Proposed 31.4% Tax on EU-Regulated Stablecoins in France Raises Concerns
Written with artificial intelligence.
France's proposed 31.4% tax on trades involving EU-regulated stablecoins may lead investors to seek unregulated options. The legislation is part of the 2027 budget, with discussions ongoing until December 10.
Overview of the Proposed Tax
France's legislators are considering a new proposal to expand the existing 31.4% capital gains tax on cryptocurrencies to include trades involving European Union-regulated stablecoins. This proposal, part of the 2027 budget, is currently under discussion in the National Assembly, with a deadline for passage set for December 10.
Tax Implications
An amendment adopted by the National Assembly's finance committee would classify exchanges of cryptocurrencies like Bitcoin for EU-regulated stablecoins as taxable events. Currently, exchanging one cryptocurrency for another does not incur capital gains tax in France. However, if approved, the new rules would apply starting January 1, 2027.
Concerns Raised by Industry Experts
Francois Volpoet, Chainalysis’ regional sales director for France, has expressed concerns that this tax could drive traders toward decentralized finance (DeFi) platforms and peer-to-peer trading, potentially undermining regulatory efforts. He noted that the proposed tax targets MiCA-compliant stablecoins but may inadvertently encourage the use of alternatives that fall outside EU regulations.
Additional Legislative Measures
In addition to the tax on stablecoin trades, another amendment would require French taxpayers to declare self-hosted crypto wallets holding over €100,000 (approximately $116,000), with significant penalties for non-compliance. Volpoet also highlighted the safety risks associated with such disclosures, citing a rise in attacks on crypto holders.
Lawmakers are also considering extending France's exit tax to crypto holdings valued around $900,000 and allowing the carry-forward of crypto losses for up to 10 years, aligning tax treatment closer to that of stocks. However, the revenue section of the 2027 budget was rejected by the finance committee, meaning these amendments will need to be debated again before a vote scheduled for October 20.
Comparative Tax Landscape
This proposed tax hike comes as Greece is planning to implement a much lower 10% capital gains tax on cryptocurrencies, contrasting sharply with France’s and other EU nations' higher rates.
None of these measures have yet become law, and further developments are expected as discussions progress.