French lawmakers have taken a step toward taxing wealthy cryptocurrency investors who leave the country, approving an amendment in committee that would impose a levy on unrealised gains above €800,000. The same text also introduces fines of up to €10,000 for failing to declare self-custody wallets, part of a broader effort to tighten oversight of digital assets.
The amendment, backed by the finance committee of the Assemblée nationale, targets individuals who hold substantial crypto portfolios and choose to relocate abroad. Under the proposal, those with paper gains exceeding the threshold would be liable for tax even before selling their assets, a mechanism similar to the existing exit tax on large shareholdings.
Supporters argue the measure is necessary to prevent tax avoidance as more French residents move to crypto-friendly jurisdictions such as Switzerland, Portugal, or the United Arab Emirates. "We cannot allow a small minority to escape taxation simply by changing their postal address," said one committee member, speaking on condition of anonymity.
The fines for undeclared self-custody wallets are designed to improve transparency. Self-custody wallets, which allow users to hold cryptocurrencies without a third-party intermediary, have become a popular tool for those seeking to avoid reporting obligations. The proposed penalty would apply to French residents who fail to declare such wallets to the tax authorities.
Critics, however, warn that the measures could be counterproductive. They argue that taxing unrealised gains may drive innovation and investment away from France, particularly at a time when the country is trying to position itself as a hub for blockchain and fintech. Some also question the practicality of enforcing a tax on assets that are often held anonymously.
The amendment is part of a wider finance bill and must still be voted on by the full parliament. Even if approved, it would need to survive potential legal challenges, as constitutional experts have previously raised concerns about the retroactive nature of exit taxes.
Broader European context
The French proposal comes amid a broader European debate on how to regulate and tax cryptocurrencies. The EU's Markets in Crypto-Assets Regulation (MiCA) has already established a framework for crypto service providers, but taxation remains a national competence. Several member states, including Germany and Italy, have introduced or are considering similar measures to track crypto holdings and tax gains.
France's move could set a precedent for other countries seeking to close loopholes. However, the lack of harmonisation across the EU means that investors can still exploit differences in national tax regimes. For instance, Portugal, which once had a tax-friendly stance on crypto, has recently tightened its rules, while Germany still offers generous exemptions for long-term holders.
The amendment also reflects a broader political trend in France, where lawmakers are increasingly focused on wealth redistribution and fiscal fairness. This is not the first time that French politicians have targeted high earners; previous governments have introduced wealth taxes and stricter rules on tax havens. The current debate over crypto taxation is likely to intensify as the digital economy grows.
Industry observers note that the proposal could have a chilling effect on France's crypto ecosystem. Paris has attracted several blockchain startups and events, and the government has promoted the country as a welcoming place for innovation. A punitive tax regime could undermine those efforts, they say.
For now, the amendment is just one step in a long legislative process. It will be debated alongside other provisions of the finance bill, and amendments can still be modified or rejected. The final outcome will depend on political negotiations in the coming weeks.
As the French parliament debates, other European capitals will be watching closely. The outcome could influence similar proposals across the continent, shaping how Europe balances innovation with fiscal oversight in the rapidly evolving world of digital assets.
