France targets crypto tax before withdrawing from cryptocurrencies

Core Points

Starting from 2027, conversion of certain regulated fiat pegged tokens may create tax obligations.
When holders leave France, large cryptocurrency portfolios may be included in France's departure tax system.
Another measure would allow cryptocurrency losses to be carried forward 10 years.
None of the above proposals change the current rules.

Focus of controversy: Two key decisions

During its review of France's 2027 budget, the Finance Committee reviewed multiple amendments on cryptocurrency taxation. Together, these amendments address the question of: Even if investors do not deposit euros in a bank account, when will earnings be deemed "real enough" to be taxed?

Proposed trigger condition 1: Exchange of cryptoassets into regulated electronic currency tokens

According to amendment I-CF1826, the treatment of exchange of electronic currency tokens (EMT) will be changed from January 1, 2027. The Cryptographic Asset Markets Regulation (MiCA) defines EMT as a crypto-asset designed to maintain its value by reference to an official currency. This wording is narrower than the general term "stablecoin." The draft specifically refers to electronic currency tokens that comply with MiCA regulations and usually covers regulated euro or dollar-linked tokens. Therefore, tokens advertised as "stable" do not automatically apply to the rule.

Example: When a Bitcoin holder converts BTC to an eligible dollar-linked token, he may need to calculate the proceeds generated by the transaction even if no cash enters the bank account.

The amendment's explanation states that current conversion to fiat currency linked tokens allows proceeds to be exempted from taxation for a longer period of time than direct conversion to fiat currency. The proposed change aims to advance this tax payment timeline. Long-term holders will also face record-keeping options: text allows them to record the historical cost of each asset, or choose a one-time, irreversible method to allocate the acquisition costs of a portfolio. This option will affect the taxable income generated by subsequent eligible conversions.

Proposed trigger 2: Leaving French tax jurisdiction

The second measure involves another situation. Amendment I-CF1822 stipulates that when a taxpayer changes his place of residence, the crypto assets held by him will be included in France's departure tax framework. The measure applies to people who have been tax residents in France for at least 6 of the past 10 years and who have a family cryptocurrency portfolio of more than 800,000 euros at the time of departure. The draft includes assets held directly, assets held through crypto asset service providers, or assets held through other third parties, which means that self-managed wallets will also be included in the proposed calculation.

Differences between departure tax and sales: Calculation will be based on unrealized gains when the individual leaves France. The amendment adjusts the existing departure tax framework to include deferral and relief mechanisms, rather than treating every departure as an instant sale of crypto assets. The purpose is clear: to prevent large gains from automatically being removed from French tax jurisdiction simply because the holder emigrated overseas before being sold. Whether this treatment can be preserved in parliamentary procedures is another independent issue.

proposal also extends the use period of losses

The proposal not only focuses on earlier revenue recognition. Amendment I-CF798 allows losses arising from the disposal of crypto assets to be carried forward for 10 years. This helps investors whose gains and losses occur in different tax years. For example, if someone pays taxes in a profitable year and makes a loss during a market downturn, there will now be more time to offset those losses against future taxable gains.

Therefore, each of these three measures plays a different role: one changes a specific type of exchange behavior, one involves leaving France, and the other changes the treatment of losses after disposal.

The committee voted not to change existing rules

France has not introduced a new stablecoin tax or cryptocurrency departure tax. On October 9, after reviewing and voting on various amendments, the Finance Committee of the French National Assembly rejected the revenue portion of the 2027 budget as a whole with 31 votes in favor, 3 against, and 2 abstentions. When the National Assembly begins its debate on October 13, it will return to the government's original budget text.

These encryption measures can be reproposed, rewritten, or revoked. For holders, the rules that take effect immediately remain unchanged; a bigger change is that lawmakers are openly debating whether the act of redeeming regulated digital assets or moving overseas should be treated as a tax consequence similar to cashing out cash.

This article is for reference only and does not constitute tax or legal advice. Taxpayers should consult qualified professionals regarding their personal circumstances.