France Tackles Crypto Tax Evasion with New Reporting Rule

Introduction

French lawmakers have backed a proposal that would require holders of self-custodied crypto assets to report holdings equal or above 100,000 euros ($112,000). The amendment, numbered I-CF821, would introduce reporting requirements for crypto that isn’t held by a crypto-asset service provider, including assets stored in personal wallets.

Background

The amendment was adopted by the National Assembly’s Finance Committee on Friday and would add a provision to France’s general tax code. Under the proposal, holders would be required to disclose holdings based on their value as of Dec. 31, and could face fines up to 10,000 euros for failing to declare. The sponsors said the measure was intended to combat tax evasion, citing a parliamentary inquiry into the taxation of wealthy individuals, which found that crypto capital gains reached 3.5 billion euros in 2021, while only 400 million euros in crypto holdings were declared to tax authorities that year.

Proposed Amendments

The amendment was introduced by Charles de Courson, Jean-Pierre Bataille, and Michel Castellani, three members of France’s Liberties, Independents, Overseas and Territories (LIOT) parliamentary group. The wallet disclosure measure was among five crypto-related amendments adopted by the Finance Committee last week. Other proposals included imposing an exit tax on cryptocurrency holdings exceeding 800,000 euros when taxpayers move abroad and ending tax deferrals on conversions into fiat-backed stablecoins.

Next Steps

The crypto amendments would need to be submitted again and approved during the parliamentary proceedings before becoming part of the legislation, according to French tech publication Clubic. Lawmakers are scheduled to begin debating the revenue section of the budget in the National Assembly on Tuesday, starting from the government’s original draft.