures were:

  • Expansion of the Exit Tax Scope: Incorporating crypto-assets into specific parts of the existing capital gains tax framework, affecting investors disposing of assets when leaving the French tax jurisdiction.
  • Taxation of Stablecoin Conversions: Explicitly classifying the conversion of cryptocurrency into stablecoins as a taxable event for the first time, aiming to close a regulatory gap.
  • High-Value Wallet Declaration Requirement: Obliging taxpayers to declare self-custodied (non-custodial) cryptocurrency wallets holding a value exceeding €100,000 at the end of each tax year. Failure to comply could result in fines of up to €10,000.

The Legislative Process and Next Steps

Under French legislative procedure, these proposals are not permanently scrapped but must be resubmitted for consideration starting October 17 (Tuesday). The National Assembly has outlined key follow-up milestones:

The full assembly will hold a revote on the revenue section of the budget bill on October 20. This represents the first crucial opportunity for the tax amendments to be revived.

Subsequently, the complete 2027 budget law will face a final vote in the National Assembly on November 17. This means the fate of the crypto tax provisions is now tied to that of the entire budget package.

Implications for the French Crypto Ecosystem

This delay provides a brief respite for France's cryptocurrency industry and investors. It highlights the challenges legislators face in crafting clear and workable tax laws for the rapidly evolving digital asset sector. The committee's initial approval followed by rejection also suggests potential differing views within parliament on how to balance tax revenue, technological innovation, and investor protection.

Market observers are closely watching the outcome of the October 20 vote, which will serve as a key indicator of the future direction of crypto taxation policy in France.